UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
--------------------------
Commission File Number 1-13102
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FIRST INDUSTRIAL REALTY TRUST, INC.
(Exact Name of Registrant as Specified in its Charter)
MARYLAND 36-3935116
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
311 S. WACKER DRIVE, SUITE 4000, CHICAGO, ILLINOIS 60606
(Address of Principal Executive Offices)
(312) 344-4300
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes /X/ No / /
Number of shares of Common Stock, $.01 par value, outstanding as of August 9,
2002: 39,575,771
FIRST INDUSTRIAL REALTY TRUST, INC.
FORM 10-Q
FOR THE PERIOD ENDED JUNE 30, 2002
INDEX
PAGE
----
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 2002 and
December 31, 2001.................................................... 2
Consolidated Statements of Operations for the Six Months Ended
June 30, 2002 and June 30, 2001...................................... 3
Consolidated Statements of Operations for the Three Months Ended
June 30, 2002 and June 30, 2001...................................... 4
Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 2002 and June 30, 2001...................................... 5
Notes to Consolidated Financial Statements............................ 6-15
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations .. ..................................... 16-26
Item 3. Quantitative and Qualitative Disclosures About Market Risk..... 26
PART II: OTHER INFORMATION
Item 1. Legal Proceedings ............................................ 27
Item 2. Changes in Securities ........................................ 27
Item 3. Defaults Upon Senior Securities............................... 27
Item 4. Submission of Matters to a Vote of Security Holders .......... 27
Item 5. Other Information ............................................ 27
Item 6. Exhibits and Report on Form 8-K............................... 27
SIGNATURE ............................................................... 28
EXHIBIT INDEX ........................................................... 29
1
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRST INDUSTRIAL REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
June 30, December 31,
2002 2001
----------- -----------
ASSETS
Assets:
Investment in Real Estate:
Land ...................................................... $ 432,481 $ 421,828
Buildings and Improvements ................................ 2,146,297 2,137,666
Furniture, Fixtures and Equipment ......................... 1,258 1,258
Construction in Progress .................................. 152,617 154,175
Less: Accumulated Depreciation ............................ (296,665) (276,820)
----------- -----------
Net Investment in Real Estate ..................... 2,435,988 2,438,107
Real Estate Held for Sale, Net of Accumulated Depreciation
and Amortization of $5,264 at June 30, 2002 and $4,033 at
December 31, 2001 ......................................... 36,675 30,750
Cash and Cash Equivalents .................................... 2,630 --
Restricted Cash .............................................. 39,939 22,764
Tenant Accounts Receivable, Net .............................. 11,132 11,956
Investments in Joint Ventures ................................ 10,783 9,010
Deferred Rent Receivable ..................................... 14,841 15,442
Deferred Financing Costs, Net ................................ 12,386 11,717
Prepaid Expenses and Other Assets, Net ....................... 107,063 81,654
----------- -----------
Total Assets ...................................... $ 2,671,437 $ 2,621,400
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage Loans Payable, Net .................................. $ 97,473 $ 87,459
Senior Unsecured Debt, Net ................................... 1,211,715 1,048,491
Acquisition Facility Payable ................................. 156,100 182,500
Accounts Payable and Accrued Expenses ........................ 59,245 71,031
Rents Received in Advance and Security Deposits .............. 23,263 26,684
Dividends/Distributions Payable .............................. 36,651 31,196
----------- -----------
Total Liabilities ................................. 1,584,447 1,447,361
----------- -----------
Minority Interest ............................................... 176,492 178,442
Commitments and Contingencies ................................... -- --
Stockholders' Equity:
Preferred Stock ($.01 par value, 10,000,000 shares authorized,
20,000, 50,000 and 30,000 shares of Series C, D and E
Cumulative Preferred Stock, respectively, issued and
outstanding at June 30, 2002 and December 31, 2001, having a
liquidation preference of $2,500 per share ($50,000), $2,500
per share ($125,000) and $2,500 per share ($75,000),
respectively, as well as 40,000 shares of Series B Cumulative
Preferred Stock issued and outstanding at December 31, 2001,
having a liquidation preference of $2,500 per share
($100,000)) ................................................. 1 1
Common Stock ($.01 par value, 100,000,000 shares authorized,
40,970,497 and 40,302,287 shares issued and 39,572,897 and
38,904,687 shares outstanding at June 30, 2002 and December
31, 2001, respectively) ..................................... 410 403
Additional Paid-in-Capital ...................................... 1,121,190 1,197,877
Distributions in Excess of Accumulated Earnings ................. (153,451) (143,958)
Unearned Value of Restricted Stock Grants ....................... (6,891) (6,247)
Accumulated Other Comprehensive Loss ............................ (10,663) (12,381)
Treasury Shares at Cost (1,397,600 shares at June 30, 2002 and
December 31, 2001) ....................................... (40,098) (40,098)
----------- -----------
Total Stockholders' Equity ...................... 910,498 995,597
----------- -----------
Total Liabilities and Stockholders' Equity ...... $ 2,671,437 $ 2,621,400
=========== ===========
The accompanying notes are an integral part of the financial statements.
2
FIRST INDUSTRIAL REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Six Months Ended Six Months Ended
June 30, 2002 June 30, 2001
---------------- ----------------
Revenues:
Rental Income ........................................................ $ 134,445 $ 143,389
Tenant Recoveries and Other Income ................................... 42,006 45,912
---------------- ----------------
Total Revenues ............................................. 176,451 189,301
---------------- ----------------
Expenses:
Real Estate Taxes .................................................... 27,976 28,644
Repairs and Maintenance .............................................. 10,550 9,965
Property Management .................................................. 6,707 6,610
Utilities ............................................................ 4,420 5,191
Insurance ............................................................ 1,276 1,154
Other ................................................................ 4,476 5,447
General and Administrative ........................................... 10,023 9,653
Interest Expense ..................................................... 42,704 42,633
Amortization of Deferred Financing Costs ............................. 959 898
Depreciation and Other Amortization .................................. 36,924 33,124
---------------- ----------------
Total Expenses ............................................ 146,015 143,319
---------------- ----------------
Income from Continuing Operations Before Equity in Income of Joint
Ventures, Income Allocated to Minority Interest and
Gain on Sale of Real Estate ......................................... 30,436 45,982
Equity in Income of Joint Ventures ...................................... 576 436
Gain on Sale of Real Estate ............................................. 3,256 29,698
Minority Interest Allocable to Continuing Operations .................... (3,102) (9,410)
---------------- ----------------
Income from Continuing Operations ....................................... 31,166 66,706
Income from Discontinued Operations (Including Gain on Sale of Real
Estate of $32,239 for the Six Months Ended June 30, 2002) ............ 36,557 6,525
Minority Interest Allocable to Discontinued Operations .................. (5,509) (1,011)
---------------- ----------------
Net Income Before Extraordinary Loss .................................... 62,214 72,220
Extraordinary Loss ...................................................... (888) (10,309)
Minority Interest Allocable to Extraordinary Loss ....................... 134 1,597
---------------- ----------------
Net Income .............................................................. 61,460 63,508
Less: Preferred Stock Dividends ........................................ (13,344) (15,539)
---------------- ----------------
Net Income Available to Common Stockholders ............................. $ 48,116 $ 47,969
================ ================
Income from Continuing Operations Available to Common Stockholders Per
Weighted Average Common Share Outstanding:
Basic ....................................................... $ .45 $ 1.31
================ ================
Diluted ..................................................... $ .45 $ 1.29
================ ================
Net Income Available to Common Stockholders Before Extraordinary Loss Per
Weighted Average Common Share Outstanding:
Basic ....................................................... $ 1.25 $ 1.45
================ ================
Diluted ..................................................... $ 1.24 $ 1.43
================ ================
Net Income Available to Common Stockholders Per Weighted Average
Common Share Outstanding:
Basic ....................................................... $ 1.23 $ 1.22
================ ================
Diluted ..................................................... $ 1.22 $ 1.21
================ ================
Net Income .............................................................. $ 61,460 $ 63,508
Other Comprehensive Income:
Cumulative Transition Adjustment ............................ -- (14,920)
Settlement of Interest Rate Protection Agreement ............ 1,772 (191)
Mark-to-Market of Interest Rate Protection Agreements ....... (179) --
Write-off of Unamortized Interest Rate Protection Agreement
Due to the Early Retirement of Debt ....................... -- 2,156
Amortization of Interest Rate Protection Agreements ......... 125 702
---------------- ----------------
Comprehensive Income .................................................... $ 63,178 $ 51,255
================ ================
The accompanying notes are an integral part of the financial statements.
3
FIRST INDUSTRIAL REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended Three Months Ended
June 30, 2002 June 30, 2001
---------------- ----------------
Revenues:
Rental Income ........................................................ $ 68,140 $ 72,050
Tenant Recoveries and Other Income ................................... 22,014 21,644
---------------- ----------------
Total Revenues ............................................. 90,154 93,694
---------------- ----------------
Expenses:
Real Estate Taxes .................................................... 14,402 14,170
Repairs and Maintenance .............................................. 5,898 4,504
Property Management .................................................. 3,396 3,276
Utilities ............................................................ 2,217 2,108
Insurance ............................................................ 688 585
Other ................................................................ 2,289 2,611
General and Administrative ........................................... 4,860 5,051
Interest Expense ..................................................... 22,920 21,431
Amortization of Deferred Financing Costs ............................. 497 456
Depreciation and Other Amortization .................................. 18,806 16,421
---------------- ----------------
Total Expenses ............................................ 75,973 70,613
---------------- ----------------
Income from Continuing Operations Before Equity in Income of Joint
Ventures, Income Allocated to Minority Interest and
Gain on Sale of Real Estate ......................................... 14,181 23,081
Equity in Income of Joint Ventures ...................................... 354 250
Gain on Sale of Real Estate ............................................. 2,616 15,822
Minority Interest Allocable to Continuing Operations .................... (1,630) (4,888)
---------------- ----------------
Income from Continuing Operations ....................................... 15,521 34,265
Income from Discontinued Operations (Including Gain on Sale of Real
Estate of $17,211 for the Three Months Ended June 30, 2002) .......... 18,724 3,255
Minority Interest Allocable to Discontinued Operations .................. (2,804) (499)
---------------- ----------------
Net Income Before Extraordinary Loss .................................... 31,441 37,021
Extraordinary Loss ...................................................... (888) (10,309)
Minority Interest Allocable Extraordinary Loss .......................... 134 1,597
---------------- ----------------
Net Income .............................................................. 30,687 28,309
Less: Preferred Stock Dividends ........................................ (6,113) (7,328)
---------------- ----------------
Net Income Available to Common Stockholders ............................. $ 24,574 $ 20,981
================ ================
Income from Continuing Operations Available to Common Stockholders Per
Weighted Average Common Share Outstanding:
Basic ....................................................... $ .24 $ .68
================ ================
Diluted ..................................................... $ .24 $ .68
================ ================
Net Income Available to Common Stockholders Before Extraordinary Loss Per
Weighted Average Common Share Outstanding:
Basic ....................................................... $ .64 .75
================ ================
Diluted ..................................................... $ .64 $ .75
================ ================
Net Income Available to Common Stockholders Per Weighted Average
Common Share Outstanding:
Basic ....................................................... $ .62 $ .53
================ ================
Diluted ..................................................... $ .62 $ .53
================ ================
Net Income .............................................................. $ 30,687 $ 28,309
Other Comprehensive Income:
Settlement of Interest Rate Protection Agreement ............ 1,772 (425)
Mark-to-Market of Interest Rate Protection Agreements ....... (3,751) --
Write-off of Unamortized Interest Rate Protection Agreement
Due to the Early Retirement of Debt ....................... -- 2,156
Amortization of Interest Rate Protection Agreements ......... 71 612
---------------- ----------------
Comprehensive Income .................................................... $ 28,779 $ 30,652
================ ================
The accompanying notes are an integral part of the financial statements
4
FIRST INDUSTRIAL REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
Six Months Ended Six Months Ended
June 30, 2002 June 30, 2001
---------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income ................................................. $ 61,460 $ 63,508
Income Allocated to Minority Interest ...................... 8,477 8,824
---------------- ----------------
Income Before Minority Interest ............................ 69,937 72,332
Adjustments to Reconcile Net Income to Net Cash Provided
by Operating Activities:
Depreciation ........................................... 32,562 29,887
Amortization of Deferred Financing Costs ............... 959 898
Other Amortization ..................................... 7,926 7,313
Equity in Income of Joint Ventures ..................... (576) (436)
Distributions from Joint Ventures ...................... 576 436
Gain on Sale of Real Estate ............................ (35,495) (29,698)
Extraordinary Loss ..................................... 888 10,309
Increase in Tenant Accounts Receivable and Prepaid
Expenses and Other Assets, Net ....................... (4,098) (4,556)
Increase in Deferred Rent Receivable ................... (661) (1,244)
Decrease in Accounts Payable and Accrued Expenses and ..
