First Industrial Realty Trust Reports Third Quarter 2021 Results
- Occupancy of 97.1%, Up 50 Basis Points from 2Q21; Cash Same Store NOI Grew 6.9%
- 15% Cash Rental Rate Increase on 2021 Rollovers and New Leases Signed To-Date; 19% Cash Rental Rate Increase on 2022 Rollovers Signed To-Date
- Pre-leased 1.1 Million Square Feet At First Park @ PV303 in Phoenix Including Expansion and First Wilson Logistics Center I in the Inland Empire
- Started Three Developments Totaling 691,000 Square Feet, Estimated Investment of $108 Million
- Three Planned Development Starts for Fourth Quarter Totaling 800,000 Square Feet, Estimated Investment of $130 Million
- In-Process Developments Plus Planned 4Q21 Starts Total $725 Million of Estimated Investment and 6.4 Million Square Feet
- Raised $59 Million of Net Proceeds Via At-The-Market Equity Offering Program
- Closed $750 Million Unsecured Revolving Credit Facility and $200 Million Unsecured Term Loan
- Increased 2021 FFO Guidance By $0.02 at Midpoint to $1.95 Per Share/Unit
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 2021. First Industrial's diluted net income available to common stockholders per share (EPS) was $0.33, compared to $0.28 a year ago and third quarter FFO was $0.51 per share/unit on a diluted basis, compared to $0.49 per share/unit a year ago. Excluding approximately $0.04 per share/unit of income related to the final settlement of an insurance claim, third quarter 2020 FFO was $0.45 per share/unit.
“Our team continued its strong performance in the quarter producing excellent portfolio results and executing on our investment strategy,” said Peter E. Baccile, First Industrial's president and chief executive officer. “We are achieving strong rent growth across our markets while driving external growth through our expanding development pipeline.”
- In service occupancy was 97.1% at the end of the third quarter of 2021, compared to 96.6% at the end of the second quarter of 2021, and 96.3% at the end of the third quarter of 2020.
- Third quarter 2021 same property cash basis net operating income before termination fees (“SS NOI”) increased 6.9%.
- Cash rental rates increased 22.8% and increased 36.2% on a straight-line basis in 3Q21.
- Cash rental rate growth on the 98% of 2021 rollovers completed and new leases signed to-date is 15.3%.
- The Company, to-date, has signed approximately 29% of 2022 rollovers by square footage at a cash rental rate increase of approximately 19.0%.
During the third quarter and fourth quarter to-date, the Company:
- Leased its 548,000 square-foot First Park @ PV303 Building C in Phoenix prior to completion and signed an agreement for a 254,000 square-foot expansion with the tenant.
- Leased 100% of the 303,000 square-foot First Wilson Logistics Center I in the Inland Empire. The lease is expected to commence upon completion in the first quarter of 2022.
- Leased 100% of its 28,000 square-foot port-centric redevelopment in the South Bay submarket of Los Angeles.
Investment and Disposition Activities
In the third quarter, the Company:
- Commenced development of three projects totaling 691,000 square feet, with an estimated total investment of $108 million comprised of:
- First Park Miami Building 1 in South Florida - 219,000 square feet; 50% pre-leased; $39 million estimated investment.
- First Loop Logistics Park in Central Florida - four buildings totaling 344,000 square feet; $45 million estimated investment.
- First Steele in Seattle - 129,000 square feet; $24 million estimated investment.
- Acquired a 39,000 square-foot building in Fremont in Northern California for $8 million.
- Acquired three sites totaling 122 net acres in the Inland Empire East and Denver for $59 million that are developable up to 2.1 million square feet.
- Sold six buildings and four units totaling 159,000 square feet located in Detroit and South Florida for $14 million.
In the fourth quarter, the Company:
- Plans to commence development of three projects totaling 800,000 square feet, with an estimated total investment of $130 million comprised of:
- First Pioneer Logistics Center in the Inland Empire - 461,000 square feet; $73 million estimated investment.
- FirstGate Commerce Center in South Florida - 132,000 square feet; $24 million estimated investment.
- First Bordentown Logistics Center in New Jersey - 208,000 square feet; $33 million estimated investment, includes $8 million for site acquisition in 4Q21.
- Acquired two additional sites comprised of ten acres in the Inland Empire and Northern California for a total of $10 million.
- Sold four buildings totaling 90,000 square feet located in Detroit for $7 million.
“Our team is creating value for shareholders by delivering high quality distribution facilities to serve the logistics needs for tenants operating in a range of industries,” said Johannson Yap, chief investment officer. “We will have $725 million of development projects underway including our three planned fourth quarter starts and we continue to replenish our pipeline by sourcing and entitling land in high-barrier locations.”
During the third quarter, the Company:
- On July 7, 2021, closed a $750 million senior unsecured revolving credit facility which amended and restated its previous facility. The facility matures on July 7, 2025 and has two six-month extension options. The agreement provides for interest-only payments currently at an interest rate of LIBOR plus 77.5 basis points based on the Company's current credit ratings and consolidated leverage ratio which is a 32.5 basis point reduction in the credit spread compared to the prior facility.
