- Cash Rental Rates Up 58.3%
- Cash Rental Rate Increase of 56% on Leases Signed To Date
Commencing in 2023
- Occupancy of 98.7%; Cash Same Store NOI Growth of
8.1%
- Signed 394,000 Square Feet of New Leases for Speculative
Developments Year-To-Date
- Started a 358,000 Square-Foot Development in the
Philadelphia Market, Estimated Investment of $61 Million
- Sold 31 Acres at Camelback 303 Joint Venture in Phoenix for $50
Million; FR's Share of Gain and Incentive Fee Before Tax of
$24 Million; Purchase Option
Agreement and Ground Lease with Buyer for Additional 71
Acres
- 2023 FFO Guidance Increased $0.04 at Midpoint to $2.33 to $2.43 Per
Share/Unit, Excluding 1Q23 Accelerated Recognition of Tenant
Improvement Reimbursement
- Increased First Quarter 2023 Dividend to $0.32 Per Share, an 8.5% Increase
CHICAGO, April 19,
2023 /PRNewswire/ -- First Industrial Realty Trust,
Inc. (NYSE: FR), a leading fully integrated owner, operator and
developer of industrial real estate, today announced results for
the first quarter of 2023. First Industrial's diluted net income
available to common stockholders per share (EPS) was $0.42, compared to $0.27 a year ago and first quarter FFO was
$0.59 per share/unit on a diluted
basis, compared to $0.53 per
share/unit a year ago. Excluding $0.02 per share/unit of income related to the
accelerated recognition of a tenant improvement reimbursement
associated with a departing tenant in Dallas, first quarter 2023 FFO was
$0.57 per share/unit.
"2023 is off to an excellent start with another strong quarter
of operating results that reflect the strength of our portfolio and
the talents of our team," said Peter E.
Baccile, president and chief executive officer of First
Industrial. "We established a new company quarterly record for cash
rental rate change of 58% while maintaining high occupancy and
securing new customers for a few of our developments."
Portfolio Performance
- In service occupancy was 98.7% at the end of the first quarter
of 2023, compared to 98.8% at the end of the fourth quarter of
2022, and 98.0% at the end of the first quarter of 2022.
- Cash rental rates increased 58.3% and increased 85.3% on a
straight-line basis.
- The Company has achieved a cash rental rate increase of
approximately 56% on leases signed to date commencing in 2023
reflecting 63% of 2023 rollovers.
- Same store cash basis net operating income before termination
fees ("SS NOI") increased 8.1% reflecting increases in rental rates
on new and renewal leasing, contractual rent escalations and higher
average occupancy, slightly offset by higher free rent and an
increase in real estate taxes.
Development Leasing
During the first quarter, the Company:
- Leased 100% of the 198,000 square-foot First Park Miami
Building 10 in South Florida. The
lease is expected to commence upon completion in the second
quarter.
- Leased 100% of the 105,000 square-foot First Lehigh Logistics
Center in the Lehigh Valley in
Pennsylvania.
- Leased the remaining 27,000 square feet at the 81,000
square-foot First Loop Logistics Park Building 2 in Central Florida.
In the second quarter to-date, the Company:
- Leased 50% of the 128,000 square-foot First Steele in
Seattle.
Investment and Disposition Highlights
In the first quarter, the Company:
- Commenced development of First State Crossing in the
Philadelphia market - 358,000
square feet; $61 million estimated
investment.
- Sold 31 acres at its Camelback 303 business park joint venture
in Phoenix for $50 million; First Industrial's share of the gain
and incentive fee before tax is $24
million. In conjunction with the sale, the joint venture
entered into a purchase option agreement with the buyer for an
additional 71 acres that requires the buyer to lease the ground for
up to two years.
Common Stock Dividend
In the first quarter, the Company:
- Paid a common dividend of $0.32
per share/unit for the quarter ending March
31, 2023 on April 17, 2023 to
stockholders of record on March 31,
2023. The new dividend rate represented an 8.5% increase
from the prior quarterly rate of $0.295 per share/unit.