Rents Received in Advance and Security Deposits ...... (15,967) (10,291)
Increase in Restricted Cash ............................ (57) (94)
---------------- ----------------
Net Cash Provided by Operating Activities ........ 55,994 74,856
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of and Additions to Investment in Real Estate ... (168,063) (204,365)
Net Proceeds from Sales of Investment in Real Estate ...... 142,120 212,445
Contributions to and Investments in Joint Ventures ........ (3,104) --
Distributions from Joint Ventures in Excess of Equity in ..
Income .................................................. 179 166
Repayment of Mortgage Loans Receivable .................... 18,068 4,429
Increase in Restricted Cash ............................... (17,118) (27,883)
---------------- ----------------
Net Cash Used in Investing Activities ........... (27,918) (15,208)
---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Proceeds from Exercise of Employee Stock Options ...... 15,749 13,936
Repurchase of Restricted Stock ............................ (1,787) (1,638)
Purchase of U.S. Government Securities .................... (2,634) (1,123)
Proceeds from Senior Unsecured Debt ....................... 247,950 199,390
Other Proceeds from Senior Unsecured Debt ................. 1,772 --
Repayments of Senior Unsecured Debt ....................... (84,930) (100,000)
Redemption of Preferred Stock ............................. (100,000) (41,295)
Dividends/Distributions ................................... (62,648) (60,812)
Preferred Stock Dividends ................................. (8,300) (16,519)
Repayments on Mortgage Loans Payable ...................... (1,806) (12,731)
Proceeds from Acquisition Facility Payable ................ 320,300 297,300
Repayments on Acquisition Facility Payable ................ (346,700) (326,300)
Cost of Debt Issuance and Prepayment Fees ................. (2,412) (8,888)
---------------- ----------------
Net Cash Used in Financing Activities .......... (25,446) (58,680)
---------------- ----------------
Net Increase in Cash and Cash Equivalents .................... 2,630 968
Cash and Cash Equivalents, Beginning of Period ............... -- 7,731
---------------- ----------------
Cash and Cash Equivalents, End of Period ..................... $ 2,630 $ 8,699
================ ================
The accompanying notes are an integral part of the financial statements.
5
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
1. ORGANIZATION AND FORMATION OF COMPANY
First Industrial Realty Trust, Inc. (the "Company") was organized in the
state of Maryland on August 10, 1993. The Company is a real estate investment
trust as defined in the Internal Revenue Code. The Company's operations are
conducted primarily through First Industrial, L.P. (the "Operating Partnership")
of which the Company is the sole general partner with an approximate 85.1%
ownership interest at June 30, 2002. Minority interest in the Company at June
30, 2002 represents the approximate 14.9% aggregate partnership interest in the
Operating Partnership held by the limited partners thereof.
As of June 30, 2002, the Company owned 906 in-service properties located in
24 states, containing an aggregate of approximately 63.3 million square feet of
gross leasable area ("GLA"). Of the 906 in-service properties owned by the
Company, 763 are held by the Operating Partnership, 118 are held by limited
partnerships in which the Operating Partnership is the limited partner and
wholly-owned subsidiaries of the Company are the general partners, 11 are held
by limited liability companies of which the Operating Partnership is the sole
member and 14 are held by an entity wholly-owned by the Operating Partnership.
The Company, through wholly-owned limited liability companies of which the
Operating Partnership is the sole member, also owns minority equity interests
in, and provides asset and property management services to, three joint ventures
which invest in industrial properties (the "September 1998 Joint Venture", the
"September 1999 Joint Venture" and the "December 2001 Joint Venture").
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited interim financial statements have been prepared
in accordance with the accounting policies described in the financial statements
and related notes included in the Company's 2001 Form 10-K and should be read in
conjunction with such financial statements and related notes. The following
notes to these interim financial statements highlight significant changes to the
notes included in the December 31, 2001 audited financial statements included in
the Company's 2001 Form 10-K and present interim disclosures as required by the
Securities and Exchange Commission.
In order to conform with generally accepted accounting principles,
management, in preparation of the Company's financial statements, is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities as of June 30,
2002 and December 31, 2001, and the reported amounts of revenues and expenses
for each of the six and three months ended June 30, 2002 and 2001. Actual
results could differ from those estimates.
In the opinion of management, all adjustments consist of normal recurring
adjustments necessary for a fair statement of the financial position of the
Company as of June 30, 2002, the results of its operations for each of the six
and three months ended June 30, 2002 and 2001 and its cash flows for the six
months ended June 30, 2002 and 2001.
Tenant Accounts Receivable, Net:
The Company provides an allowance for doubtful accounts against the portion
of tenants accounts receivable which is estimated to be uncollectible. Tenant
accounts receivable in the consolidated balance sheets are shown net of an
allowance for doubtful accounts of approximately $2,050 as of June 30, 2002 and
December 31, 2001.
6
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Discontinued Operations:
On January 1, 2002, the Company adopted the Financial Accounting Standards
Board's ("FASB") Statement of Financial Accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long Lived Assets" ("FAS 144").
FAS 144 addresses final accounting and reporting for the disposal of long lived
assets. FAS 144 requires that the results of operations and gains or losses on
the sale of properties sold subsequent to December 31, 2001 that were not
classified as held for sale at December 31, 2001 and the results of operations
from properties that were classified as held for sale subsequent to December 31,
2001 be presented in discontinued operations. FAS 144 also requires prior period
results of operations for these properties to be restated and presented in
discontinued operations in prior consolidated statements of operations.
Recent Accounting Pronouncements:
On April 30, 2002, the FASB issued Financial Accounting Standards No. 145,
"Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement
No. 13, and Technical Corrections" ("FAS 145"). FAS 145 rescinds both Statement
of Financial Accounting Standards No. 4, "Reporting Gains and Losses from
Extinguishment of Debt" ("FAS 4"), and the amendment to FAS 4, Statement of
Financial Accounting Standards No. 64, "Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements". FAS 145 eliminates the requirement that gains and
losses from the extinguishment of debt be aggregated and, if material,
classified as an extraordinary item, net of the related income tax effect,
unless the criteria in Accounting Principles Board Opinion No. 30, "Reporting
the Results of Operations- Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions" are met. FAS 145 is effective for fiscal years beginning after May
15, 2002. The Company believes that FAS 145 will not have an impact on its
consolidated financial position, liquidity and results of operations.
Reclassification:
Certain 2001 items have been reclassified to conform to the 2002
presentation.
3. INVESTMENTS IN JOINT VENTURES
During the six months ended June 30, 2002, the Company, through
wholly-owned limited liability companies in which the Operating Partnership is
the sole member, recognized approximately $454 in asset management fees from the
September 1998 Joint Venture and the September 1999 Joint Venture, and
approximately $556 in property management fees from the September 1998 Joint
Venture, the September 1999 Joint Venture and the December 2001 Joint Venture.
The Company, through a wholly-owned limited liability company in which the
Operating Partnership is the sole member, invested approximately $3,104 in the
December 2001 Joint Venture. The Company, through wholly-owned limited liability
companies in which the Operating Partnership is the sole member, received
distributions of approximately $755 from the September 1998 Joint Venture, the
September 1999 Joint Venture and the December 2001 Joint Venture. As of June 30,
2002, the September 1998 Joint Venture owned 90 industrial properties comprising
approximately 4.3 million square feet of GLA, the September 1999 Joint Venture
owned 31 industrial properties comprising approximately .8 million square feet
of GLA and the December 2001 Joint Venture had economic interests in 14
industrial properties comprising approximately 2.5 million square feet of GLA.
The properties purchased by the December 2001 Joint Venture were purchased from
the Company. The Company deferred 15% of the gain resulting from these sales,
which is equal to the Company's economic interest in the December 2001 Joint
Venture.
7
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
4. MORTGAGE LOANS PAYABLE, NET, SENIOR UNSECURED DEBT, NET AND ACQUISITION
FACILITY PAYABLE
Mortgage Loans Payable, Net:
On December 29, 1995, the Company, through an entity in which the Operating
Partnership is the sole limited partner and a wholly-owned subsidiary of the
Company is the general partner (the "Mortgage Partnership"), entered into a
$40,200 mortgage loan (the "1995 Mortgage Loan"). In January 2002, the Company
purchased approximately $.8 million of U.S. Government securities as substitute
collateral to execute a legal defeasance of approximately $.8 million of the
1995 Mortgage Loan. In June 2002, the Company purchased approximately $1.9
million of U.S. Government securities as substitute collateral to execute a
legal defeasance of approximately $1.9 million of the 1995 Mortgage Loan. The
terms of the legal defeasance require the Mortgage Partnership to use the gross
proceeds from the maturities of the U.S. Government securities to pay down and
subsequently retire the defeased portion of the 1995 Mortgage Loan in January
2003. The Company is carrying the defeased portion of the 1995 Mortgage Loan on
its balance sheet until it pays down and retires the defeased portion of the
1995 Mortgage Loan in January 2003. Upon the executions of the legal
defeasances, two of the 21 properties collateralizing the 1995 Mortgage Loan
were released and subsequently sold.
On April 1, 2002, the Company, through the Operating Partnership, assumed a
mortgage loan in the principal amount of $5,814 (the "Acquisition Mortgage Loan
VIII"). The Acquisition Mortgage Loan VIII is collateralized by one property in
Rancho Dominguez, California, bears interest at a fixed rate of 8.26% and
provides for monthly principal and interest payments based on a 22-year
amortization schedule. The Acquisition Mortgage Loan VIII matures on December 1,
2019. The Acquisition Mortgage Loan VIII may be prepaid only after November 2004
in exchange for the greater of a 1% prepayment fee or yield maintenance premium.
On April 1, 2002, the Company, through the Operating Partnership, assumed a
mortgage loan in the principal amount of $6,030 (the "Acquisition Mortgage Loan
IX"). The Acquisition Mortgage Loan IX is collateralized by one property in
Rancho Dominguez, California, bears interest at a fixed rate of 8.26% and
provides for monthly principal and interest payments based on a 22-year
amortization schedule. The Acquisition Mortgage Loan IX matures on December 1,
2019. The Acquisition Mortgage Loan IX may be prepaid only after November 2004
in exchange for the greater of a 1% prepayment fee or yield maintenance premium.
On January 31, 1997, the Company, through the Operating Partnership,
assumed a loan in the amount of $705 (the "LB Loan II"). The LB Loan II was
interest free until February 1998, after which time the LB Loan II bore interest
at 8.00%, and provided for interest only payments prior to maturity. On June 14,
2002, the Company, through the Operating Partnership, paid off and retired the
LB Loan II.
Senior Unsecured Debt:
On April 15, 2002, the Company, through the Operating Partnership, issued
$200,000 of senior unsecured debt which matures on April 15, 2012 and bears a
coupon interest rate of 6.875% (the "2012 Notes"). The issue price of the 2012
Notes was 99.310%. Interest is paid semi-annually in arrears on April 15 and
October 15. The Company also entered into interest rate protection agreements
which were used to fix the interest rate on the 2012 Notes prior to issuance.
The Company settled the interest rate protection agreements for approximately
$1,772 of proceeds, which is included in other comprehensive income. The debt
issue discount and the settlement amount of the interest rate protection
agreements are being amortized over the life of the 2012 Notes as an adjustment
to interest expense. The 2012 Notes contain certain covenants, including
limitations on incurrence of debt and debt service coverage.
On April 15, 2002, the Company, through the Operating Partnership, issued
$50,000 of senior unsecured debt which matures on April 15, 2032 and bears a
coupon interest rate of 7.75% (the "2032 Notes"). The issue price of the 2032
Notes was 98.660%. Interest is paid semi-annually in arrears on April 15 and
October 15. The debt issue discount is being amortized over the life of the 2032
Notes as an adjustment to interest expense. The 2032 Notes contain certain
covenants, including limitations on incurrence of debt and debt service
coverage.
