Apr 25, 2017
First Industrial Realty Trust Reports First Quarter 2017 ResultsCHICAGO, April 25, 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 first quarter 2017. Diluted net income available to common stockholders per share (EPS) was $0.19 in the first quarter, compared to $0.14 a year ago.
First Industrial's first quarter FFO was $0.36 per share/unit on a diluted basis, compared to $0.35 per share/unit a year ago. First quarter 2017 results included $0.01 per share of loss from retirement of debt related to the early payoff of a mortgage loan.
"Our team delivered a strong quarter to start the year, reflected in our cash same store NOI and rental rate growth," said Peter E. Baccile, First Industrial's president and CEO. "The industrial real estate market continues to enjoy broad-based demand driven by economic growth and ever-evolving supply chain activity. We are focused on serving those growing needs through our existing portfolio as well as through targeted developments and select acquisitions."
Portfolio Performance – First Quarter 2017
- In service occupancy was 95.8% at the end of the first quarter, compared to 96.0% at the end of the fourth quarter of 2016, and 94.8% at the end of the first quarter of 2016.
- Tenants were retained in 84.7% of square footage up for renewal.
- Same property cash basis net operating income (NOI) increased 5.9%. Including lease termination fees, same property NOI increased 6.1%.
- Rental rates increased 6.0% on a cash basis and increased 14.3% on a GAAP basis; leasing costs were $1.29 per square foot.
Capital Markets Activity
In the first quarter:
- Prepaid $35.0 million of secured debt with an interest rate of 5.55% as previously disclosed in the Company's fourth quarter results press release.
- The Company's board of directors declared a common dividend of $0.21 per share/unit for the quarter ending March 31, 2017 that was paid 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.
- Fitch Ratings upgraded the Company's unsecured debt rating to 'BBB' from 'BBB-.'
- Established a new "at-the-market" offering program of up to $200 million, replacing the prior facility.
In the second quarter to date,
- Closed on $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%.
- Moody's Investor Service affirmed the Company's Baa3 senior unsecured debt rating and revised its rating outlook to "positive" from "stable."
"Through our new $200 million private placement, we continue to lower our borrowing costs and position our balance sheet for the long-term," said Scott Musil, chief financial officer. "We were also pleased to gain traction with two credit rating agencies since the beginning of the year, with an upgrade from Fitch and an improved outlook from Moody's."
In the first quarter, the Company signed the following development lease:
- 301,000 square feet of the 602,000 square-foot Building II at First Park 94 in the Chicago market.
Investment and Disposition Activities
In the first quarter, the Company:
- Acquired a 19-acre development parcel for $15.0 million in the Inland Empire West that is developable up to 400,000 square feet.
- Sold 12 buildings comprised of 258,000 square feet for $20.5 million.
In the second quarter to date, the Company:
- Acquired a 100% leased, 181,000 square-foot facility in the I-70 East submarket of Denver for $11.2 million.
Outlook for 2017
Mr. Baccile stated, "We are increasing our FFO per share guidance range for 2017 by $0.02, largely due to our same store NOI performance in the first quarter and the impact from the lease-up at our Chicago development. Given the solid industrial real estate fundamentals, we are driving future cash flow through higher rental rates and continuing our track record of execution on our development investments."
The following assumptions were used:
- Average quarter-end in service occupancy of 95.5% to 96.5%.
- Same-store NOI growth on a cash basis before termination fees of 3.0% to 5.0% for the full year, an increase of 25 basis points at the midpoint, reflecting first quarter results.
- General and administrative expense of approximately $26 million to $27 million.
- Guidance includes the incremental costs expected in 2017 related to the Company's completed and under construction developments as of March 31, 2017. In total, the Company expects to capitalize $0.03 per share of interest related to these projects in 2017.
- Guidance reflects the impact of the second quarter acquisition in Denver.
- 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.
First Industrial will host its quarterly conference call on Wednesday, April 26, 2017 at 11:00 a.m. EDT (10:00 a.m. CDT). The conference call may be accessed by dialing (888) 823-7459, 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 2017 supplemental information can be viewed at www.firstindustrial.com under the "Investors" tab.
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