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First Industrial Realty Trust Reports Third Quarter 2017 Results

CHICAGO, October 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 third quarter of 2017. Diluted net income available to common stockholders per share (EPS) was $0.36 in the third quarter, compared to $0.27 a year ago.

First Industrial's third quarter FFO was $0.41 per share/unit on a diluted basis, compared to $0.37 per share/unit a year ago. Third quarter 2017 results included a $0.015 per share gain related to the mark-to-market of an interest rate protection agreement in which the Company entered with the anticipation of a future issuance of unsecured debt.

"The U.S. industrial real estate market continues to enjoy broad-based tenant demand which has resulted in low vacancy rates and increasing market rents," said Peter E. Baccile, First Industrial's president and CEO. "Our team delivered another strong quarter of leasing, increasing occupancy to 97.2% at quarter end, while commencing three new developments that will contribute to our future cash flow growth."

Portfolio Performance – Third Quarter 2017

  • In service occupancy was 97.2% at the end of the third quarter, compared to 95.7% at the end of the second quarter of 2017 and 95.4% at the end of the third quarter of 2016. Sales contributed 14 basis points to third quarter 2017 occupancy as compared to the second quarter of 2017.
  • Tenants were retained in 68.8% of square footage up for renewal.
  • Same property cash basis net operating income (NOI) increased 3.7%. Results reflect a 140 basis point reduction due to increased real estate taxes related to rising property values in certain markets in which taxes are paid in arrears. Including lease termination fees, same property NOI increased 4.2%.
  • Rental rates increased 9.5% on a cash basis and increased 21.3% on a GAAP basis; leasing costs were $3.33 per square foot.

Investment and Disposition Activities

In the third quarter, the Company:
  • Commenced development of three projects totaling 1.7 million square feet with estimated total investment of $105.9 million comprised of:
    • the 739,000 square-foot First Logistics Center @ I-78/81 in Pennsylvania, estimated investment of $48.9 million;
    • a 640,000 square-foot facility at First Park @ PV-303 in Phoenix, estimated investment of $35.8 million; and
    • the 355,000 square-foot First Joliet Logistics Center in Chicago, estimated investment of $21.2 million.

  • Acquired two buildings totaling 385,000 square feet and four land parcels for a total of $64.5 million comprised of:
    • a 172,000 square-foot facility in Miami for $22.7 million;
    • a 213,000 square-foot building in New Jersey for $20.9 million; and
    • four land parcels located in Pennsylvania, Chicago, Houston and Dallas comprising 187 acres for a total of $20.9 million.
  • Sold ten buildings comprised of 900,000 square feet for $40.1 million.

In the fourth quarter to date, the Company:
  • Acquired an 86,000 square-foot facility in Orlando for $8.2 million.
  • Sold nine buildings totaling 1.2 million square feet for $54.1 million.

"Tenant demand for logistics facilities remains strong as companies invest in their distribution networks to grow and gain supply chain efficiencies," said Johannson Yap, chief investment officer of First Industrial. "Our new development starts are well-positioned to meet our customers' needs in key distribution markets serving sizeable population centers, while earning attractive risk-adjusted returns for our investors."

Outlook for 2017

Mr. Baccile stated, "Given the favorable market fundamentals and the importance of logistics as a competitive differentiator for many businesses, we expect demand for industrial real estate to continue to increase, driving market rents higher which will contribute to future cash flow growth from our portfolio."

The following assumptions were used:

  • In service occupancy for fourth quarter-end of 96.25% to 97.25%. This implies a full-year average quarter-end in service occupancy of 96.25% to 96.5%, a slight increase at the midpoint from prior guidance.
  • Same-store NOI growth on a cash basis before termination fees for the fourth quarter of 2.75% to 4.25%, which implies a quarterly average same-store growth for full year 2017 of 4.1% to 4.5%.
  • General and administrative expense of approximately $27 million to $28 million, an increase of $1 million at the midpoint related to an increase in expected performance-based compensation costs.
  • Guidance includes the incremental costs expected in 2017 related to the Company's completed and under construction developments as of September 30, 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 property sales in the fourth quarter to-date and the planned retirement of $55 million of its 7.5%, 2017 Unsecured Notes maturity in December.
  • 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 mark-to-market gain or loss related to the previously discussed interest rate protection agreement;
    • 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, October 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 third quarter 2017 supplemental information can be viewed at www.firstindustrial.com under the "Investors" tab.

Investor Day Reminder – November 8, 2017

First Industrial will also host an Investor Day on Wednesday, November 8, 2017 in New York City. The event will feature presentations from First Industrial's senior management and regional teams regarding the Company's platform, portfolio, investments, and growth opportunities. For additional information on Investor Day, contact Art Harmon, vice president of investor relations and marketing, at aharmon@firstindustrial.com.

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