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First Industrial Realty Trust Reports First Quarter 2019 Results

  • Signed 1.8 Million Square Feet of New Leases for Development and Value-Add Acquisitions Year-To-Date; Includes 739,000 Square-Foot Lease at First Logistics Center @ I-78/81 in Central Pennsylvania
  • Increased FFO Per Share Guidance $0.01 At Midpoint
  • Occupancy of 97.3%, Cash Same Store NOI Grew 3.2%, Cash Rental Rates Were Up 8.0%
  • 13.0% Cash Rental Rate Growth On 2019 Rollovers Signed Year-to-Date
  • Started Five Development Projects Comprised of 1.1 Million Square Feet in the Inland Empire, Houston, Dallas, New Jersey and Phoenix; Estimated Total Investment of $108 Million
  • Acquired One Building Comprised of 173,000 Square Feet Plus Two Development Parcels for $18.3 Million
  • Paid Off $72 Million of Mortgage Loans at a Weighted Average Interest Rate of 7.8%
  • Increased First Quarter 2019 Dividend to $0.23 Per Share, a 5.7% Increase

CHICAGO, April 23, 2019 – 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 2019. Diluted net income available to common stockholders per share (EPS) was $0.19 compared to $0.30 a year ago.

First Industrial's first quarter FFO was $0.41 per share/unit on a diluted basis, compared to $0.38 per share/unit a year ago. First quarter 2018 FFO excluding the severance and impairment charge was $0.40 per share.

"We continue to see broad-based demand for industrial real estate, reflected in our recent leasing wins at our developments and value-add acquisitions, as well as our portfolio performance," said Peter E. Baccile, First Industrial's president and chief executive officer. "Given low national vacancy levels and supply and demand near equilibrium, the environment for rental rate growth in the sector remains favorable."

Portfolio Performance

  • In service occupancy was 97.3% at the end of the first quarter of 2019, compared to 98.5% at the end of the fourth quarter of 2018, and 97.1% at the end of the first quarter of 2018. Tenants were retained in 86.0% of square footage up for renewal.
  • Same property cash basis net operating income (“SS NOI”) increased 3.2%, reflecting contractual rent escalations, increased rental rates on leasing and lower free rent, offset by the negative impact of tax true-ups in markets where taxes are paid in arrears.
  • Rental rates increased 8.0% on a cash basis and increased 16.7% on a straight-line basis; leasing costs were $1.35 per square foot.
  • Cash rental rate change for 2019 rollovers signed through April 23rd was 13.0%.

Development and Value-Add Acquisition Leasing

During the first quarter, the Company:
  • Pre-leased 100% of its First Perry Logistics Center, a 240,000 square-foot building in the Inland Empire.
  • Leased 56,000 square feet of its 173,000 square-foot First Orchard 88 Business Center development forward in Chicago.
  • Pre-leased 63,000 square feet of the two-building, 345,000 square-foot First Park 121 in Dallas.

During the second quarter to date, the Company:
  • Leased 100% of its 739,000 square-foot First Logistics Center @ I-78/81 Building A in Central Pennsylvania to Ferrero U.S.A., Inc., the U.S. arm of the third-largest confectionery company in the world. The lease will commence by the fourth quarter.
  • Leased 100% of the 221,000 square-foot and 137,000 square-foot facilities at The Ranch by First Industrial in the Inland Empire, bringing that six-building park to 100% occupancy.
  • Leased 67,000 square feet of a 171,000 square-foot value-add acquisition in Los Angeles.
  • Leased 207,000 square feet of its 356,000 square-foot First Joliet Logistics Center in Chicago.
  • Leased 80,000 square feet at First 290 @ Guhn Road, a 126,000 square-foot development in Houston.

