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First Industrial Realty Trust Reports Fourth Quarter And Full Year 2016 Results

CHICAGO, February 22, 2017 – First Industrial Realty Trust, Inc. (NYSE: FR), a leading fully integrated owner, operator and developer of industrial real estate, today announced results for the fourth quarter and full year 2016. Diluted net income available to common stockholders per share (EPS) was $0.20 in the fourth quarter, compared to $0.39 a year ago. Full year 2016 diluted net income available to common stockholders was $1.05 per share, compared to $0.66 per share in 2015.

First Industrial's fourth quarter FFO was $0.38 per share/unit on a diluted basis, compared to $0.37 per share/unit a year ago.

Full year 2016 FFO was $1.45 per share/unit on a diluted basis versus $1.27 per share/unit in 2015.

"First Industrial produced another excellent year in 2016, driving increased cash flow for our shareholders and further enhancing our portfolio through high quality developments, acquisitions and targeted sales," said Peter E. Baccile, First Industrial's president and CEO. "Our operating metrics reflect the team's excellent execution and the continuing strong fundamentals in our industry. We look to build upon our track record in 2017 and beyond, levering the strengths of our platform."

Portfolio Performance – Fourth Quarter 2016

  • In service occupancy was 96.0% at the end of the fourth quarter, compared to 95.4% at the end of the third quarter of 2016, and 96.1% at the end of the fourth quarter of 2015. As compared to September 30th, 2016, 4Q16 occupancy reflects a 100 basis point contribution from asset sales and 30 basis points from leasing, partially offset by the 70 basis point impact from acquisitions placed in service.
  • Tenants were retained in 80.5% of square footage up for renewal.
  • Same property cash basis net operating income (NOI) increased 3.2%. Including lease termination fees, same property NOI increased 3.1%. For the full year, same property cash basis NOI increased 6.1%. Including lease termination fees, same property NOI for 2016 increased 5.9%.
  • Rental rates increased 7.0% on a cash basis and increased 17.8% on a GAAP basis; leasing costs were $2.50 per square foot.

Common Stock Dividend Increased

The board of directors declared a common dividend of $0.21 per share/unit for the quarter ending March 31, 2017 payable on April 17, 2017 to stockholders of record on March 31, 2017. The new dividend rate represents a 10.5% increase from the prior rate of $0.19 per share.

Capital Markets – First Quarter 2017

On February 21, 2017, the Company entered into a note and guaranty agreement to issue $200 million of fixed rate senior unsecured notes in a private placement offering with a weighted average interest rate of 4.34%. The notes are comprised of two tranches: $125 million with a 10-year term at an interest rate of 4.30% and $75 million with a 12-year term at an interest rate of 4.40%. The Company anticipates closing the offering on or about April 20, 2017.

"We are pleased to return to the unsecured debt markets through this $200 million private placement as we position our balance sheet to lower our long-term borrowing costs," said Scott Musil, chief financial officer. "The offering demonstrates the strength of our credit profile and portfolio."

Investment and Disposition Activities

In the fourth quarter, the Company:
  • Placed in service five developments comprised of 1.7 million square feet, 96% leased on average, with total estimated investment of $110.4 million. These were comprised of speculative buildings in New Jersey, Phoenix and Dallas and build-to-suits in Atlanta and Southern California.
  • Started development of The Ranch by First Industrial, a six-building, 936,000 square-foot park in Southern California in the Chino submarket of the Inland Empire West with an estimated total investment of $86.7 million.
  • Acquired a 63,000 square-foot building in the Doral submarket of Miami for $8.4 million and a 100,000 square-foot building in Indianapolis for $4.1 million.
  • Sold 13 buildings comprising 1.3 million square feet for a total of $30.9 million.

For the full year 2016, the Company:
  • Placed in service 11 buildings, 98% leased on average at December 31st, totaling 3.3 million square feet with an estimated total investment of $210.1 million.
  • Acquired six buildings totaling 709,000 square feet for $56.7 million.
  • Acquired six land parcels for a total investment of $54.4 million.
  • Sold 63 buildings totaling 3.9 million square feet for a total of $169.9 million.

In the first quarter of 2017 to date, the Company:
  • Sold a three-building portfolio comprised of 74,000 square feet in the Philadelphia market for $5.5 million.

"In 2016, we created value for shareholders through our development program, placing in service $210 million of state-of-the-art buildings that were 98% leased," said Johannson Yap, chief investment officer. "To support our long-term cash flow growth, our team continues to replenish our development pipeline with land acquisitions, particularly those which we can put in production rapidly to meet tenant demand, along with select acquisitions."

Outlook for 2017

Mr. Baccile stated, "In 2017, our focus continues to be on driving incremental cash flow from leasing within our portfolio and our development investments. The supply and demand picture in the industrial real estate sector remains favorable, supporting further market rent growth and growth in cash rents within our portfolio."

The following assumptions were used:

  • Average quarter-end in service occupancy of 95.5% to 96.5%.
  • Same-store NOI on a cash basis before termination fees of positive 2.75% to 4.75% for the full year.
  • General and administrative expense of approximately $26 million to $27 million.
  • Guidance includes the incremental costs expected in 2017 related to the Company's developments under construction as of December 31, 2016. In total, the Company expects to capitalize $0.03 per share of interest related to these projects in 2017.
  • Guidance reflects the issuance of $200 million of unsecured notes in the private placement discussed above, the planned retirement of the Company's 2017 unsecured senior notes at their maturities and the first quarter prepayment of $35.4 million of secured debt originally maturing in October 2020.
  • Other than the above, guidance does not include the impact of:
    • any other future debt repurchases prior to maturity or future debt issuances,
    • any future investments or property sales,
    • any future NAREIT-compliant gains or losses,
    • any future impairment gains or losses, or
    • any future equity issuance.

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.

Conference Call

First Industrial will host its quarterly conference call on Thursday, February 23, 2017 at 12:00 p.m. EST (11:00 a.m. CST). The conference call may be accessed by dialing (888) 823-7459, passcode "First Industrial." The conference call will also be webcast live on the Investor Relations page of the Company’s website at www.firstindustrial.com. The replay will also be available on the website.

The Company's fourth quarter and full year 2016 supplemental information can be viewed at www.firstindustrial.com under the "Investors" tab.

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