8
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
4. MORTGAGE LOANS PAYABLE, NET, SENIOR UNSECURED DEBT, NET AND ACQUISITION
FACILITY PAYABLE, CONTINUED
On May 13, 1997, the Company, through the Operating Partnership, issued
$100,000 of senior unsecured debt which matures on May 15, 2027 and bears a
coupon interest rate of 7.15% (the "2027 Notes"). The issue price of the 2027
Notes was 99.854%. The 2027 Notes were redeemable, at the option of the holders
thereof, on May 15, 2002. The Company received redemption notices from holders
representing $84,930 of the 2027 Notes outstanding. On May 15, 2002, the Company
paid off and retired $84,930 of the 2027 Notes. Due to the partial payoff of the
2027 Notes, the Company has recorded an extraordinary loss of approximately $888
comprised of the amount paid above the carrying amount of the 2027 Notes, the
write-off of unamortized deferred financing fees and legal costs.
Acquisition Facility Payable:
In January 2002, the Company entered into an interest rate swap agreement
(the "Interest Rate Swap Agreement") which fixed the interest rate on a portion
of the Company's outstanding borrowings on its $300,000 unsecured revolving
credit facility (the "2000 Unsecured Acquisition Facility"). The Company
designated this transaction as a cash flow hedge. The Interest Rate Swap
Agreement has a notional value of $25,000, is effective from February 4, 2002
through February 4, 2003 and fixed the LIBOR Rate at 2.4975%. Any payments or
receipts from the Interest Rate Swap Agreement will be treated as a component of
interest expense. The Company anticipates that the Interest Rate Swap Agreement
will be highly effective and, as a result, the change in value will be shown in
other comprehensive income.
9
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
4. MORTGAGE LOANS PAYABLE, NET, SENIOR UNSECURED DEBT, NET AND ACQUISITION
FACILITY PAYABLE, CONTINUED
The following table discloses certain information regarding the Company's
mortgage loans payable, senior unsecured debt and acquisition facility payable:
OUTSTANDING BALANCE AT ACCRUED INTEREST PAYABLE AT INTEREST RATE AT
------------------------------ --------------------------- ----------------
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, MATURITY
2002 2001 2002 2001 2002 DATE
---------- ---------- ------- ------------ -------- --------
MORTGAGE LOANS PAYABLE, NET
1995 Mortgage Loan ............. $ 37,774 (1) $ 38,063 $ 152 $ 160 7.220% 1/11/26 (1)
CIGNA Loan...................... 32,824 33,214 205 207 7.500% 4/01/03 (7)
Assumed Loans................... 6,282 6,538 -- -- 9.250% 1/01/13
LB Loan II...................... -- 705 -- 24 8.000% (2)
Acquisition Mortgage Loan III... 2,999 3,065 22 -- 8.875% 6/01/03
Acquisition Mortgage Loan IV.... 2,255 2,286 17 -- 8.950% 10/01/06
Acquisition Mortgage Loan V..... 2,631 (3) 2,665 (3) -- -- 9.010% 9/01/06
Acquisition Mortgage Loan VI.... 905 (3) 923 (3) 6 7 8.875% 11/01/06 (8)
Acquisition Mortgage Loan VIII.. 5,794 -- 40 -- 8.260% 12/01/19
Acquisition Mortgage Loan IX.... 6,009 -- 41 -- 8.260% 12/01/19
---------- ---------- ------- -------
Total........................... $ 97,473 $ 87,459 $ 483 $ 398
========== ========== ======= =======
SENIOR UNSECURED DEBT, NET
2005 Notes...................... $ 50,000 $ 50,000 $ 383 $ 383 6.900% 11/21/05
2006 Notes...................... 150,000 150,000 875 875 7.000% 12/01/06
2007 Notes...................... 149,974 (4) 149,972 (4) 1,457 1,457 7.600% 5/15/07
2011 PATS....................... 99,587 (4) 99,563 (4) 942 942 7.375% 5/15/11 (5)
2017 Notes...................... 99,852 (4) 99,847 (4) 625 625 7.500% 12/01/17
2027 Notes...................... 15,052 (4) 99,877 (4) 138 914 7.150% 5/15/27 (6)
2028 Notes...................... 199,795 (4) 199,791 (4) 7,009 7,009 7.600% 7/15/28
2011 Notes...................... 199,471 (4) 199,441 (4) 4,343 4,343 7.375% 3/15/11
2012 Notes...................... 198,649 (4) -- 2,903 -- 6.875% 4/15/12
2032 Notes...................... 49,335 (4) -- 818 -- 7.750% 4/15/32
---------- ---------- ------- -------
Total........................... $1,211,715 $1,048,491 $19,493 $16,548
========== ========== ======= =======
ACQUISITION FACILITY PAYABLE
2000 Unsecured Acquisition
Facility..................... $ 156,100 $ 182,500 $ 399 $ 571 3.17% 6/30/03
========== ========== ======= =======
(1) Approximately $4.9 million of this loan has been defeased and will be
paid in full in January 2003.
(2) On June 14, 2002, the Company paid off and retired the LB Loan II.
(3) At June 30, 2002, the Acquisition Mortgage Loan V and the Acquisition
Mortgage Loan VI are net of unamortized premiums of $161 and $36,
respectively. At December 31, 2001 the Acquisition Mortgage Loan V and
the Acquisition Mortgage Loan VI are net of unamortized premiums of
$180 and $41, respectively.
(4) At June 30, 2002, the 2007 Notes, 2011 PATS, 2017 Notes, 2027 Notes,
2028 Notes, 2011 Notes, 2012 Notes and the 2032 Notes are net of
unamortized discounts of $26, $413, $148, $18, $205, $529, $1,351 and
$665, respectively. At December 31, 2001, the 2007 Notes, 2011 PATS,
2017 Notes, 2027 Notes, 2028 Notes and the 2011 Notes are net of
unamortized discounts of $28, $437, $153, $123, $209 and $559,
respectively.
(5) The 2011 PATS are redeemable at the option of the holder thereof, on
May 15, 2004.
(6) The 2027 Notes were redeemable at the option of the holders thereof, on
May 15, 2002. The Company redeemed $84,930 of the 2027 Notes
outstanding on May 15, 2002.
(7) The Company has given notice to the lender of the CIGNA Loan that it
intends to pay off and retire this loan in October 2002.
(8) On July 2, 2002, the Company paid off and retired the Acquisition
Mortgage Loan VI.
10
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
4. MORTGAGE LOANS PAYABLE, NET, SENIOR UNSECURED DEBT, NET AND ACQUISITION
FACILITY PAYABLE, CONTINUED
The following is a schedule of the stated maturities and scheduled
principal payments of the mortgage loans payable, senior unsecured debt and
acquisition facility payable for the next five years ending December 31, and
thereafter:
Amount
-----------
Remainder of 2002 $ 34,532
2003 165,264
2004 1,628
2005 51,777
2006 156,058
Thereafter 1,059,187
----------
Total $1,468,446
==========
The Company has given notice to the lender of the CIGNA Loan (as defined in
Note 11) that it intends to pay off and retire this loan in October 2002. As a
result, the CIGNA Loan (as defined in Note 11) is shown as coming due in 2002.
Also, on July 2, 2002, the Company paid off and retired the Acquisition Mortgage
Loan VI. As a result, the Acquisition Mortgage Loan VI is shown as coming due in
2002 as well.
Other Comprehensive Income:
In conjunction with the prior issuances of senior unsecured debt, the
Company entered into interest rate protection agreements to fix the interest
rate on anticipated offerings of senior unsecured debt (the "Interest Rate
Protection Agreements"). In the next 12 months, the Company will amortize
approximately $190 into net income as an increase to interest expense.
The following is a rollforward of the accumulated other comprehensive loss
balance relating to derivative transactions:
Balance at December 31, 2001................................... $ (12,381)
Settlement of Interest Rate Protection Agreements......... 1,772
Change in Market Value of Interest Rate Swap Agreements... (179)
Amortization of Interest Rate Protection Agreements....... 125
-------------
Balance at June 30, 2002....................................... $ (10,663)
=============
5. STOCKHOLDERS' EQUITY
Preferred Stock:
On May 14, 1997, the Company issued 4,000,000 Depositary Shares, each
representing 1/100th of a share of the Company's 8 3/4%, $.01 par value, Series
B Cumulative Preferred Stock (the "Series B Preferred Stock"), at an initial
offering price of $25.00 per Depositary Share. On or after May 14, 2002, the
Series B Preferred Stock became redeemable for cash at the option of the
Company, in whole or in part, at a redemption price equivalent to $25.00 per
Depositary Share, or $100,000 in the aggregate, plus dividends accrued and
unpaid to the redemption date. On April 12, 2002, the Company called for the
redemption of all of its outstanding Series B Preferred Stock at the price of
$25.00 per Depositary Share, plus accrued and unpaid dividends. The Company
redeemed the Series B Preferred Stock on May 14, 2002 and paid a prorated second
quarter dividend of $.26736 per Depositary Share, totaling approximately $1,069.
11
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
5. STOCKHOLDERS' EQUITY, CONTINUED
Restricted Stock:
During the six months ended June 30, 2002, the Company awarded 90,260
shares of restricted common stock to certain employees and 1,841 shares of
restricted common stock to certain Directors. These shares of restricted common
stock had a fair value of approximately $3,174 on the date of grant. The
restricted common stock vests over periods from one to ten years. Compensation
expense will be charged to earnings over the respective vesting period.
Non-Qualified Employee Stock Options:
During the six months ended June 30, 2002, the Company issued 940,600
non-qualified employee stock options to certain officers, Directors and
employees of the Company. These non-qualified employee stock options vest over
periods from one to three years, have a strike price of $30.53 - $33.15 per
share and expire ten years from the date of grant.
During the six months ended June 30, 2002, certain employees of the Company
exercised 555,068 non-qualified employee stock options. Net proceeds to the
Company were approximately $15,749.
Dividends/Distributions:
The following table summarizes dividends/distributions declared for the six
months ended June 30, 2002.
Six Months Ended June 30, 2002
----------------------------------
Dividend/
Distribution
per Share/ Total Dividend/
Unit Distribution
-------------- ---------------
Common Stock/Operating Partnership Units $ 1.3600 $ 63,060
Series B Preferred Stock $ 81.4240 $ 3,260
Series C Preferred Stock $ 107.8120 $ 2,156
Series D Preferred Stock $ 99.3740 $ 4,968
Series E Preferred Stock $ 98.7500 $ 2,960
6. ACQUISITION AND DEVELOPMENT OF REAL ESTATE
During the six months ended June 30, 2002, the Company acquired 35
industrial properties, comprising approximately 3.4 million square feet of GLA
and one land parcel. The aggregate purchase price for these acquisitions totaled
approximately $131,309, excluding costs incurred in conjunction with the
acquisition of the properties. The Company also completed the development of
five industrial properties comprising approximately .9 million square feet of
GLA at a cost of approximately $37.9 million.
7. SALES OF REAL ESTATE, REAL ESTATE HELD FOR SALE AND DISCONTINUED OPERATIONS
During the six months ended June 30, 2002, the Company sold 41 industrial
properties comprising approximately 4.4 million square feet of GLA that were not
classified as held for sale at December 31, 2001, nine properties comprising
approximately .4 million square feet of GLA that were classified as held for
sale at December 31, 2001, several land parcels and assigned to a third party
the right to purchase a certain property. Gross proceeds from these sales were
approximately $196,530. The gain on sale of real estate was approximately
$35,495, of which $32,239 is shown in discontinued operations. In accordance
with FAS 144, the results of operations and gain on sale of real estate for the
41 sold properties that were not identified as held for sale at December 31,
2001 and the gain associated with the assignment to a third party of the right
to purchase a certain property are included in discontinued operations.
12
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
7. SALES OF REAL ESTATE, REAL ESTATE HELD FOR SALE AND DISCONTINUED
OPERATIONS, CONTINUED
At June 30, 2002, the Company had 12 industrial properties comprising
approximately 1.3 million square feet of GLA held for sale. Five of the 12
properties comprising approximately .8 million square feet of GLA that were held
for sale as of June 30, 2002 were identified as held for sale as of December 31,
2001. In accordance with FAS 144, the results of operations of the seven
properties identified as held for sale during the six months ended June 30, 2002
are included in discontinued operations. There can be no assurance that such
properties held for sale will be sold.
The following table discloses certain information regarding the five
industrial properties identified as held for sale by the Company prior to
January 1, 2002.