- On July 7, 2021, closed a new unsecured term loan facility that refinances its $200 million unsecured term loan facility previously scheduled to mature on July 15, 2021. The new term loan matures on July 7, 2026 and provides for interest-only payments currently at an interest rate of LIBOR plus 85 basis points based on the Company's current credit ratings and consolidated leverage ratio which is a 65 basis point reduction in the credit spread compared to the prior term loan. With the interest rate swap agreements in place, the fixed interest rate on the new term loan is 1.84%.
- Issued 1.1 million shares of its common stock at an average price of $55.35 per share through its “at-the-market” equity offering program generating approximately $59 million in net proceeds.
Outlook for 2021
“We are raising our full year FFO per share guidance for 2021 by $0.02 at the midpoint due to our strong third quarter performance and our outlook for the fourth quarter,” added Mr. Baccile. “With strategic land positions that support the development of more than 16 million square feet of additional space, we are well-positioned for future growth.”
The following assumptions were used for guidance:
- In service occupancy at year-end fourth quarter of 96.75% to 97.75%. This implies a full year quarter-end average in service occupancy of 96.5% to 96.8%, an increase of 15 basis points at the midpoint.
- Fourth quarter SS NOI growth on a cash basis before termination fees of 6.0% to 7.5%. This implies a quarterly average SS NOI growth for the full year 2021 of 4.3% to 4.7%, an increase of 25 basis points at the midpoint. Same Store revenues for the full year 2020 excludes approximately $1 million of insurance settlement gain relating to a building destroyed by fire in 2016.
- General and administrative expense of approximately $34 million to $35 million, an increase of $1 million at the midpoint.
- Includes the incremental costs expected in 2021 related to the Company’s developments completed and under construction as of September 30, 2021 and the aforementioned planned fourth quarter starts of First Pioneer Logistics Center, FirstGate Commerce Center and First Bordentown Logistics Center. In total, the Company expects to capitalize $0.08 per share of interest in 2021.
- Other than the transactions discussed in this release, guidance does not include the impact of:
- any future debt repurchases prior to maturity or future debt issuances,
- any future investments or property sales, or
- any future equity issuances.
First Industrial will host its quarterly conference call on Thursday, October 21, 2021 at 10:00 a.m. CDT (11:00 a.m. EDT). The conference call may be accessed by dialing (866) 542-2938 and entering the conference ID 2499227. 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 2021 supplemental information can be viewed at www.firstindustrial.com under the “Investors” tab.
In accordance with the NAREIT definition of FFO, 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 unconsolidated joint ventures.
About First Industrial Realty Trust, Inc.
First Industrial Realty Trust, Inc. (NYSE: FR) is a leading fully integrated owner, operator, and developer of industrial real estate with a track record of providing industry-leading customer service to multinational corporations and regional customers. Across major markets in the United States, our local market experts manage, lease, buy, (re)develop, and sell bulk and regional distribution centers, light industrial, and other industrial facility types. In total, we own and have under development approximately 67.7 million square feet of industrial space as of September 30, 2021. For more information, please visit us at www.firstindustrial.com.
This press release and the presentation to which it refers may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. We intend for such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on certain assumptions and describe our future plans, strategies and expectations, and are generally identifiable by use of the words "believe," "expect," "plan," "intend," "anticipate," "estimate," "project," "seek," "target," "potential," "focus," "may," "will," "should" or similar words. Although we believe the expectations reflected in forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be attained or that results will not materially differ. Factors which could have a materially adverse effect on our operations and future prospects include, but are not limited to: changes in national, international, regional and local economic conditions generally and real estate markets specifically; changes in legislation/regulation (including changes to laws governing the taxation of real estate investment trusts) local economic conditions generally and real estate markets specifically; changes in legislation/regulation (including changes to laws governing the taxation of real estate investment trusts) and actions of regulatory authorities; the uncertainty and economic impact of pandemics, epidemics or other public health emergencies or fear of such events, such as the recent outbreak of coronavirus disease 2019 (COVID-19); our ability to qualify and maintain our status as a real estate investment trust; the availability and attractiveness of financing (including both public and private capital) and changes in interest rates; the availability and attractiveness of terms of additional debt repurchases; our ability to retain our credit agency ratings; our ability to comply with applicable financial covenants; our competitive environment; changes in supply, demand and valuation of industrial properties and land in our current and potential market areas; our ability to identify, acquire, develop and/or manage properties on favorable terms; our ability to dispose of properties on favorable terms; our ability to manage the integration of properties we acquire; potential liability relating to environmental matters; defaults on or non-renewal of leases by our tenants; decreased rental rates or increased vacancy rates; higher-than-expected real estate construction costs and delays in development or lease-up schedules; potential natural disasters and other potentially catastrophic events such as acts of war and/or terrorism; litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; risks associated with our investments in joint ventures, including our lack of sole decision-making authority; and other risks and uncertainties described under the heading "Risk Factors" and elsewhere in our annual report on Form 10-K for the year ended December 31, 2020, as well as those risks and uncertainties discussed from time to time in our other Exchange Act reports and in our other public filings with the SEC. We caution you not to place undue reliance on forward-looking statements, which reflect our outlook only and speak only as of the date of this press release or the dates indicated in the statements. We assume no obligation to update or supplement forward-looking statements. For further information on these and other factors that could impact us and the statements contained herein, reference should be made to our filings with the SEC.
A schedule of selected financial information can be found on the pdf link below.
Contact: Art Harmon, Vice President, Investor Relations and Marketing, (312) 344-4320