Outlook for 2023
"On the strength of our leasing performance and contribution
from our joint venture, we are raising our FFO per share guidance,
before the accelerated tenant improvement reimbursement
recognition, by four cents at the
midpoint," added Mr. Baccile. "We expect healthy rental rate
changes on our new and renewal leasing for the balance of the year
and we are keenly focused on leasing up our development pipeline to
drive future cash flow."
|
|
Low End of
|
|
High End
of
|
|
|
Guidance for
2023
|
|
Guidance for
2023
|
|
|
(Per
share/unit)
|
|
(Per
share/unit)
|
Net Income
|
|
$
1.28
|
|
$
1.38
|
Add: Real Estate
Depreciation/Amortization
|
|
1.20
|
|
1.20
|
Less: Gain on
Sale of Real Estate, Net of Allocable Income Tax Provision
(Including Joint Venture) and Net of Joint Venture Noncontrolling
Interest,
Through April 19, 2023
|
|
(0.13)
|
|
(0.13)
|
|
|
|
|
|
FFO (NAREIT
Definition)
|
|
$
2.35
|
|
$
2.45
|
|
|
|
|
|
Less: Income
Related to Accelerated Recognition of a Tenant Improvement
Reimbursement
|
|
(0.02)
|
|
(0.02)
|
|
|
|
|
|
FFO Before Income
Related to Accelerated Recognition of a Tenant Improvement
Reimbursement
|
|
$
2.33
|
|
$
2.43
|
The following assumptions were used for guidance:
- Average quarter-end in service occupancy of 97.75% to
98.75%.
- SS NOI growth on a cash basis before termination fees of 7.75%
to 8.75% for the full year, an increase of 25 basis points at the
midpoint. This range excludes $1.4
million of income related to insurance claim settlements
recognized in 4Q22.
- FFO from Joint Venture of $0.02
per share primarily related to the Company's share of the ground
lease rent from the aforementioned purchase option agreement.
- Includes the incremental costs expected in 2023 related to the
Company's developments completed and under construction as
March 31, 2023. In total, the Company
expects to capitalize $0.09 per share
of interest in 2023.
- General and administrative expense of $34.0 million to $35.0
million.
- Our guidance does not include the impact of any future
investments, property sales, debt repurchases prior to maturity,
debt issuances, or equity issuances post the date of this press
release.
Conference Call
First Industrial will host its quarterly conference call on
Thursday, April 20, 2023 at
10:00 a.m. CDT (11:00 a.m. EDT). The conference call may be
accessed by dialing (888) 317-6003, passcode "First Industrial".
The conference call will also be webcast live on the Investors page
of the Company's website at www.firstindustrial.com. The replay
will also be available on the website.
The Company's first quarter 2023 supplemental information can be
viewed at www.firstindustrial.com under the "Investors"
tab.
FFO Definition
In accordance with the NAREIT definition of FFO, First
Industrial calculates FFO to be equal to net income available to
First Industrial Realty Trust, Inc.'s common stockholders and
participating securities, plus depreciation and other amortization
of real estate, plus impairment of real estate, minus gain or plus
loss on sale of real estate, net of any income tax provision or
benefit associated with the sale of real estate. First Industrial
also excludes the same adjustments from its share of net income
from unconsolidated joint ventures.
About First Industrial Realty Trust, Inc.
First Industrial Realty Trust, Inc. (NYSE: FR) is a leading
fully integrated owner, operator, and developer of industrial real
estate with a track record of providing industry-leading customer
service to multinational corporations and regional customers.
Across major markets in the United
States, our local market experts manage, lease, buy,
(re)develop, and sell bulk and regional distribution centers, light
industrial, and other industrial facility types. In total, we own
and have under development approximately 69.3 million square feet
of industrial space as of March 31,
2023. For more information, please visit us at
www.firstindustrial.com.