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- -------------------
2002 2001 2002 2001
------- ------ ------ ------
Total Revenues $ 1,689 $1,390 $ 804 $ 645
Operating Expenses (567) (602) (282) (282)
------- ------ ------ ------
Income from Operations $ 1,122 $ 788 $ 522 $ 363
======= ====== ====== ======
8. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS
Supplemental disclosure of cash flow information:
Six Months Ended
------------------------
June 30, June 30,
2002 2001
--------- ---------
Interest paid, net of capitalized interest ......................... $ 39,846 $ 40,597
========= =========
Interest capitalized ............................................... $ 5,204 $ 4,297
========= =========
Supplemental schedule of noncash investing and financing activities:
Distribution payable on common stock/units ......................... $ 31,607 $ 30,668
========= =========
Distribution payable on preferred stock ............................ $ 5,044 $ 7,231
========= =========
Issuance of units in exchange for property ............................ $ 633 $ 1,491
========= =========
Exchange of units for common shares:
Minority interest ................................................. $ (1,628) $ (4,213)
Common stock ...................................................... 1 2
Additional paid-in capital ........................................ 1,627 4,211
--------- ---------
$ -- $ --
========= =========
In conjunction with the property and land acquisitions, the following
liabilities were assumed:
Purchase of real estate ............................................ $ 131,309 $ 124,361
Accrued real estate taxes and security deposits .................... (699) (1,072)
Mortgage Debt ...................................................... (11,844) --
--------- ---------
$ 118,766 $ 123,289
========= =========
In conjunction with certain property sales, the Company provided seller
financing on behalf of certain buyers:
Notes Receivable ................................................... $ 44,036 $ --
========= =========
13
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
9. EARNINGS PER SHARE
The computation of basic and diluted EPS is presented below:
Six Months Ended Three Months Ended
----------------------------- ------------------------------
June 30, 2002 June 30, 2001 June 30, 2002 June 30, 2001
------------- ------------- ------------- -------------
Numerator:
Income from Continuing Operations ..................... $ 31,166 $ 66,706 $ 15,521 $ 34,265
Less: Preferred Stock Dividends ....................... (13,344) (15,539) (6,113) (7,328)
------------ ------------ ------------ ------------
Income from Continuing Operations Available to
Common Stockholders, Net of Minority Interest
-For Basic and Diluted EPS .......................... 17,822 51,167 9,408 26,937
Discontinued Operations, Net of Minority Interest 31,048 5,514 15,920 2,756
------------ ------------ ------------ ------------
Net Income Available to Common Stockholders
Before Extraordinary Loss-For
Basic and Diluted EPS ................................ 48,870 56,681 25,328 29,693
Extraordinary Loss, Net of Minority Interest .......... (754) (8,712) (754) (8,712)
------------ ------------ ------------ ------------
Net Income Available to Common Stockholders
-For Basic and Diluted EPS ............................ $ 48,116 $ 47,969 $ 24,574 $ 20,981
============ ============ ============ ============
Denominator:
Weighted Average Shares - Basic ...................... 39,193,571 39,196,852 39,407,243 39,440,432
Effect of Dilutive Securities:
Employee and Director Common Stock Options ........... 346,382 373,698 422,871 289,465
------------ ------------ ------------ ------------
Weighted Average Shares - Diluted .................... 39,539,953 39,570,550 39,830,114 39,729,897
============ ============ ============ ============
Basic EPS:
Income from Continuing Operations Available to
Common Stockholders, Net of Minority Interest ...... $ .45 $ 1.31 $ .24 $ .68
============ ============ ============ ============
Discontinued Operations, Net of Minority Interest $ .79 $ .14 $ .40 $ .07
============ ============ ============ ============
Net Income Available to Common Stockholders
Before Extraordinary Loss .......................... $ 1.25 $ 1.45 $ .64 $ .75
============ ============ ============ ============
Extraordinary Loss, Net of Minority Interest ......... $ (.02) $ (.22) $ (.02) $ (.22)
============ ============ ============ ============
Net Income Available to Common Stockholders .......... $ 1.23 $ 1.22 $ .62 $ .53
============ ============ ============ ============
Diluted EPS:
Income from Continuing Operations Available to
Common Stockholders, Net of Minority Interest ...... $ .45 $ 1.29 $ .24 $ .68
============ ============= ============== ============
Discontinued Operations, Net of Minority Interest .... $ .79 $ .14 $ .40 $ .07
============ ============= ============== ============
Net Income Available to Common Stockholders
Before Extraordinary Loss .......................... $ 1.24 $ 1.43 $ .64 $ .75
============ ============= ============== ============
Extraordinary Loss, Net of Minority Interest ......... $ (.02) $ (.22) $ (.02) $ (.22)
============ ============= ============== ============
Net Income Available to Common Stockholders .......... $ 1.22 $ 1.21 $ .62 $ .53
============ ============= ============== ============
14
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
10. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company is involved in legal
actions arising from the ownership of its properties. In management's opinion,
the liabilities, if any, that may ultimately result from such legal actions are
not expected to have a materially adverse effect on the consolidated financial
position, operations or liquidity of the Company.
The Company has committed to the construction of 34 development projects
totaling approximately 4.4 million square feet of GLA for an estimated
investment of approximately $214.9 million. Of this amount, approximately $48.4
million remains to be funded. These developments are expected to be funded with
proceeds from the sale of select properties, cash flows from operations and
borrowings under the Company's 2000 Unsecured Acquisition Facility. The Company
expects to place in service all of the development projects during the next
twelve months. There can be no assurance that the Company will place these
projects in service during the next twelve months or that the actual completion
cost will not exceed the estimated completion cost stated above.
11. SUBSEQUENT EVENTS
From July 1, 2002 to August 9, 2002, the Company acquired three industrial
properties for an aggregate purchase price of approximately $4,550 excluding
costs incurred in conjunction with the acquisition of these industrial
properties. The Company also sold four industrial properties and several land
parcels for approximately $21,060 of gross proceeds.
On July 1, 2002, the Company paid second quarter preferred stock dividends
of $53.906 per share (equivalent to $.53906 per Depositary Share) on its Series
C Preferred Stock, $49.687 per share (equivalent to $.49687 per Depositary
Share) on its Series D Preferred Stock and $49.375 per share (equivalent to
$.49375 per Depositary Share) on its Series E Preferred Stock. The preferred
stock dividends paid on July 1, 2002 totaled approximately $5,044.
On August 31, 1998, the Company, through the Operating Partnership, assumed
a mortgage loan in the principal amount of $965 (the "Acquisition Mortgage Loan
VI"). The Acquisition Mortgage Loan VI was collateralized by one property in
Portland, Oregon, bore interest at a fixed rate of 8.875% and provided for
monthly principal and interest payments based on a 20-year amortization
schedule. On July 2, 2002, the Company paid off and retired the Acquisition
Mortgage Loan VI.
On March 20, 1996, the Company, through the Operating Partnership and the
Indianapolis Partnership, entered into a $36,750 mortgage loan (the "CIGNA
Loan") that is collateralized by seven properties in Indianapolis, Indiana and
three properties in Cincinnati, Ohio. The CIGNA Loan bears interest at a fixed
interest rate of 7.50% and provides for monthly principal and interest payments
based on a 25 - year amortization schedule. The CIGNA Loan matures on April 1,
2003. The Company has given notice to the lender of the CIGNA Loan that it
intends to pay off and retire this loan in October 2002.
On July 22, 2002, the Company and the Operating Partnership paid a second
quarter 2002 dividend/distribution of $.6800 per common share/Unit, totaling
approximately $31,607.
15
FIRST INDUSTRIAL REALTY TRUST, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis of First Industrial Realty Trust,
Inc.'s (the "Company") financial condition and results of operations should be
read in conjunction with the financial statements and notes thereto appearing
elsewhere in this Form 10-Q.
This report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Company intends 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, and is including this statement for purposes of complying with
those safe harbor provisions. Forward-looking statements, which are based on
certain assumptions and describe future plans, strategies and expectations of
the Company, are generally identifiable by use of the words "believe," "expect,"
"intend," "anticipate," "estimate," "project" or similar expressions. The
Company's ability to predict results or the actual effect of future plans or
strategies is inherently uncertain. Factors which could have a material adverse
affect on the operations and future prospects of the Company on a consolidated
basis include, but are not limited to, 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. These risks and uncertainties should be considered in
evaluating forward-looking statements and undue reliance should not be placed on
such statements. Further information concerning the Company and its business,
including additional factors that could materially affect the Company's
financial results, is included herein and in the Company's other filings with
the Securities and Exchange Commission.
The Company was organized in the state of Maryland on August 10, 1993. The
Company is a real estate investment trust ("REIT") as defined in the Internal
Revenue Code. The Company's operations are conducted primarily through First
Industrial, L.P. (the "Operating Partnership") of which the Company is the sole
general partner with an approximate 85.1% ownership interest at June 30, 2002.
Minority interest in the Company at June 30, 2002 represents the approximate
14.9% aggregate partnership interest in the Operating Partnership held by the
limited partners thereof.
As of June 30, 2002, the Company owned 906 in-service properties located in
24 states, containing an aggregate of approximately 63.3 million square feet of
gross leasable area ("GLA"). Of the 906 in-service properties owned by the
Company, 763 are held by the Operating Partnership, 118 are held by limited
partnerships in which the Operating Partnership is the limited partner and
wholly-owned subsidiaries of the Company are the general partners, 11 are held
by limited liability companies of which the Operating Partnership is the sole
member and 14 are held by an entity wholly-owned by the Operating Partnership.
The Company, through wholly-owned limited liability companies of which the
Operating Partnership is the sole member, also owns minority equity interests
in, and provides asset and property management services to three joint ventures
which invest in industrial properties (the "September 1998 Joint Venture", the
"September 1999 Joint Venture" and the "December 2001 Joint Venture").
RESULTS OF OPERATIONS
At June 30, 2002, the Company owned 906 in-service properties with
approximately 63.3 million square feet of GLA, compared to 947 in-service
properties with approximately 65.8 million square feet of GLA at June 30, 2001.
During the period between July 1, 2001 and June 30, 2002, the Company acquired
62 in-service properties containing approximately 5.3 million square feet of
GLA, one out of service property with approximately .1 million square feet of
GLA, completed development of seven properties totaling approximately 1.1
million square feet of GLA and sold 109 in-service properties totaling
16
approximately 8.4 million square feet of GLA, four out of service properties and
several land parcels. The Company also took four properties out of service that
are under redevelopment, comprising approximately .7 million square feet of GLA,
and placed in service three properties comprising approximately .2 million
square feet of GLA.
COMPARISON OF SIX MONTHS ENDED JUNE 30, 2002 TO SIX MONTHS ENDED JUNE 30, 2001
Rental income and tenant recoveries and other income decreased by
approximately $12.9 million or 6.8% due primarily to a decrease in average
occupied GLA for the six months ended June 30, 2002 as compared to the six
months ended June 30, 2001. Rental income and tenant recoveries and other income
from properties owned prior to January 1, 2001 decreased by approximately $1.4
million or .9% due primarily to a decrease in occupancy for the six months ended
June 30, 2002 as compared to the six months ended June 30, 2001.
Property expenses, which include real estate taxes, repairs and
maintenance, property management, utilities, insurance and other expenses
decreased by approximately $1.6 million or 2.8%. This decrease is due primarily
to decreases in real estate taxes, utilities and other expenses, offset by an
increase in repairs and maintenance. The decrease in real estate taxes and
utilities is primarily due to a decrease in average GLA owned for the six months
ended June 30, 2002 as compared to the six months ended June 30, 2001. The
decrease in other expense is primarily due to a decrease in bad debt expense and
a decrease in master lease payments. The increase in repairs and maintenance is
primarily due to an increase in maintenance expenses as well as snow removal and
related expenses. Property expenses from properties owned prior to January 1,
2001 increased by approximately $1.4 million or 3.2% due primarily to an
increase in real estate taxes and repairs and maintenance. The increase in
real estate taxes is primarily due to an increase in real estate taxes in many
of the Company's markets. The increase in repairs and maintenance is due
primarily to the explanation above.
General and administrative expense increased by approximately $.4 million
due primarily to increases in employee compensation and additional employees for
the six months ended June 30, 2002 as compared to the six months ended June 30,
2001, offset by the write-off of the Company's technology investment in the
second quarter of 2001.
Interest expense increased by approximately $.1 million for the six months
ended June 30, 2002 compared to the six months ended June 30, 2001 due primarily
to a higher average debt balance outstanding for the six months ended June 30,
2002 as compared to the six months ended June 30, 2001. The average debt balance
outstanding for the six months ended June 30, 2002 and 2001 was approximately
$1,392.9 million and $ 1,310.5 million, respectively. This was offset by a
decrease in the weighted average interest rate on the Company's outstanding debt
for the six months ended June 30, 2002 (6.85%) as compared to the six months
ended June 30, 2001 (7.19%), as well as an increase in capitalized interest due
to an increase in development activities.
