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First Industrial Realty Trust Reports Third Quarter 2016 Results

CHICAGO, October 27, 2016 - First Industrial Realty Trust, Inc. (NYSE: FR), a leading fully integrated owner, operator and developer of industrial real estate, today announced results for the third quarter 2016. Diluted net income available to common stockholders per share (EPS) was $0.27 in the third quarter, compared to $0.13 a year ago.

First Industrial’s third quarter FFO was $0.37 per share/unit on a diluted basis, compared to $0.35 per share/unit a year ago.

"The industrial real estate market continues to experience broad-based tenant demand that has exceeded new supply," said Bruce W. Duncan, First Industrial's chairman and CEO. "Reflective of this healthy environment, our team delivered excellent rental rate growth during the quarter, along with key development leasing wins."

Portfolio Performance - Third Quarter 2016

  • In service occupancy was 95.4% at the end of the third quarter, compared to 95.8% at the end of the second quarter of 2016, and 95.5% at the end of the third quarter of 2015. Dispositions helped occupancy by 15 basis points since the end of the second quarter of 2016.
  • Tenants were retained in 63.4% of square footage up for renewal.
  • Same property cash basis net operating income (NOI) increased 3.5%. Including lease termination fees, same property cash basis NOI increased 3.4%.
  • Rental rates increased 11.0% on a cash basis and increased 20.4% on a GAAP basis; leasing costs were $2.00 per square foot.

Development Leasing
In the third quarter, the Company signed:
  • A full building 601,000 square-foot lease at First Park 94 - Building I in the Chicago market.
  • A 69,000 square-foot expansion lease at its First Northwest Commerce Center in Houston to bring this 352,000 square-foot development to 100% leased.

In the fourth quarter to date, the Company signed:
  • A full building 234,000 square-foot lease at First Arlington Commerce Center II in Dallas.

Investment and Disposition Activities
In the third quarter, the Company:
  • Acquired a 99,000 square-foot building in the San Diego market of Southern California for $11.9 million.
  • Acquired a vacant, recently constructed 121,000 square-foot development in the Chicago market for $9.0 million.
  • Acquired a 26-acre development site in Dallas for $3.0 million that can accommodate a 420,000 square-foot building.
  • Started its second development at First Park 94 - Building II in the Chicago market, a 602,000 square-foot building with an estimated investment of $29.9 million.
  • Started development of a 618,000 square-foot distribution center in Phoenix with an estimated investment of $32.8 million.
  • Started a 243,000 square-foot development in the Inland Empire of Southern California with an estimated investment of $17.8 million.

In the fourth quarter to date, the Company:
  • Acquired a 63,000 square-foot building in the Doral submarket of Miami for $8.4 million.

"Using the strength of our platform, we are developing and acquiring high quality, well-located assets that meet the needs of a range of tenants and will contribute to long-term cash flow growth," said Peter Baccile, president. "We will continue to enhance the competitive position of our Company through active portfolio management."

Outlook for 2016

Mr. Duncan stated, “Due to the incremental compensation related to our new CEO hire and an increase in our projected performance-based compensation, we are reducing by $0.01 the midpoint of our FFO per share guidance before the impact of acquisition costs. With fundamentals strong, we are excited about the long-term opportunities to drive cash flow and value within our development program, new value-add investments, and throughout our portfolio.”

The following assumptions were used:

  • Average quarter-end in service occupancy of 95.25% to 95.75%, a narrowing of the range.
  • Fourth quarter same-store NOI on a cash basis before termination fees of 2.5% to 4.0%. This implies a quarterly average same-store NOI range for 2016 of approximately 5.5% to 5.9%, compared to the midpoint of our prior guidance of 5.0% from our second quarter results press release.
  • General and administrative expense of approximately $26.5 million to $27.5 million, an increase of $1.5 million reflecting increased performance-related compensation and incremental compensation expense related to our new CEO hire.
  • Guidance includes the incremental costs related to the Company’s developments under construction as of September 30, 2016. In total, the Company expects to capitalize $0.03 per share of interest related to its development projects in 2016.
  • Guidance reflects the aforementioned $8.4 million acquisition in Miami in the fourth quarter to-date.
  • Other than the above, guidance does not include the impact of:
    • any future debt repurchases or future debt issuances,
    • any future investments,
    • any future property sales,
    • any future impairment gains or losses,
    • any future NAREIT-compliant gains or losses, or
    • any future equity issuances.

A number of factors could impact our ability to deliver results in line with our assumptions, such as interest rates, the economy, the supply and demand of industrial real estate, the availability and terms of financing to potential acquirers of 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.

FFO Definition

First Industrial reports FFO in accordance with the NAREIT definition to provide a comparative measure to other REITs. NAREIT recommends that REITs define FFO as net income, excluding gains (or losses) from the sale of previously depreciated property, plus depreciation and amortization, excluding impairments from previously depreciated assets, and after adjustments for unconsolidated partnerships and joint ventures.

For more information contact: Arthur Harmon, Vice President - Investor Relations and Marketing