Forward-Looking Statements
This press release and the presentation to which it refers
may contain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, and Section 21E of the
Securities Exchange Act of 1934. We intend for such forward-looking
statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are based
on certain assumptions and describe our future plans, strategies
and expectations, and are generally identifiable by use of the
words "believe," "expect," "plan," "intend," "anticipate,"
"estimate," "project," "seek," "target," "potential," "focus,"
"may," "will," "should" or similar words. Although we believe the
expectations reflected in forward-looking statements are based upon
reasonable assumptions, we can give no assurance that our
expectations will be attained or that results will not materially
differ. Factors which could have a materially adverse effect on our
operations and future prospects include, but are not limited to:
changes in national, international, regional and local economic
conditions generally and real estate markets specifically; changes
in legislation/regulation (including changes to laws governing the
taxation of real estate investment trusts) and actions of
regulatory authorities; the uncertainty and economic impact of
pandemics, epidemics or other public health emergencies or fear of
such events, such as the outbreak of coronavirus disease 2019
(COVID-19); our ability to qualify and maintain our status as a
real estate investment trust; the availability and attractiveness
of financing (including both public and private capital) and
changes in interest rates; the availability and attractiveness of
terms of additional debt repurchases; our ability to retain our
credit agency ratings; our ability to comply with applicable
financial covenants; our competitive environment; changes in
supply, demand and valuation of industrial properties and land in
our current and potential market areas; our ability to identify,
acquire, develop and/or manage properties on favorable terms; our
ability to dispose of properties on favorable terms; our ability to
manage the integration of properties we acquire; potential
liability relating to environmental matters; defaults on or
non-renewal of leases by our tenants; decreased rental rates or
increased vacancy rates; higher-than-expected real estate
construction costs and delays in development or lease-up schedules;
potential natural disasters and other potentially catastrophic
events such as acts of war and/or terrorism; technological
developments, particularly those affecting supply chains and
logistics; litigation, including costs associated with prosecuting
or defending claims and any adverse outcomes; risks associated with
our investments in joint ventures, including our lack of sole
decision-making authority; and other risks and uncertainties
described under the heading "Risk Factors" and elsewhere in
our annual report on Form 10-K for the year ended December 31, 2022, as well as those risks and
uncertainties discussed from time to time in our other Exchange Act
reports and in our other public filings with the SEC. We caution
you not to place undue reliance on forward-looking statements,
which reflect our outlook only and speak only as of the date of
this press release or the dates indicated in the statements. We
assume no obligation to update or supplement forward-looking
statements. For further information on these and other factors that
could impact us and the statements contained herein, reference
should be made to our filings with the SEC.
A schedule of selected financial information is
attached.
FIRST INDUSTRIAL
REALTY TRUST, INC.
|
Selected Financial
Data
|
(Unaudited)
|
(In thousands except
per share/Unit data)
|