Amortization of deferred financing costs remained relatively unchanged.
Depreciation and other amortization increased by approximately $3.8 million
due primarily to a decrease in the number of properties the Company considered
held for sale at June 30, 2002 as compared to June 30, 2001.
Equity in income of joint ventures increased by approximately $.1 million
or 32.1% due primarily to an increase in gain on sale of real estate and the
start up of one of the Company's joint ventures in December 2001.
17
The approximate $3.3 million gain on sale of real estate for the six months
ended June 30, 2002 resulted from the sale of nine industrial properties that
were identified as held for sale at December 31, 2001. Gross proceeds from these
sales were approximately $16.1 million.
The approximate $29.7 million gain on sale of real estate for the six
months ended June 30, 2001 resulted from the sale of 69 industrial properties
and several land parcels. Gross proceeds from these sales were approximately
$226.4 million.
Income from discontinued operations of approximately $36.6 million for the
six months ended June 30, 2002 reflects the results of operations and gain on
sale of 41 industrial properties and several land parcels that were not held for
sale at December 31, 2001 and were sold during the six months ended June 30,
2002 as well as the results of operations of seven industrial properties
identified as held for sale during the six months ended June 30, 2002. Gross
proceeds from the sales of the 41 industrial properties and several land parcels
were approximately $180.4 million, resulting in a gain on sale of real estate of
approximately $32.2 million.
Income from discontinued operations of approximately $6.5 million for the
six months ended June 30, 2001 reflects the results of operations of the 41
industrial properties that were not held for sale at December 31, 2001 and were
sold during the six months ended June 30, 2002 as well as the results of
operations of seven industrial properties identified as held for sale during the
six months ended June 30, 2002.
The approximate $.9 million extraordinary loss for the six months ended
June 30, 2002 is due to the early retirement of senior unsecured debt. The
extraordinary loss is comprised of the amount paid above the carrying amount of
the senior unsecured debt, the write-off of unamortized deferred financing fees
and legal costs.
The approximate $10.3 million extraordinary loss for the six months ended
June 30, 2001 is due to the early retirement of senior unsecured debt and
various mortgage loans. The extraordinary loss is comprised of the amount paid
above the carrying amount of the senior unsecured debt, the write-off of
unamortized deferred financing fees, the write-off of the unamortized portion of
an interest rate protection agreement which was used to fix the interest rate on
the senior unsecured debt prior to issuance, the settlement of an interest rate
protection agreement used to fix the retirement price of the senior unsecured
debt, prepayment fees, legal costs and other expenses.
COMPARISON OF THREE MONTHS ENDED JUNE 30, 2002 TO THREE MONTHS ENDED JUNE 30,
2001
Rental income and tenant recoveries and other income decreased by
approximately $3.5 million or 3.8% due primarily to a decrease in average
occupied GLA for the three months ended June 30, 2002 as compared to the three
months ended June 30, 2001, offset by an increase in tenant recoveries due to an
increase in operating expenses (as discussed below) for the three months ended
June 30, 2002 as compared to the three months ended June 30, 2001. Rental income
and tenant recoveries and other income from properties owned prior to April 1,
2001 increased by approximately $1.2 million or 1.6% due primarily to an
increase in tenant recoveries due to an increase in property expenses (as
discussed below) for the three months ended June 30, 2002 as compared to the
three months ended June 30, 2001.
Property expenses, which include real estate taxes, repairs and
maintenance, property management, utilities, insurance and other expenses
increased by approximately $1.6 million or 6.0%. This increase is due primarily
to increases in real estate taxes and repairs and maintenance. These increases
were offset by a decrease in other expenses. The increase in real estate taxes
is primarily due to an increase in real estate taxes in many of the Company's
markets. The increase in repairs and maintenance is primarily due to an increase
in maintenance expenses. The decrease in other expenses is primarily due to a
decrease in bad debt expense. Property expenses from properties owned prior to
April 1, 2001 increased by approximately $2.4 million or 11.3% due primarily to
the explanations above.
18
General and administrative expense decreased by approximately $.2 million
due primarily to the write-off of the Company's technology investment in the
second quarter of 2001, offset by increases in employee compensation and
additional employees for the three months ended June 30, 2002 as compared to the
three months ended June 30, 2001.
Interest expense increased by approximately $1.5 million for the three
months ended June 30, 2002 compared to the three months ended June 30, 2001 due
primarily to a higher average debt balance outstanding for the three months
ended June 30, 2002 as compared to the three months ended June 30, 2001. The
average debt balance outstanding for the three months ended June 30, 2002 and
2001 was approximately $1,437.2 million and $1,332.1 million, respectively. This
was slightly offset by a decrease in the weighted average interest rate on the
Company's outstanding debt for the three months ended June 30, 2002 (6.98%) as
compared to the three months ended June 30, 2001 (7.12%).
Amortization of deferred financing costs remained relatively unchanged.
Depreciation and other amortization increased by approximately $2.4 million
due primarily to a decrease in the number of properties the Company considered
held for sale at June 30, 2002 as compared to June 30, 2001.
Equity in income of joint ventures increased by approximately $.1 million
or 41.6% due primarily to the start up of one of the Company's joint ventures in
December 2001.
The approximate $2.6 million gain on sale of real estate for the three
months ended June 30, 2002 resulted from the sale of seven industrial properties
that were identified as held for sale at December 31, 2001. Gross proceeds from
these sales were approximately $11.3 million.
The approximate $15.8 million gain on sale of real estate for the three
months ended June 30, 2001 resulted from the sale of 45 industrial properties
and several land parcels. Gross proceeds from these sales were approximately
$165.5 million.
Income from discontinued operations of approximately $18.7 million for the
three months ended June 30, 2002 reflects the results of operations and gain on
sale of 21 industrial properties and several land parcels that were not held for
sale at December 31, 2001 and were sold during the three months ended June 30,
2002 as well as the results of operations of seven industrial properties
identified as held for sale during the three months ended June 30, 2002. Gross
proceeds from the sales of the 21 industrial properties and several land parcels
were approximately $88.3 million, resulting in a gain on sale of real estate of
approximately $17.2 million.
Income from discontinued operations of approximately $3.3 million for the
three months ended June 30, 2001 reflects the results of operations of the 21
industrial properties that were not held for sale at December 31, 2001 and were
sold during the three months ended June 30, 2002 as well as the results of
operations of seven industrial properties identified as held for sale during the
three months ended June 30, 2002.
The approximate $.9 million extraordinary loss for the three months ended
June 30, 2002 is due to the early retirement of senior unsecured debt. The
extraordinary loss is comprised of the amount paid above the carrying amount of
the senior unsecured debt, the write-off of unamortized deferred financing fees
and legal costs.
The approximate $10.3 million extraordinary loss for the three months ended
June 30, 2001 is due to the early retirement of senior unsecured debt and
various mortgage loans. The extraordinary loss is comprised of the amount paid
above the carrying amount of the senior unsecured debt, the write-off of
unamortized deferred financing fees, the write-off of the unamortized portion of
an interest rate protection agreement which was used to fix the interest rate on
the senior unsecured debt prior to
19
issuance, the settlement of an interest rate protection agreement used to fix
the retirement price of the senior unsecured debt, prepayment fees, legal costs
and other expenses.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2002, the Company's cash and cash equivalents was approximately
$2.6 million and restricted cash was approximately $39.9 million. Included in
restricted cash are approximately $2.7 million of cash reserves required to be
set aside under the Company's $40.0 million mortgage loan (the "1995 Mortgage
Loan") for payments of security deposit refunds, capital expenditures, interest,
real estate taxes, insurance and releasing costs. The portion of the cash
reserve relating to payments for capital expenditures, interest, real estate
taxes and insurance for properties collateralizing the 1995 Mortgage Loan is
established monthly, distributed to the Company as such expenditures are made
and is replenished to a level adequate to make the next periodic payment of such
expenditures. The portion of the cash reserve relating to security deposit
refunds is adjusted as tenants turn over. The portion of cash reserves relating
to releasing costs resulted from a deposit of a lease termination fee that will
be used to cover the costs of releasing that space. Also included in restricted
cash is approximately $37.2 million of gross proceeds from the sales of certain
properties. These sales proceeds will be disbursed as the Company exchanges
properties under Section 1031 of the Internal Revenue Code.
SIX MONTHS ENDED JUNE 30, 2002
Net cash provided by operating activities of approximately $56.0 million
for the six months ended June 30, 2002 was comprised primarily of net income
before minority interest of approximately $69.9 million and adjustments for
non-cash items of approximately $6.2 million, offset by the net change in
operating assets and liabilities of approximately $20.1 million. The adjustments
for the non-cash items of approximately $6.2 million are primarily comprised of
depreciation and amortization of approximately $41.4 million and an
extraordinary loss of approximately $.9 million from the early retirement of
debt, offset by the gain on sale of real estate of approximately $35.4 million
and the effect of the straight-lining of rental income of approximately $.7
million.
Net cash used in investing activities of approximately $27.9 million for
the six months ended June 30, 2002 was comprised primarily of the acquisition of
real estate, development of real estate, capital expenditures related to the
expansion and improvement of existing real estate, an increase in restricted
cash from sales proceeds deposited with an intermediary for Section 1031
exchange purposes and contributions to and investments in the December 2001
Joint Venture, offset by the net proceeds from the sale of real estate,
distributions from the Company's industrial real estate joint ventures and the
repayment of mortgage loans receivable.
Net cash used in financing activities of approximately $25.4 million for
the six months ended June 30, 2002 was comprised primarily of the redemption of
the Company's Series B Preferred Stock (defined below), the partial pay off of
the 2027 Notes (defined below), repayments on mortgage loans payable, the
repurchase of restricted stock from employees of the Company to pay for
withholding taxes on the vesting of restricted stock, the purchase of U.S.
Government securities used as substitute collateral to execute a legal
defeasance of a portion of the 1995 Mortgage Loan, common and preferred stock
dividends and unit distributions and net repayments under the Company's $300
million unsecured line of credit (the "2000 Unsecured Acquisition Facility"),
offset by the net proceeds from the issuance of senior unsecured debt and the
net proceeds from the exercise of employee stock options.
20
SIX MONTHS ENDED JUNE 30, 2001
Net cash provided by operating activities of approximately $74.9 million
for the six months ended June 30, 2001 was comprised primarily of net income
before minority interest of approximately $72.3 million and adjustments for
non-cash items of approximately $17.5 million, offset by the net change in
operating assets and liabilities of approximately $14.9 million. The adjustments
for the non-cash items of approximately $17.5 million are primarily comprised of
depreciation and amortization of approximately $38.1 million and an
extraordinary loss of approximately $10.3 million from the early retirement of
debt, offset by the gain on sale of real estate of approximately $29.7 million
and the effect of the straight-lining of rental income of approximately $1.2
million.
Net cash used in investing activities of approximately $15.2 million for
the six months ended June 30, 2001 was comprised primarily of the acquisition of
real estate, development of real estate, capital expenditures related to the
expansion and improvement of existing real estate and an increase in restricted
cash from sales proceeds deposited with an intermediary for Section 1031
exchange purposes, offset by the net proceeds from the sale of real estate,
distributions from the Company's industrial real estate joint ventures and the
repayment of mortgage loans receivable.
Net cash used in financing activities of approximately $58.7 million for
the six months ended June 30, 2001 was comprised primarily of repayment of
senior unsecured debt, repayments on mortgage loans payable, the repurchase of
restricted stock from employees of the Company to pay for withholding taxes on
the vesting of restricted stock, the purchase of U.S. Government securities used
as substitute collateral to execute a legal defeasance of a portion of the 1995
Mortgage Loan, common and preferred stock dividends and unit distributions,
prepayment fees incurred in the repayment of senior unsecured debt and
prepayment fees incurred in the early retirement of two mortgage loans,
redemption of the Company's Series A Preferred Stock and the net repayments
under the 2000 Unsecured Acquisition Facility, offset by the net proceeds from
the issuance of senior unsecured debt and net proceeds from the exercise of
employee stock options.
