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Over 30 years as a public company focused on top U.S. industrial markets
Press Release
First Industrial Reports Second Quarter Results
CHICAGO, July 24 /PRNewswire-FirstCall/ -- First Industrial Realty Trust, Inc. (NYSE: FR), the nation's largest provider of diversified industrial real estate, announced results for the quarter ended June 30, 2002. Fully-diluted earnings per share, including income from discontinued operations and before extraordinary items (EPS), was $0.64 compared to $0.75 per share for the same quarter last year, representing a decrease of 14.7 percent. Earnings in the quarter were $25.3 million, before extraordinary items, compared to $29.7 million for the same quarter last year, representing a decrease of 14.7 percent year over year. For the six months ended June 30, 2002, EPS decreased 13.3 percent to $1.24 from $1.43.
"We remain committed to optimizing our portfolio and our stable occupancy demonstrates our focus on portfolio fundamentals and strengthening our business during this difficult operating environment," said Mike Brennan, President and Chief Executive Officer. "The prolonged weakness in corporate profits continues to impact capital spending and, in turn, the demand for industrial real estate. Despite the difficult economic environment, we are seeing significant opportunities to work with Corporate America and we have the operating platform and corporate real estate program to deliver the solutions they require."
The highlights of the Company's results are listed below:
Portfolio Performance
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Leased 5.9 million square feet during the quarter, including development properties sold.
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Actual cash-on-cash rental increases were 2.0%.
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Same property net operating income (NOI) declined 2.0%.
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Occupancy increased to 90.9% and tenant retention was 66.6%.
Profitable Capital Recycling and Strategic Reinvestment
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For the quarter, sold 27 properties and 1 parcel of land for $98.6 million at an average 8.8% capitalization (cap) rate and an average 19.2% unleveraged internal rate of return (IRR). Year-to-date, sold 49 properties and 3 parcels of land for $195.5 million at an average 9.0% cap rate and an average 17.7% unleveraged IRR.
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For the quarter, acquired $87.6 million of property, comprising 2.5 million square feet, and placed in service $13.7 million of new developments, comprising 156,687 square feet, with aggregate first- year stabilized yields of approximately 11.3%. Year-to-date, acquired $129.3 million of property, comprising 3.4 million square feet, and placed in service $37.9 million of new developments, comprising 939,479 square feet, with aggregate first-year stabilized yields of approximately 11.1%.
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Development under construction at the end of the quarter stood at $214.9 million with an expected aggregate first-year stabilized yield of 10.4%.
Successfully Expanded the Company's Corporate Real Estate Program
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Integrated Industrial Solutions (IIS(TM)) profits increased by 12.0% in the second quarter.
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For the quarter, generated IIS(TM) income of $10.2 million, comprised of $1.7 million from single tenant/user sales, $8.3 million from merchant development/redevelopment and $0.2 million from land sales. Year-to-date, generated IIS(TM) income of $20.5 million, comprised of $3.4 million from single tenant/user sales, $16.6 million from merchant development/redevelopment and $0.5 million from land sales.
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For the quarter, IIS(TM) sales constituted $69.8 million and generated a 21.0% unleveraged IRR.
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Completed a 1.8 million square-foot sale/leaseback transaction with General Motors involving four facilities in Chicago, Los Angeles, Philadelphia and Reno.
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Completed a 1.1 million square-foot East Coast supply-chain reconfiguration transaction with Maytag involving three facilities in Pennsylvania and Georgia.
Strong Financial Position
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Fixed-charge coverage is 2.4 times and interest coverage is 3.1 times.
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Executed on the Company's self-funding strategy, completely funding new investments with internally generated funds.
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Redeemed the Company's 8 3/4% Series B Cumulative Preferred Stock on May 14, 2002, and a portion of the Company's 7.15% notes on May 15, 2002, using proceeds from the April 2002 issuance of $200 million of 6 7/8% notes with a 10-year maturity and $50 million of 7 3/4% notes with a 30-year maturity.
Supplemental Reporting Measure
FFO per share decreased 14.0 percent to $0.86 per share/unit on a fully-diluted basis, compared to $1.00 per share/unit on a fully-diluted basis for the same quarter last year. FFO totaled $40.2 million for the quarter compared to $47.0 million for the second quarter 2001. For the six months ended June 30, 2002, FFO per share decreased 10.1 percent to $1.78 from $1.98. The Company calculates FFO to be equal to net income, excluding gains/losses from debt restructuring and sales of depreciated property (other than net economic gains/losses from sales of properties related to the Company's Integrated Industrial Solutions(TM) activities), plus depreciation and amortization (other than amortization of deferred financing costs and interest rate protection agreements), and after adjustments for unconsolidated partnerships and joint ventures.