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
March
31,
|
|
|
2023
|
|
2022
|
Statements of
Operations and Other Data:
|
|
|
|
|
Total Revenues
|
|
$
149,423
|
|
$
125,513
|
|
|
|
|
|
Property Expenses
|
|
(42,182)
|
|
(35,415)
|
General and Administrative
|
|
(9,354)
|
|
(8,741)
|
Joint Venture Development Services Expense
|
|
(784)
|
|
—
|
Depreciation of Corporate FF&E
|
|
(245)
|
|
(230)
|
Depreciation and Other Amortization of Real Estate
|
|
(39,527)
|
|
(33,680)
|
Total
Expenses
|
|
(92,092)
|
|
(78,066)
|
Interest Expense
|
|
(16,119)
|
|
(9,636)
|
Amortization of Debt Issuance Costs
|
|
(904)
|
|
(756)
|
Income from
Operations Before Equity in Income (Loss)
of
Joint Venture and Income Tax (Provision) Benefit
|
|
$
40,308
|
|
$
37,055
|
Equity in Income (Loss) of Joint Venture
|
|
27,634
|
|
(22)
|
Income Tax (Provision) Benefit
|
|
(7,167)
|
|
90
|
Net
Income
|
|
$
60,775
|
|
$
37,123
|
Net
Income Attributable to the Noncontrolling Interests
|
|
(4,808)
|
|
(865)
|
Net Income
Available to First Industrial Realty Trust, Inc.'s
Common Stockholders and Participating Securities
|
|
$
55,967
|
|
$
36,258
|
RECONCILIATION OF
NET INCOME AVAILABLE TO
FIRST INDUSTRIAL
REALTY TRUST, INC.'S COMMON
STOCKHOLDERS AND
PARTICIPATING SECURITIES
TO FFO (c) AND AFFO
(c)
|
|
|
|
|
Net Income Available to
First Industrial Realty Trust, Inc.'s
Common Stockholders and Participating Securities
|
|
$
55,967
|
|
$
36,258
|
Depreciation and Other
Amortization of Real Estate
|
|
39,527
|
|
33,680
|
Noncontrolling
Interests
|
|
4,808
|
|
865
|
Gain on Sale of Real Estate
from Joint Venture (a)
|
|
(27,632)
|
|
—
|
Income Tax Provision -
Allocable to Gain on Sale of Real Estate,
Including Joint
Venture (b)
|
|
6,997
|
|
—
|
Funds From Operations
("FFO") (NAREIT) (c)
|
|
$
79,667
|
|
$
70,803
|
Amortization of Equity Based
Compensation
|
|
6,141
|
|
5,101
|
Amortization of Debt
Discounts and Hedge Costs
|
|
104
|
|
104
|
Amortization of Debt
Issuance Costs
|
|
904
|
|
756
|
Depreciation of Corporate
FF&E
|
|
245
|
|
230
|
Non-incremental Building
Improvements
|
|
(3,177)
|
|
(721)
|
Non-incremental Leasing
Costs
|
|
(8,861)
|
|
(6,329)
|
Capitalized
Interest
|
|
(3,981)
|
|
(4,070)
|
Capitalized
Overhead
|
|
(3,155)
|
|
(2,613)
|
Straight-Line Rent,
Amortization of Above (Below) Market
Leases and Lease Inducements
|
|
(6,082)
|
|
(4,152)
|
Adjusted Funds From
Operations ("AFFO") (c)
|
|
$
61,805
|
|
$
59,109
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
NET INCOME AVAILABLE TO
FIRST INDUSTRIAL
REALTY TRUST, INC.'S COMMON
STOCKHOLDERS AND
PARTICIPATING SECURITIES TO ADJUSTED
EBITDA (c) AND NOI (c)
|
|
|
|
Three Months
Ended
|
|
March
31,
|
|
March
31,
|
|
2023
|
|
2022
|
Net Income Available
to First Industrial Realty Trust, Inc.'s
Common Stockholders and Participating Securities
|
|
$
55,967
|
|
$
36,258
|
Interest Expense
|
|
16,119
|
|
9,636
|
Depreciation and Other
Amortization of Real Estate
|
|
39,527
|
|
33,680
|
Income Tax Provision
(Benefit) - Not Allocable to Gain on Sale
of Real Estate
(b)
|
|
170
|
|
(90)
|
Noncontrolling
Interests
|
|
4,808
|
|
865
|
Amortization of Debt
Issuance Costs
|
|
904
|
|
756
|
Depreciation of Corporate
FF&E
|
|
245
|
|
230
|
Gain on Sale of Real Estate
from Joint Venture (a)
|
|
(27,632)
|
|
—
|
Income Tax Provision -
Allocable to Gain on Sale of Real Estate,
Including Joint
Venture (b)
|
|
6,997
|
|
—
|
Adjusted EBITDA
(c)
|
|
$
97,105
|
|
$
81,335
|
General and
Administrative
|
|
9,354
|
|
8,741
|
FFO from Joint Venture
(a)
|
|
(2)
|
|
22
|
Net Operating Income
("NOI") (c)
|
|
$
106,457
|
|
$
90,098
|
Non-Same Store
NOI
|
|
(9,743)
|
|
(565)
|
Same Store NOI Before
Same Store Adjustments (c)
|
|
$
96,714
|
|
$
89,533
|
Straight-line
Rent
|
|
(3,256)
|
|
(3,049)