INVESTMENT IN REAL ESTATE AND DEVELOPMENT OF REAL ESTATE
During the six months ended June 30, 2002, the Company acquired 35
industrial properties comprising, in the aggregate, approximately 3.4 million
square feet of GLA and one land parcel for an aggregate purchase price of
approximately $131.3 million, excluding costs incurred in conjunction with the
acquisition of the properties. The Company also completed the development of
five industrial properties comprising approximately .9 million square feet of
GLA at a cost of approximately $37.9 million.
The Company has committed to the construction of 34 development projects
totaling approximately 4.4 million square feet of GLA for an estimated
investment of approximately $214.9 million. Of this amount, approximately $48.4
million remains to be funded. These developments are expected to be funded with
proceeds from the sale of select properties, cash flows from operations and
borrowings under the Company's 2000 Unsecured Acquisition Facility. The Company
expects to place in service all of the development projects during the next
twelve months. There can be no assurance that the Company will place these
projects in service during the next twelve months or that the actual completion
cost will not exceed the estimated completion cost stated above.
SALE OF REAL ESTATE, REAL ESTATE HELD FOR SALE AND DISCONTINUED OPERATIONS
During the six months ended June 30, 2002, the Company sold 41 industrial
properties comprising approximately 4.4 million square feet of GLA that were not
classified as held for sale at December 31, 2001, nine properties comprising
approximately .4 million square feet of GLA that were classified as held for
sale at December 31, 2001, several land parcels and assigned to a third party
the right to purchase a certain property. Gross proceeds from these sales were
approximately $196.5 million. In accordance with FAS 144, the results of
operations and gain on sale of real estate for the 41 sold properties that were
not identified as held for sale at December 31, 2001 and the gain associated
with the assignment of the right to a third party to purchase a certain property
are included in discontinued operations.
21
At June 30, 2002, the Company had 12 industrial properties comprising
approximately 1.3 million square feet of GLA held for sale. Five of the 12
properties comprising approximately .8 million square feet of GLA that were held
for sale as of June 30, 2002 were identified as held for sale as of December 31,
2001. Income from operations for these five industrial properties held for sale
for the six months ended June 30, 2002 and 2001 is approximately $1.1 million
and $.8 million, respectively. Income from operations for these five industrial
properties held for sale for the three months ended June 30, 2002 and 2001 is
approximately $.5 million and $.4 million, respectively. Net carrying value of
the 12 industrial properties held for sale at June 30, 2002 is approximately
$36.7 million. In accordance with FAS 144, the results of operations of the
property identified as held for sale during the six months ended June 30, 2002
are included in discontinued operations. There can be no assurance that such
properties held for sale will be sold.
INVESTMENTS IN JOINT VENTURES
During the six months ended June 30, 2002, the Company, through
wholly-owned limited liability companies in which the Operating Partnership is
the sole member, recognized approximately $1.0 million in asset management and
property management fees from the September 1998 Joint Venture, the September
1999 Joint Venture and the December 2001 Joint Venture. The Company, through a
wholly-owned limited liability company in which the Operating Partnership is the
sole member, invested approximately $3.1 million in the December 2001 Joint
Venture. The Company, through wholly-owned limited liability companies in which
the Operating Partnership is the sole member, received distributions of
approximately $.8 million from the September 1998 Joint Venture, the September
1999 Joint Venture, and the December 2001 Joint Venture. As of June 30, 2002,
the September 1998 Joint Venture owned 90 industrial properties comprising
approximately 4.3 million square feet of GLA, the September 1999 Joint Venture
owned 31 industrial properties comprising approximately .8 million square feet
of GLA and the December 2001 Joint Venture had economic interests in 14
industrial properties comprising approximately 2.5 million square feet of GLA.
The properties purchased by the December 2001 Joint Venture were purchased from
the Company. The Company deferred 15% of the gain resulting from these sales,
which is equal to the Company's economic interest in the December 2001 Joint
Venture.
MORTGAGE LOANS PAYABLE
In January 2002, the Company purchased approximately $.8 million of U.S.
Government securities as substitute collateral to execute a legal defeasance of
approximately $.8 million of the 1995 Mortgage Loan. In June 2002, the Company
purchased approximately $1.9 million of U.S. Government securities as substitute
collateral to execute a legal defeasance of approximately $1.9 million of the
1995 Mortgage Loan. The terms of the legal defeasance require the Mortgage
Partnership to use the gross proceeds from the maturities of the U.S. Government
securities to pay down and subsequently retire the defeased portion of the 1995
Mortgage Loan in January 2003. The Company is carrying the defeased portion of
the 1995 Mortgage Loan on its balance sheet until it pays down and retires the
defeased portion of the 1995 Mortgage Loan in January 2003. Upon the executions
of the legal defeasances, two of the 21 properties collateralizing the 1995
Mortgage Loan were released and subsequently sold.
On April 1, 2002, the Company, through the Operating Partnership, assumed a
mortgage loan in the principal amount of approximately $5.8 million (the
"Acquisition Mortgage Loan VIII"). The Acquisition Mortgage Loan VIII is
collateralized by one property in Rancho Dominguez, California, bears interest
at a fixed rate of 8.26% and provides for monthly principal and interest
payments based on a 22-year amortization schedule. The Acquisition Mortgage Loan
VIII matures on December 1, 2019. The Acquisition Mortgage Loan VIII may be
prepaid only after November 2004 in exchange for the greater of a 1% prepayment
fee or yield maintenance premium.
22
On April 1, 2002, the Company, through the Operating Partnership, assumed a
mortgage loan in the principal amount of approximately $6.0 million (the
"Acquisition Mortgage Loan IX"). The Acquisition Mortgage Loan IX is
collateralized by one property in Rancho Dominguez, California, bears interest
at a fixed rate of 8.26% and provides for monthly principal and interest
payments based on a 22-year amortization schedule. The Acquisition Mortgage Loan
IX matures on December 1, 2019. The Acquisition Mortgage Loan IX may be prepaid
only after November 2004 in exchange for the greater of a 1% prepayment fee or
yield maintenance premium.
On January 31, 1997, the Company, through the Operating Partnership,
assumed a loan in the amount of approximately $.7 million (the "LB Loan II").
The LB Loan II was interest free until February 1998, after which time the LB
Loan II bore interest at 8.00%, and provided for interest only payments prior to
maturity. On June 14, 2002, the Company, through the Operating Partnership, paid
off and retired the LB Loan II.
SENIOR UNSECURED DEBT
On April 15, 2002, the Company, through the Operating Partnership, issued
$200 million of senior unsecured debt which matures on April 15, 2012 and bears
a coupon interest rate of 6.875% (the "2012 Notes"). The issue price of the 2012
Notes was 99.310%. Interest is paid semi-annually in arrears on April 15 and
October 15. The Company also entered into interest rate protection agreements
which were used to fix the interest rate on the 2012 Notes prior to issuance.
The Company settled the interest rate protection agreements for approximately
$1.8 million of proceeds, which is included in other comprehensive income. The
debt issue discount and the settlement amount of the interest rate protection
agreements are being amortized over the life of the 2012 Notes as an adjustment
to interest expense. The 2012 Notes contain certain covenants, including
limitations on incurrence of debt and debt service coverage.
On April 15, 2002, the Company, through the Operating Partnership, issued
$50 million of senior unsecured debt which matures on April 15, 2032 and bears a
coupon interest rate of 7.75% (the "2032 Notes"). The issue price of the 2032
Notes was 98.660%. Interest is paid semi-annually in arrears on April 15 and
October 15. The debt issue discount is being amortized over the life of the 2032
Notes as an adjustment to interest expense. The 2032 Notes contain certain
covenants, including limitations on incurrence of debt and debt service
coverage.
On May 13, 1997, the Company, through the Operating Partnership, issued
$100 million of senior unsecured debt which matures on May 15, 2027 and bears a
coupon interest rate of 7.15% (the "2027 Notes"). The issue price of the 2027
Notes was 99.854%. The 2027 Notes were redeemable, at the option of the holders
thereof, on May 15, 2002. The Company received redemption notices from holders
representing approximately $84.9 million of the 2027 Notes outstanding. On May
15, 2002, the Company paid off and retired approximately $84.9 million of the
2027 Notes. Due to the partial payoff of the 2027 Notes, the Company has
recorded an extraordinary loss of approximately $.9 million comprised of the
amount paid above the carrying amount of the 2027 Notes, the write-off of
unamortized deferred financing fees and legal costs.
PREFERRED STOCK
On May 14, 1997, the Company issued 4,000,000 Depositary Shares, each
representing 1/100th of a share of the Company's 8 3/4%, $.01 par value, Series
B Cumulative Preferred Stock (the "Series B Preferred Stock"), at an initial
offering price of $25.00 per Depositary Share. On or after May 14, 2002, the
Series B Preferred Stock became redeemable for cash at the option of the
Company, in whole or in part, at a redemption price equivalent to $25.00 per
Depositary Share, or $100 million in the aggregate, plus dividends accrued and
unpaid to the redemption date. On April 12, 2002, the Company called for the
redemption of all of its outstanding Series B Preferred Stock at the price of
$25.00 per Depositary Share, plus accrued and unpaid dividends. The Company
redeemed the Series B Preferred Stock on May 14,
23
2002 and paid a prorated second quarter dividend of $.26736 per Depositary
Share, totaling approximately $1.1 million.
MARKET RISK
The following discussion about the Company's risk-management activities
includes "forward-looking statements" that involve risk and uncertainties.
Actual results could differ materially from those projected in the
forward-looking statements.
This analysis presents the hypothetical gain or loss in earnings, cash
flows or fair value of the financial instruments and derivative instruments
which are held by the Company at June 30, 2002 that are sensitive to changes in
the interest rates. While this analysis may have some use as a benchmark, it
should not be viewed as a forecast.
In the normal course of business, the Company also faces risks that are
either non-financial or non-quantifiable. Such risks principally include credit
risk and legal risk and are not represented in the following analysis.
At June 30, 2002, $1,384.2 million (approximately 94.5% of total debt at
June 30, 2002) of the Company's debt was fixed rate debt (included in the fixed
rate debt is $75.0 million of borrowings under the Company's 2000 Unsecured
Acquisition Facility which the Company fixed the interest rate via interest rate
swap agreements) and $81.1 million (approximately 5.5% of total debt at June 30,
2002) was variable rate debt. The Company also has outstanding a written put
option (the "Written Option"), which was issued in conjunction with the initial
offering of one tranche of senior unsecured debt. Currently, the Company does
not enter into financial instruments for trading or other speculative purposes.
For fixed rate debt, changes in interest rates generally affect the fair
value of the debt, but not earnings or cash flows of the Company. Conversely,
for variable rate debt, changes in the interest rate generally do not impact the
fair value of the debt, but would affect the Company's future earnings and cash
flows. The interest rate risk and changes in fair market value of fixed rate
debt generally do not have a significant impact on the Company until the Company
is required to refinance such debt. See Note 4 to the consolidated financial
statements for a discussion of the maturity dates of the Company's various fixed
rate debt.
Based upon the amount of variable rate debt outstanding at June 30, 2002, a
10% increase or decrease in the interest rate on the Company's variable rate
debt would decrease or increase, respectively, future net income and cash flows
by approximately $.2 million per year. A 10% increase in interest rates would
decrease the fair value of the fixed rate debt at June 30, 2002 by approximately
$62.2 million to $1,442.2 million. A 10% decrease in interest rates would
increase the fair value of the fixed rate debt at June 30, 2002 by approximately
$68.3 million to $1,572.7 million. A 10% increase in interest rates would
decrease the fair value of the Written Option at June 30, 2002 by approximately
$2.3 million to $6.5 million. A 10% decrease in interest rates would increase
the fair value of the Written Option at June 30, 2002 by approximately $2.8
million to $11.6 million.
ISSUANCE OF RESTRICTED STOCK AND EMPLOYEE STOCK OPTIONS
During the six months ended June 30, 2002, the Company awarded 90,260
shares of restricted common stock to certain employees and 1,841 shares of
restricted common stock to certain Directors. These shares of restricted common
stock had a fair value of approximately $3.2 million on the date of grant. The
restricted common stock vests over periods from one to ten years. Compensation
expense will be charged to earnings over the respective vesting periods.
During the six months ended June 30, 2002, the Company issued 945,600
non-qualified employee stock options to certain officers, Directors and
employees of the Company. These non-qualified employee
24
stock options vest over periods from one to three years, have a strike price of
$30.53 - $33.15 per share and expire ten years from the date of grant.
COMMON STOCK
During the six months ended June 30, 2002, certain employees of the Company
exercised 555,068 non-qualified employee stock options. Net proceeds to the
Company were approximately $15.7 million.