Investment and Disposition Activities

In the first quarter of 2019, the Company:
  • Commenced development of five projects comprised of seven buildings totaling 1.1 million square feet with an estimated total investment of $108.1 million:
    • First Redwood Logistics Center, Inland Empire, two buildings, 358,000 square feet and 44,000 square feet, $47.4 million total estimated investment.
    • First Grand Parkway Commerce Center, Houston, two buildings, 198,000 square feet and 172,000 square feet, $28.5 million total estimated investment.
    • First Fossil Creek Commerce Center, Dallas, 199,000 square feet, $12.4 million estimated investment.
    • First Park @ Central Crossing III, New Jersey, 120,000 square feet, $12.1 million estimated investment.
    • Build-to-suit, Phoenix, 50,000 square feet, $7.7 million estimated investment.
  • Acquired the aforementioned 173,000 square-foot First Orchard 88 Business Center in Chicago for $12.3 million.
  • Acquired one land parcel for the aforementioned build-to-suit in Phoenix for $1.8 million; also acquired a 16-acre site in the Inland Empire East for $4.2 million developable to 301,000 square feet.
  • Sold one building, 67,000 square feet in San Diego, for $10.5 million.
  • Sold a 55-acre parcel in its First Park @ PV303 joint venture; First Industrial’s share of the sales price was $5.0 million.

In the second quarter, the Company:
  • Acquired a 28-acre site in Dallas adjacent to its First Park 121 development for $7.4 million developable to 434,000 square feet.
  • Sold an 8,400 square-foot space in Miami for $1.1 million.
  • Sold a 147-acre parcel in its First Park @ PV303 joint venture; First Industrial’s share of the sales price was $18.2 million.

"Our team continues to create value for shareholders by sourcing profitable development and value-add acquisitions and executing on lease-up," said Johannson Yap, First Industrial's chief investment officer. "While competition for sites and buildings remains intense, we are levering the strength of our platform to replenish our pipeline to grow and further enhance our portfolio."

Capital

During the first quarter, the Company:
  • Paid off $72 million of mortgage loans at a weighted average interest rate of 7.8%.
  • Paid a common dividend of $0.23 per share/unit for the quarter ending March 31, 2019 on April 15, 2019 to stockholders of record on March 29, 2019, as previously disclosed. The new dividend rate represented a 5.7% increase from the prior rate of $0.2175 per share/unit.

Outlook for 2019

Mr. Baccile stated, "On the strength of our development and value-add leasing thus far in 2019, we are increasing the midpoint of our FFO guidance by $0.01. Through our investments and our existing portfolio, we are providing quality logistics real estate that supports our customers' growth and supply chain initiatives, while delivering long-term cash flow growth for shareholders."

The following assumptions were used:
  • Average quarter-end in service occupancy of 96.75% to 97.75%.
  • Same-store NOI growth on a cash basis before termination fees of 1.5% to 3.0% for the full year.
  • General and administrative expense of approximately $27.5 million to $28.5 million.
  • Guidance includes the incremental costs expected in 2019 related to the Company’s developments completed and under construction as of March 31, 2019. In total, the Company expects to capitalize $0.03 per share of interest related to these development projects in 2019.
  • Guidance reflects the expected payoff of an approximately $33 million secured debt maturity in the third quarter and an approximately $1 million secured debt maturity in the fourth quarter with a weighted average interest rate of 7.5%.
  • 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 after the date of this earnings release,
    • any future gains related to the final settlement of two insurance claims for damaged properties previously disclosed, 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.

Conference Call

First Industrial will host its quarterly conference call on Thursday, April 24, 2019 at 10:00 a.m. CST (11:00 a.m. EST). 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 first quarter 2019 supplemental information can be viewed at www.firstindustrial.com under the "Investors" tab.

FFO Definition

In accordance with the restated NAREIT definition of FFO adopted by the Company effective January 1, 2019, 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 an unconsolidated joint venture. For the comparative 2018 period, if applicable, gain and losses from the sale of non-depreciable real estate as well as impairment of non-depreciable real estate were not excluded from FFO.

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