|
Above (Below) Market Lease
Amortization
|
|
(232)
|
|
(258)
|
Lease Termination
Fees
|
|
(22)
|
|
—
|
Same Store NOI (Cash
Basis without Termination Fees) (c)
|
|
$
93,204
|
|
$
86,226
|
|
|
|
|
|
Weighted Avg. Number of
Shares/Units Outstanding - Basic
|
|
134,686
|
|
134,073
|
Weighted Avg. Number of
Shares Outstanding - Basic
|
|
132,211
|
|
131,811
|
|
|
|
|
|
Weighted Avg. Number of
Shares/Units Outstanding - Diluted
|
|
135,231
|
|
134,495
|
Weighted Avg. Number of
Shares Outstanding - Diluted
|
|
132,299
|
|
131,885
|
|
|
|
|
|
Per Share/Unit
Data:
|
|
|
|
|
Net Income Available to
First Industrial Realty Trust, Inc.'s
Common Stockholders and
Participating Securities
|
|
$
55,967
|
|
$
36,258
|
Less: Allocation to
Participating Securities
|
|
(47)
|
|
(31)
|
Net Income Available to
First Industrial Realty Trust, Inc.'s
Common
Stockholders
|
|
$
55,920
|
|
$
36,227
|
|
|
|
|
|
Basic and Diluted Per
Share
|
|
$
0.42
|
|
$
0.27
|
|
|
|
|
|
FFO (NAREIT)
(c)
|
|
$
79,667
|
|
$
70,803
|
Less: Allocation to
Participating Securities
|
|
(185)
|
|
(156)
|
FFO (NAREIT) Allocable
to Common Stockholders and
Unitholders
|
|
$
79,482
|
|
$
70,647
|
|
|
|
|
|
Basic and Diluted Per
Share/Unit
|
|
$
0.59
|
|
$
0.53
|
|
|
|
|
|
Common
Dividends/Distributions Per Share/Unit
|
|
$
0.320
|
|
$
0.295
|
|
|
|
Balance Sheet Data
(end of period):
|
|
March 31,
2023
|
|
December 31,
2022
|
Gross Real Estate
Investment
|
|
$
5,402,000
|
|
$
5,343,039
|
Total
Assets
|
|
4,950,852
|
|
4,954,322
|
Debt
|
|
2,080,804
|
|
2,066,301
|
Total
Liabilities
|
|
2,422,887
|
|
2,424,023
|
Total
Equity
|
|
2,527,965
|
|
2,530,299
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
March
31,
|
|
March
31,
|
|
|
|
2023
|
|
2022
|
(a)
|
Equity in Income
(Loss) of Joint Venture
|
|
|
|
|
|
Equity in Income
(Loss) of Joint Venture per GAAP Statements of
Operations
|
|
$
27,634
|
|
$
(22)
|
|
Gain on Sale of Real
Estate from Joint Venture
|
|
(27,632)
|
|
—
|
|
FFO from Joint
Venture
|
|
$
2
|
|
$
(22)
|
|
|
|
|
|
|
(b)
|
Income Tax
(Provision) Benefit
|
|
|
|
|
|
Income Tax (Provision)
Benefit per GAAP Statements of Operations
|
|
$
(7,167)
|
|
$
90
|
|
Income Tax Provision -
Allocable to Gain on Sale
of Real Estate, Including
Joint Venture
|
|
6,997
|
|
—
|
|
Income Tax (Provision)
Benefit - Not Allocable to Gain on
Sale of Real
Estate
|
|
$
(170)
|
|
$
90
|
(c) Investors in, and analysts following, the real
estate industry utilize funds from operations ("FFO"), net
operating income ("NOI"), adjusted EBITDA and adjusted funds from
operations ("AFFO"), variously defined below, as supplemental
performance measures. While we believe net income available to
First Industrial Realty Trust, Inc.'s common stockholders and
participating securities, as defined by GAAP, is the most
appropriate measure, we consider FFO, NOI, adjusted EBITDA and
AFFO, given their wide use by, and relevance to investors and
analysts, appropriate supplemental performance measures. FFO,
reflecting the assumption that real estate asset values rise or
fall with market conditions, principally adjusts for the effects of
GAAP depreciation and amortization of real estate assets. NOI
provides a measure of rental operations, and does not factor in
depreciation and amortization and non-property specific expenses
such as general and administrative expenses. Adjusted EBITDA
provides a tool to further evaluate the ability to incur and
service debt and to fund dividends and other cash needs. AFFO
provides a tool to further evaluate the ability to fund dividends.
In addition, FFO, NOI, adjusted EBITDA and AFFO are commonly used
in various ratios, pricing multiples/yields and returns and
valuation calculations used to measure financial position,
performance and value.