DIVIDENDS/DISTRIBUTIONS
On April 1, 2002, the Company paid first quarter preferred stock dividends
of $54.688 per share (equivalent to $.54688 per Depositary Share) on its Series
B Preferred Stock, $53.906 per share (equivalent to $.53906 per Depositary
Share) on its Series C Preferred Stock, $49.687 per share (equivalent to $.49687
per Depositary Share) on its Series D Preferred Stock and $49.375 per share
(equivalent to $.49375 per Depositary Share) on its Series E Preferred Stock.
The preferred stock dividends paid on April 1, 2002 totaled approximately $7.2
million. On May 14, 2002, the Company paid a prorated second quarter dividend
of $26.736 per share, totaling approximately $1.1 million on its Series B
Preferred Stock.
On January 22, 2002, the Company and the Operating Partnership paid a
fourth quarter 2001 distribution of $.6800 per common share/Unit, totaling
approximately $31.2 million. On April 22, 2002, the Company and the Operating
Partnership paid a first quarter 2002 dividend/distribution of $.6800 per common
share/Unit, totaling approximately $31.5 million.
SUBSEQUENT EVENTS
From July 1, 2002 to August 9, 2002, the Company acquired three industrial
properties for an aggregate purchase price of approximately $4.6 million,
excluding costs incurred in conjunction with the acquisition of these industrial
properties. The Company also sold four industrial properties and several land
parcels for approximately $21.1 million of gross proceeds.
On July 1, 2002, the Company paid second quarter preferred stock dividends
of $53.906 per share (equivalent to $.53906 per Depositary Share) on its Series
C Preferred Stock, $49.687 per share (equivalent to $.49687 per Depositary
Share) on its Series D Preferred Stock and $49.375 per share (equivalent to
$.49375 per Depositary Share) on its Series E Preferred Stock. The preferred
stock dividends paid on July 1, 2002 totaled approximately $5.0 million.
On August 31, 1998, the Company, through the Operating Partnership, assumed
a mortgage loan in the principal amount of $1.0 million (the "Acquisition
Mortgage Loan VI"). The Acquisition Mortgage Loan VI was collateralized by one
property in Portland, Oregon, bore interest at a fixed rate of 8.875% and
provided for monthly principal and interest payments based on a 20-year
amortization schedule. On July 2, 2002, the Company paid off and retired the
Acquisition Mortgage Loan VI.
On March 20, 1996, the Company, through the Operating Partnership and the
Indianapolis Partnership entered into a $36.8 million mortgage loan (the "CIGNA
Loan") that is collateralized by seven properties in Indianapolis, Indiana and
three properties in Cincinnati, Ohio. The CIGNA Loan bears interest at a fixed
interest rate of 7.50% and provides for monthly principal and interest payments
based on a 25 - year amortization schedule. The CIGNA Loan matures on April 1,
2003. The Company has given notice to the lender of the CIGNA Loan that it
intends to pay off and retire this loan in October 2002.
On July 22, 2002, the Company and the Operating Partnership paid a second
quarter 2002 dividend/distribution of $.6800 per common share/Unit, totaling
approximately $31.6 million.
25
SHORT-TERM AND LONG-TERM LIQUIDITY NEEDS
The Company has considered its short-term (one year or less) liquidity
needs and the adequacy of its estimated cash flow from operations and other
expected liquidity sources to meet these needs. The Company believes that its
principle short-term liquidity needs are to fund normal recurring expenses, debt
service requirements and the minimum distribution required to maintain the
Company's REIT qualification under the Internal Revenue Code. The Company
anticipates that these needs will be met with cash flows provided by operating
activities.
The Company expects to meet long-term (greater than one year) liquidity
requirements such as property acquisitions, developments, scheduled debt
maturities, major renovations, expansions and other nonrecurring capital
improvements through the disposition of select assets, the issuance of long-term
unsecured indebtedness and the issuance of additional equity securities. As of
June 30, 2002 and August 9, 2002, approximately $589.2 million of common stock,
preferred stock and depositary shares and approximately $250.0 million of debt
securities were registered and unissued under the Securities Act of 1933, as
amended. The Company also may finance the development or acquisition of
additional properties through borrowings under the 2000 Unsecured Acquisition
Facility. At June 30, 2002, borrowings under the 2000 Unsecured Acquisition
Facility bore interest at a weighted average interest rate of 3.17%. The 2000
Unsecured Acquisition Facility bears interest at a floating rate of LIBOR plus
..80%, or the Prime Rate, at the Company's election. As of August 9, 2002, the
Company had approximately $112.2 million available for additional borrowings
under the 2000 Unsecured Acquisition Facility.
OTHER
On April 30, 2002, the FASB issued Financial Accounting Standards No. 145,
"Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement
No. 13, and Technical Corrections" ("FAS 145"). FAS 145 rescinds both Statement
of Financial Accounting Standards No. 4, "Reporting Gains and Losses from
Extinguishment of Debt" ("FAS 4"), and the amendment to FAS 4, Statement of
Financial Accounting Standards No. 64, "Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements". FAS 145 eliminates the requirement that gains and
losses from the extinguishment of debt be aggregated and, if material,
classified as an extraordinary item, net of the related income tax effect,
unless the criteria in Accounting Principles Board Opinion No. 30, "Reporting
the Results of Operations- Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions" are met. FAS 145 is effective for transactions occurring
subsequent to May 15, 2002. The Company believes that FAS 145 will not have an
impact on its consolidated financial position, liquidity and results of
operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Response to this item is included in Item 2. "Management's Discussion and
Analysis of Financial Condition and Results of Operations" above.
26
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 15, 2002, First Industrial Realty Trust, Inc. ("the Company") held its
Annual Meeting of Stockholders. At the meeting, three Class II directors of
the Company were elected to serve until the 2005 Annual Meeting of
Stockholders and until their respective successors are duly elected and
qualified. The votes cast for each director were as follows:
For election of Michael W. Brennan
Votes for: 32,218,245
Votes withheld: 2,180,287
For election of Michael G. Damone
Votes for: 33,874,542
Votes withheld: 523,990
For election of Kevin W. Lynch
Votes for: 33,304,060
Votes withheld: 1,094,472
In addition, the appointment of PricewaterhouseCoopers LLP, as independent
auditors of the Company for the fiscal year ending December 31, 2002, was
ratified at the meeting with 32,840,901 shares voting in favor, 1,496,507
shares voting against and 61,124 shares abstaining.
John Rau, Robert J. Slater and W. Ed Tyler continue to serve as Class III
directors until their present terms expire in 2003 and their successors are
duly elected. Jay H. Shidler, John L. Lesher and J. Steven Wilson continue to
serve as Class I directors until their present terms expire in 2004 and their
successors are duly elected.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORT ON FORM 8-K
a) Exhibits:
Exhibit Number Description
10.1* Nineteenth Amendment, dated as of June 26, 2002, to
Sixth Amended and Restated Limited Partnership
Agreement of First Industrial, L.P., dated March
18, 1998
b) Report on Form 8-K:
None
* Filed herewith
27
SIGNATURE
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, thereunto duly authorized.
FIRST INDUSTRIAL REALTY TRUST, INC.
Date: August 9, 2002 By: /s/ Scott A. Musil
-----------------------------
Scott A. Musil
Senior Vice President- Controller
(Chief Accounting Officer)
28
EXHIBIT INDEX
Exhibit Number Description
10.1* Nineteenth Amendment, dated as of June 26, 2002, to
Sixth Amended and Restated Limited Partnership
Agreement of First Industrial, L.P., dated March
18, 1998
* Filed herewith
29
EXHIBIT 10.1
NINETEENTH AMENDMENT TO
SIXTH AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT OF
FIRST INDUSTRIAL, L.P.
As of June 26, 2002, the undersigned, being the sole general partner of
First Industrial, L.P. (the "PARTNERSHIP"), a limited partnership formed under
the Delaware Revised Uniform Limited Partnership Act and pursuant to the terms
of that certain Sixth Amended and Restated Limited Partnership Agreement, dated
March 18, 1998 (as amended by the first amendment thereto dated April 1, 1998,
the second amendment thereto dated April 3, 1998, the third amendment thereto
dated April 16, 1998, the fourth amendment thereto dated May 20, 1998, the fifth
amendment thereto dated July 16, 1998, the sixth amendment thereto dated August
31, 1998, the seventh amendment thereto dated October 21, 1998, the eighth
amendment thereto dated October 30, 1998, the ninth amendment thereto dated
November 5, 1998, the tenth amendment thereto dated January 28, 2000, the
eleventh amendment thereto dated January 28, 2000, the twelfth amendment thereto
dated June 27, 2000, the thirteenth amendment thereto dated September 1, 2000,
the fourteenth amendment thereto dated October 13, 2000, the fifteenth amendment
thereto dated October 13, 2000, the sixteenth amendment thereto dated October
27, 2000, and the seventeenth amendment thereto dated January 25, 2001 and the
eighteenth amendment thereto dated February 13, 2001) (as amended, the
"PARTNERSHIP AGREEMENT"), does hereby amend the Partnership Agreement as
follows:
Capitalized terms used but not defined in this Nineteenth Amendment
shall have the same meanings that are ascribed to them in the Partnership
Agreement.
1. ADDITIONAL LIMITED PARTNERS. The Person identified on SCHEDULE 1
hereto is hereby admitted to the Partnership as a Substituted Limited Partner or
Additional Limited Partner, as the case may be, owning the number of Units and
having made the Capital Contributions set forth on such SCHEDULE 1. Such person
hereby adopts the Partnership Agreement. The undersigned acknowledges that the
Person identified on SCHEDULE 1 hereto, if a Substituted Limited Partner, has
received its Partnership Interests from various Additional Limited Partners, and
the undersigned hereby consents to such transfers.
2. SCHEDULE OF PARTNERS. EXHIBIT 1B to the Partnership Agreement is
hereby deleted in its entirety and replaced by EXHIBIT 1B hereto which
identifies the Partners following consummation of the transactions referred to
in Section 1 hereof.
3. PROTECTED AMOUNTS. In connection with the transactions consummated
pursuant to that certain Contribution Agreement (the "CONTRIBUTION AGREEMENT"),
dated as of June 26, 2002, by and between the Partnership and First & Broadway
Limited Partnership, a Missouri Partnership, certain Protected Amounts are being
established for the Additional Limited Partner, if any, admitted pursuant to
this Nineteenth Amendment, which Protected Amounts are reflected on EXHIBIT 1D
attached hereto and shall be incorporated as part of EXHIBIT 1D of the
Partnership Agreement.
4. RATIFICATION. Except as expressly modified by this Nineteenth
Amendment, all of the provisions of the Partnership Agreement are affirmed and
ratified and remain in full force and effect.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE IMMEDIATELY FOLLOWS]
2
IN WITNESS WHEREOF, the undersigned has executed this Nineteenth
Amendment as of the date first written above.
FIRST INDUSTRIAL REALTY TRUST, INC.,
as sole general partner of the Partnership
By: /s/ James Carpenter
------------------------------------------
Name: James Carpenter
Title: Executive Director - Investments
3
EXHIBIT 1B
SCHEDULE OF PARTNERS
GENERAL PARTNER NUMBER OF UNITS
--------------- ---------------
First Industrial Realty Trust, Inc. 30,892,739
LIMITED PARTNERS NUMBER OF UNITS
---------------- ---------------
Kerry Acker 154
Sanders H. Acker 307
Charles T. Andrews 754
Daniel R. Andrew, TR of the Daniel R.