Outlook for 2002
Brennan continued, "We continue to see significant opportunity in our corporate real estate program, IIS(TM), as Corporate America develops a greater emphasis on real estate sales for cash generation. However, because a return to more traditional levels of capital spending by Corporate America is unlikely in the near term, we believe real estate fundamentals will remain subdued this year. As a result, we are lowering our 2002 EPS to a range of $2.10 to $2.30. This estimate assumes flat same property NOI in 2002. Sales volume in 2002 is assumed to be approximately $500 million to $600 million with a 9% to 10% average cap rate, with book gains from property sales of between $50 million and $60 million. Investment volume assumptions for 2002, which include both new developments and acquisitions, are approximately $450 million to $550 million with a 10% to 11% average cap rate. We assume no significant changes in relative G&A or capital expenditures, nor do we assume any significant changes in our balance sheet structure. We expect to deliver FFO per share in the range of $3.70 to $3.80 for 2002, with estimate ranges of: $0.93 to $0.99 for the third quarter and $0.99 to $1.03 for the fourth quarter. Our estimate for IIS(TM) income for 2002 is between $40 million and $45 million. A number of factors could impact our ability to deliver results in line with our assumptions, such as interest rates, the overall economy, the supply and demand of industrial real estate, the timing and yields for divestment and investment, and numerous other variables. There can be no assurance that First Industrial can achieve such results for 2002. However, I strongly believe that First Industrial has the proper strategic and tactical design to deliver such results. We believe our I-N-D-L infrastructure - with its offensive and defensive characteristics - will continue to support our efforts and prove its value."
Company Information
First Industrial Realty Trust, Inc., the nation's largest provider of diversified industrial real estate, serves every aspect of Corporate America's industrial real estate needs, including customized supply chain solutions, through its unique I-N-D-L operating platform, which utilizes a pure Industrial focus and National scope to provide Diverse facility types, while offering Local, full-service management and expertise. Building, buying, selling, leasing and managing industrial property in major markets nationwide, First Industrial develops long-term relationships with corporate real estate directors, tenants and brokers to better serve customers with creative, flexible industrial real estate solutions.
Forward-Looking Information
This press release contains forward-looking information about the Company. A number of factors could cause the Company's actual results to differ materially from those anticipated, including changes in: economic conditions generally and the real estate market specifically, legislative/regulatory changes (including changes to laws governing the taxation of real estate investment trusts), availability of financing, interest rate levels, competition, supply and demand for industrial properties in the Company's current and proposed market areas, potential environmental liabilities, slippage in development or lease-up schedules, tenant credit risks, higher-than-expected costs and changes in general accounting principles, policies and guidelines applicable to real estate investment trusts. For further information on these and other factors that could impact the Company and the statements contained herein, reference should be made to the Company's filings with the Securities and Exchange Commission.
A schedule of selected financial information is attached.
First Industrial will host a quarterly conference call at 10 a.m. Central time, 11 a.m. Eastern time, on Thursday, July 25, 2002. The call-in number is (800) 865-4460 and the passcode is "First Industrial." The conference call will also be available live on First Industrial's web site, http://www.firstindustrial.com , under the "Investor Relations" tab. Replay will also be available on the web site.
The company's first quarter supplemental information can be viewed by the end of this week on First Industrial's website, http://www.firstindustrial.com , under the "Financials" tab. For a hard copy of the company's quarterly supplemental information report or other investor materials, please contact:
Karen Henderson
First Industrial Realty Trust, Inc.
311 South Wacker Drive, Suite 4000
Chicago, IL 60606
Phone: (312) 344-4335 - Facsimile: (312) 922-9851
FIRST INDUSTRIAL REALTY TRUST, INC.