In accordance with the NAREIT definition of FFO, we calculate
FFO to be equal to net income available to First Industrial Realty
Trust, Inc.'s common stockholders and participating securities,
plus depreciation and other amortization of real estate, plus
impairment of real estate, minus gain or plus loss on sale of real
estate, net of any income tax provision or benefit associated with
the sale of real estate. We also exclude the same adjustments from
our share of net income from unconsolidated joint venture.
NOI is defined as our revenues, minus property expenses such as
real estate taxes, repairs and maintenance, property management,
utilities, insurance and other expenses.
Adjusted EBITDA is defined as NOI minus general and
administrative expenses and the equity in FFO from our investment
in joint venture.
AFFO is defined as adjusted EBITDA minus interest expense, minus
capitalized interest and overhead, (minus)/plus amortization of
debt discounts and hedge costs, minus straight-line rent,
amortization of above (below) market leases and lease inducements,
minus provision for income taxes or plus benefit for income taxes
not allocable to gain on sale of real estate, plus amortization of
equity based compensation and minus non-incremental capital
expenditures. Non-incremental capital expenditures refer to
building improvements and leasing costs required to maintain
current revenues plus tenant improvements amortized back to the
tenant over the lease term. Excluded are first generation leasing
costs, capital expenditures underwritten at acquisition and
development/redevelopment costs.
FFO, NOI, adjusted EBITDA and AFFO do not represent cash
generated from operating activities in accordance with GAAP and are
not necessarily indicative of cash available to fund cash needs,
including the repayment of principal on debt and payment of
dividends and distributions. FFO, NOI, adjusted EBITDA and AFFO
should not be considered as substitutes for net income available to
common stockholders and participating securities (calculated in
accordance with GAAP) as a measure of results of operations, cash
flows (calculated in accordance with GAAP) or as a measure of
liquidity. FFO, NOI, adjusted EBITDA and AFFO as currently
calculated by us may not be comparable to similarly titled, but
variously calculated, measures of other REITs.
We consider cash-basis same store NOI ("SS NOI") to be a useful
supplemental measure of our operating performance. Same store
properties include all properties owned prior to January 1, 2022 and held as an in service
property through the end of the current reporting period (including
certain income-producing land parcels), and developments and
redevelopments that were placed in service prior to January 1, 2022 (the "Same Store Pool").
Properties which are at least 75% occupied at acquisition are
placed in service, unless we anticipate tenant move-outs within two
years of ownership would drop occupancy below 75%. Properties
acquired with occupancy greater than 75% at acquisition, but with
tenants that we anticipate will move out within two years of
ownership, will be placed in service upon the earlier of reaching
90% occupancy or twelve months after move out. Properties acquired
that are less than 75% occupied at the date of acquisition are
placed in service as they reach the earlier of reaching 90%
occupancy or one year subsequent to acquisition. Developments,
redevelopments and acquired income-producing land parcels for which
our ultimate intent is to redevelop or develop on the land parcel
are placed in service as they reach the earlier of 90% occupancy
or one year subsequent to development/redevelopment
construction completion.
We define SS NOI as NOI, less NOI of properties not in the Same
Store Pool, less the impact of straight-line rent, the amortization
of above (below) market rent and the impact of lease termination
fees. We exclude lease termination fees, straight-line rent and
above (below) market rent in calculating SS NOI because we believe
it provides a better measure of actual cash basis rental growth for
a year-over-year comparison. In addition, we believe that SS NOI
helps the investing public compare the operating performance of a
company's real estate as compared to other companies. While SS NOI
is a relevant and widely used measure of operating performance of
real estate investment trusts, it does not represent cash flow from
operations or net income as defined by GAAP and should not be
considered as an alternative to those measures in evaluating our
liquidity or operating performance. SS NOI also does not reflect
general and administrative expense, interest expense, depreciation
and amortization, income tax benefit and expense, gains and losses
on the sale of real estate, equity in income or loss from joint
venture, joint venture fees, joint venture development services
expense, capital expenditures and leasing costs. Further, our
computation of SS NOI may not be comparable to that of other real
estate companies, as they may use different methodologies for
calculating SS NOI.
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SOURCE First Industrial Realty Trust, Inc.