Andrew Trust UA 12/29/92 137,489
The Arel Company 307
Arnold Y. Aronoff 7,955
Daniel J. Aronoff 2,809
Lynn E. Aronoff 2,690
William J. Atkins 22,381
E. Donald Bafford 3,374
William Baloh 8,731
Edward N. Barad 1,141
Thomas K. Barad & Jill E. Barad Co-Trustees 2,283
of the Thomas K. Barad & Jill E. Barad Trust
Dated 10/18/89
Enid Barden Trustee of the Enid Barden Trust
dated June 28, 1995 56,082
Enid Barden Trust of June 28, 1996 23,088
Emil Billich 77
Don N. Blurton & Patricia H. Blurton 598
Trustees U/A dated 4/11/96 Blurton 1996
Revocable Family Trust
Harriett Bonn, Trustee U/A dated 3/5/97 FBO 24,804
The Harriet Bonn Revocable Living Trust
Michael W. Brennan 3,806
Helen Brown 307
Henry D. Bullock & Terri D. Bullock & 3,870
Shawn Stevenson TR of the Bullock
Childrens Education Trust UA 12/20/94, FBO
Benjamin Dure Bullock
Henry D. Bullock & Terri D. Bullock & 3,870
Shawn Stevenson TR of the Bullock
Childrens Education Trust UA 12/20/94, FBO
Christine Laurel Bullock
4
LIMITED PARTNERS NUMBER OF UNITS
---------------- ---------------
Henry D. Bullock & Terri D. Bullock TR of the Henry D. & 1,836
Terri D. Bullock Trust UA 8/28/92
Edward Burger 9,261
Barbara Lee O'Brien Burke 666
Ernestine Burstyn 5,007
Calamer Inc. 1,233
Perry C. Caplan 1,388
Carew Corporation 13,650
The Carthage Partners LLC 34,939
Magdalena G. Castleman 307
Cliffwood Development Company 64,823
Collins Family Trust dated 5/6/69 100,000
Kelly Collins 11,116
Michael Collins 17,369
Charles S. Cook and Shelby H. Cook, tenants in the 634
entirety
Caroline Atkins Coutret 7,327
David Cleborne Crow 5,159
Gretchen Smith Crow 2,602
Michael G. Damone, trustee of the Michael G. Damone 144,296
Trust UA 11/4/69
John E. De B. Blockey Trustee of The John E. De B. 8,653
Blockey Revocable Trust
Robert L. Denton 6,286
Henry E. Dietz Trust U/A 01/16/81 36,476
Steven Dizio and Helen Dizio, joint tenants 12,358
W Allen Doane Trust U/A 05/31/91 4,416
Timothy Donohue 100
Darwin B. Dosch 1,388
Charles F. Downs 1,508
Greg and Christina Downs, joint tenants 474
Gregory Downs 48
Draizin Family Partnership, LP 357,896
Joseph S. Dresner 149,531
Milton H. Dresner Trustee of the Milton Dresner 149,531
Revocable Trust U/A 10/22/76
J. O'Neil Duffy, Jr. 513
Martin Eglow 330
Rand H. Falbaum 17,022
Patricia O'Brien Ferrell 666
Rowena Finke 154
First & Broadway Limited Partnership 18,203
Fourbur Family Co., L.P. 588,273
Fred Trust dated 6/16/77 653
5
LIMITED PARTNERS NUMBER OF UNITS
---------------- ---------------
Aimee Freyer-Valls 10,000
Lee Karen Freyer Lifetime Trust dated 11/1/65 2,384
David Fried 1,326
Ester Fried 3,177
Jack Friedman Trustee of The Jack Friedman Revocable 26,005
Living Trust U/A 3/23/78
Robert L. Friedman 28,500
Nancy Gabel 14
J. Peter Gaffney 727
Gerlach Family Trust dated 6/28/85 874
Martin Goodstein 922
Dennis G. Goodwin and Jeannie L. Goodwin, tenants in the 6,166
entirety
Jeffrey L. Greenberg 330
Stanley Greenberg and Florence Greenberg, joint tenants 307
Thelma C. Gretzinger Trust 450
Stanley Gruber 30,032
Melissa C. Gudim 24,028
Timothy Gudim 5,298
H/Airport GP Inc. 1,433
H L Investors LLC 4,000
H P Family Group LLC 103,734
Vivian Hack Trustee U/A Dated 12/26/97 FBO The Vivian M. 22,522
Hack Living Trust
Clay Hamlin & Lynn Hamlin, joint tenants 15,159
Lee O'Brien Trustee of The Martha J. Harbinson 666
Testamentary Trust FBO Christopher C. O'Brien
Turner Harshaw 1,132
Frank Harvey 2,501
Cathleen Hession 3,137
Edwin Hession and Cathleen Hession, joint tenants 7,979
Highland Associates Limited Partnership 69,039
Andrew Holder 97
Ruth Holder 2,612
Robert W. Holman Jr. 150,213
Holman/Shidler Investment Corporation 22,079
Howard Trust dated 4/30/79, Howard F. Sklar trustee 653
Steven B. Hoyt 175,000
Jerry Hymowitz 307
Karen L. Hymowitz 154
6
LIMITED PARTNERS NUMBER OF UNITS
---------------- ---------------
Seymour Israel 15,016
Frederick K. Ito & June Y Ito Trustees U-A Dated 9/9/98 1,940
FBO The June Y I Ito Trust
Frederick K. Ito Trustee U-A Dated 9/9/98 FBO The 1,940
Frederick K. Ito Trust
J P Trusts LLC 35,957
Jacob Family Trust 20,260
Michael W. Jenkins 460
Jernie Holdings Corp. 180,499
L. Chris Johnson 3,196
Johnson Living Trust dated 2/18/83, H. Stanton and Carol 1,078
A. Johnson, trustees
Thomas Johnson Jr. and Sandra L. Johnson, tenants in the 2,142
entirety
Martha A. O'Brien Jones 665
Charles Mark Jordan 57
KEP LLC, a Michigan Limited Liability Company 98,626
Nourhan Kailian 2,183
H L Kaltenbacher P P Kaltenbacher & J K Carr, as 1,440
trustees of Joseph C. Kaltenbacher Credit Shelter Trust
Sarsh Katz 307
Carol F. Kaufman 166
Charles Kendall Jr. Rollover IRA Dated 1/21/93 Custodian 656
Paine Webber
Peter Kepic 9,261
Jack Kindler 1,440
Kirshner Family Trust #1 Dated 4/8/76 Bertron & Barbara 29,558
Kirshner Trustees
Kirshner Trust #4 FBO Todd Kirshner Dated 12/30/76 20,258
Bertron Kirshner Trustee
Arthur Kligman 307
James Kozen Trustee U-A DTD 02/24/86 F-B-O James I. 33,031
Kozen Family Trust
Joan R. Kreiger Trustee of The Joan R. Kreiger Revocable 15,184
Trust
William L. Kreiger, Jr. 3,374
Babette Kulka 330
Jack H. Kulka 330
L P Family Group LLC 102,249
Lambert Investment Corporation 13,606
Paul T. Lambert 39,816
Chester A. Latcham & Co. 1,793
Constance Lazarus 417,961
7
LIMITED PARTNERS NUMBER OF UNITS
---------------- ---------------
Jerome Lazarus 18,653
Princeton South at Lawrenceville LLC 4,692
Susan Lebow 740
Arron Leifer 4,801
Duane Lund 617
Barbara Lusen 307
Richard McClintock 623
McElroy Management Inc. 5,478
William J. Mallen Trust dated 4/29/94 William J. Mallen 8,016
Trustee
Stephen Mann 17
Manor Properties 143,408
R. Craig Martin 754
J. Stanley Mattison 79
Henry E. Mawicke 636
Eileen Millar 3,072
Linda Miller 2,000
The Milton Dresner Revocable Trust UA October 22, 1976 149,531
Lila Atkins Mulkey 7,327
Peter Murphy 56,184
Anthony Muscatello 81,654
James Muslow, Jr. 2,411
Joseph Musti 1,508
Dean A. Nachigall 10,076
Kris Nielsen 178
New Land Associates Limited Partnership 1,664
North Star Associates Limited Partnership 19,333
Catherine A. O'Brien 832
Catherine O'Brien Sturgis 666
Martha E. O'Brien 832
Patricia A. O'Brien 9,387
George F. Obrecht 5,289
Paul F. Obrecht 4,455
Richard F. Obrecht 5,289
Thomas F. Obrecht 5,289
Peter O'Connor 56,844
Steve Ohren 33,366
P & D Partners LP 1,440
Partridge Road Associates Limited Partnership 2,751
Sybil T. Patten 1,816
Peegee LP 4,817
Lawrence Peters 960
Betty S. Phillips 3,912
8
LIMITED PARTNERS NUMBER OF UNITS
---------------- ---------------
Jeffrey Pion 2,879
Pipkin Family Trust dated 10/6/89 3,140
Peter M. Polow 557
Francis Pomar 8,338
Keith J. Pomeroy Revocable Trust Agreement, dated 104,954
December 13, 1976, as amended and restated on June 28,
1995
Princeton South at Lawrenceville One 4,426
Abraham Punia Individually and to the Admission of 307
Abraham Punia
RBZ LLC, a Michigan limited liability company 155
R E A Associates 8,908
Marilyn Rangel IRA dated 2/5/86 969
Richard Rapp 23
Jack F. Ream 1,071
Seymour D. Reich 154
James C. Reynolds 40,284
Andre G. Richard 1,508
RJB Ford City Limited Partnership, an Illinois limited 158,438
partnership
RJB II Limited Partnership, an Illinois limited 40,788
partnership
Edward C. Roberts and Rebecca S. Roberts, tenants in the 8,308
entirety
RP Investments LLC 22,556
W.F.O. Rosenmiller 634
Leslie A. Rubin LTD 4,048
SPM Industrial LLC 5,262
SRS Partnership 2,142
James Sage 2,156
James R. Sage 3,364
Kathleen Sage 3,350
Wilton Wade Sample 5,449
Barton Satsky Personal Representative of the Estate of 2,708
Henry J. Satsky
Debbie B. Schneeman 740
Edward R. Schulak 8,073
Jane Schulak 2,690
Norma A. Schulze 307
Sealy & Company, Inc. 37,119
Sealy Florida, Inc. 675
Mark P. Sealy 8,451
Sealy Professional Drive LLC 2,906
Sealy Real Estate Services, Inc. 148,478
9
LIMITED PARTNERS NUMBER OF UNITS
---------------- ---------------
Sealy Unitholder LLC 31,552
Scott P. Sealy 40,902
Shadeland Associates Limited Partnership 42,976
Sam Shamie, as trustee of Sam Shamie Trust Agreement 422,340
dated March 16, 1978, as restated on November 16, 1993
Frances Shankman Insurance Trust 16,540
Garrett E. Sheehan 513
Jay H. Shidler 68,020
Jay H. Shidler and Wallette A. Shidler, tenants in the 1,223
entirety
Shidler Equities LP 254,541
D.W. Sivers Co. 72,265
Sivers Investment Partnership 283,500
Sivers Family Real Property Limited Liability Company 12,062
Wendell C. Sivers Marital Trust u/w/d February 20, 1981 14,020
Dennis W. Sivers 27,636
Estate of Albert Sklar 3,912
Michael B. Slade 2,829
Kevin Smith 13,571
Steve Smith 386
Arnold R. Sollar, executor of the estate of Dorothy 307
Sollar
Spencer and Company 154
S. Larry Stein, trustee under Revocable Trust Agreement 63,630
dated 9/22/99 S. Larry Stein Grantor
Robert Stein, trustee U/A Dated 5/21/96 FBO Robert Stein 63,630
Sterling Alsip Trust dated August 1, 1989, Donald W. 794
Schaumbuger trustee
Sterling Family Trust dated 3/27/80 3,559
Jonathan Stott 80,026
Victor Strauss 77
Mitchell Sussman 410
TUT Investments I LLC 5,274
Donald C. Thompson Trustee U/A Dated 12/31/98 FBO Donald 39,243
C. Thompson Revocable Family Trust
Michael T. Tomasz Trustee of the Michael T. Tomasz Trust 36,033
U/A Dated 02-05-90
Barry L. Tracey 2,142
William S. Tyrrell 2,906
10
LIMITED PARTNERS NUMBER OF UNITS
---------------- ---------------
Burton S. Ury 9,072
WSW 1998 Exchange Fund LP 32,000
Steve Walbridge 338
James J. Warfield 330
Phyllis M. Warsaw Living Trust, Phyllis M. Warsaw trustee 16,540
William B. Wiener, Jr. 41,119
Patricia Wiener-Shifke 12,944
Wilson Management Company LLC 35,787
Elmer H. Wingate, Jr. 1,688
Ralph G. Woodley, as Trustee under Revocable Trust 24,319
Agreement dated September 27, 1989
Worlds Fair Partners Limited Partnership 1,664
Sam L. Yaker, trustee of The Sam L. Yaker Revocable 37,870
Trust Agreement dated February 14, 1984
Johannson Yap 1,680
Richard H. Zimmerman, trustee of The Richard H. 43,988
Zimmerman Living Trust dated October 15, 1990, as amended
Gerald & Sharon Zuckerman joint tenants 615
11
EXHIBIT 1D
PROTECTED AMOUNTS
None.
SCHEDULE 1
Additional
Limited Partner Number of Units Capital Contribution
--------------- --------------- --------------------
18,203 $632,539.53
First & Broadway Limited Partnership
13