Selected Financial Data
(In thousands, except for per share/unit and property data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
Statement of Operations and
FFO Data:
Total Operating Revenues $92,819 $98,953 $184,404 $200,035
Property Expenses (29,125) (27,544) (56,436) (57,839)
Net Operating Income 63,694 71,409 127,968 142,196
Equity in FFO of Joint
Ventures (a) 418 337 774 664
IIS Services Income 10,168 9,079 20,465 17,601
Write-Off of Technology
Investment - (666) - (666)
General & Administrative
Expense (4,139) (3,631) (8,626) (7,479)
EBITDA 70,141 76,528 140,581 152,316
Interest Expense (22,920) (21,431) (42,704) (42,633)
Dividends on Preferred
Stock (6,113) (7,328) (13,344) (15,539)
Amortization of Deferred
Financing Costs (497) (456) (959) (898)
Depreciation and Other
Amortization (19,153) (17,120) (38,120) (34,474)
Equity in Depreciation and
Other Amortization of
Joint Ventures (a) (64) (87) (198) (228)
Gain on Sale of Property 8,368 4,974 12,225 8,558
Income Allocable to
Minority Interest (4,300) (3,790) (8,477) (8,824)
Extraordinary Loss (b) (888) (10,309) (888) (10,309)
Net Income Available to
Common Stockholders 24,574 20,981 48,116 47,969
Add: Extraordinary Loss
(b), net of Minority
Interest 754 8,712 754 8,712
Net Income Available to
Common Stockholders
Before
Extraordinary
Loss (b) 25,328 29,693 48,870 56,681
Add: Real Estate
Depreciation and Other
Amortization 18,737 16,817 37,296 33,873
Less: Gain on Sale of
Property (8,368) (4,974) (12,225) (8,558)
Add: Equity in
Depreciation and Other
Amortization of Joint
Ventures (a) 64 87 198 228
Add: Income Allocable to
Minority Interest 4,300 3,790 8,477 8,824
Add: Minority Interest
Allocable to
Extraordinary Loss (b) 134 1,597 134 1,597
Funds From Operations
("FFO") $40,195 $47,010 $82,750 $92,645
Net Income Available to
Common Stockholders
Before Extraordinary Loss
(b) 25,328 29,693 48,870 56,681
Less: Gain on Sale of
Property from
Discontinued Operations (17,211) - (32,239) -
Less: Net Operating Income
from Discontinued
Operations (1,860) (3,954) (5,514) (7,875)
Add: Depreciation and
Amortization from
Discontinued Operations 347 699 1,196 1,350
Add: Minority Interest
Allocable to Discontinued
Operations 2,804 499 5,509 1,011
Net Income Available to
Common Stockholders
Before
Discontinued Operations
(c) and Extraordinary
Loss 9,408 26,937 17,822 51,167
Additional Information for
Funds Available for
Distribution ("FAD"):
Straight-Line Rental
Income $3 $963 $684 $1,277
Non-Incremental Capital
Expenditures $8,116 $5,689 $13,643 $12,356
Restricted Stock
Amortization $1,367 $1,323 $2,525 $2,905
Weighted Avg. Number of
Shares/Units Outstanding-
Basic 46,346 46,581 46,148 46,384
Weighted Avg. Number of
Shares/Units Outstanding-
Diluted 46,769 46,870 46,494 46,758
Weighted Avg. Number of Shares
Outstanding- Basic 39,407 39,440 39,194 39,197
Weighted Avg. Number of Shares
Outstanding- Diluted 39,830 39,729 39,540 39,571
Per Share/Unit Data:
FFO :
- Basic $0.87 $1.01 $1.79 $2.00
- Diluted $0.86 $1.00 $1.78 $1.98
Net Income Available to
Common Stockholders
Before Discontinued
Operations
and Extraordinary
Loss Per Weighted
Average Common
Share Outstanding:
- Basic $0.24 $0.68 $0.45 $1.31
- Diluted $0.24 $0.68 $0.45 $1.29
Net Income Available to
Common Stockholders
Before Extraordinary
Loss
Per Weighted
Average Common
Share Outstanding:
- Basic $0.64 $0.75 $1.25 $1.45
- Diluted $0.64 $0.75 $1.24 $1.43
Net Income Available to
Common Stockholders per
Weighted Average
Common Share
Outstanding:
- Basic $0.62 $0.53 $1.23 $1.22
- Diluted $0.62 $0.53 $1.22 $1.21
Dividends/Distributions $0.6800 $0.6575 $1.3600 $1.3150
FFO Payout Ratio 78.4% 65.1% 75.8% 65.8%
FAD Payout Ratio 91.7% 72.2% 86.3% 73.1%
Balance Sheet Data (end of
period):
Real Estate Before
Accumulated
Depreciation $2,773,550 $2,702,018
Total Assets 2,671,437 2,616,919
Debt 1,465,288 1,279,230
Total Liabilities 1,584,447 1,412,109
Stockholders' Equity and
Minority Interest $1,086,990 $1,204,810
Property Data (end of period):
Total Properties 906 947
Total Gross Leasable Area
(in sq ft) 63,276,527 65,780,354
Occupancy 90.9% 93.2%
(a) Represents the Company's share of FFO and depreciation and other
amortization from three real estate joint ventures in which it owns
minority equity interests.
(b) Represents an extraordinary loss from the early retirement of debt.
(c) In August 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 144 "Accounting for
the Impairment or Disposal of Long-Lives Assets" ("FAS 144"). FAS
144 requires that the operations and gain (loss) on sale of all
properties sold subsequent to December 31, 2001 that were not held
for sale at December 31, 2001 and properties that were classified as
held for sale subsequent to December 31, 2001 be presented in
discontinued operations. FAS 144 also requires that prior periods
be restated.
SOURCE First Industrial Realty Trust, Inc.
/CONTACT: Karen Henderson of First Industrial Realty Trust, Inc.,
+1-312-344-4335, or Fax - +1-312-922-9851/