First Industrial Realty Trust Reports First Quarter 2022 Results
- Cash Same Store NOI Grew 14.4%; Occupancy of 98.0%; Cash Rental Rates Up 12.7%
- Signed 72% of 2022 Rollovers To-Date at a Cash Rental Rate Increase of 20%
- Started Five Developments in the First Quarter Totaling 1.3 Million Square Feet, Estimated Investment of $168 Million
- Announced a Planned Development Start for Second Quarter of 83,000 Square Feet in the Inland Empire, Estimated Investment of $21 Million
- In-Process Developments Plus Planned 2Q22 Start Total $751 Million of Estimated Investment and 6.3 Million Square Feet
- 2022 FFO Guidance Increased $0.01 at the Midpoint to $2.10 to $2.20 Per Share/Unit
- In 2Q22, Closed New $425 Million Unsecured Term Loan Which Refinances the $260 Million Term Loan Previously Scheduled to Mature in 2022
- Increased First Quarter 2022 Dividend to $0.295 Per Share, a 9.3% Increase
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 2022. First Industrial's diluted net income available to common stockholders per share (EPS) was $0.27, compared to $0.48 a year ago and first quarter FFO was $0.53 per share/unit on a diluted basis, compared to $0.46 per share/unit a year ago.
“Our team delivered another quarter of excellent operating results while serving the logistics needs of a broad range of customers,” said Peter E. Baccile, First Industrial's president and chief executive officer. “Industrial real estate fundamentals remain strong with low vacancy levels in our markets contributing to a favorable environment for rent growth.”
- In service occupancy was 98.0% at the end of the first quarter of 2022, compared to 98.1% at the end of the fourth quarter of 2021, and 95.7% at the end of the first quarter of 2021.
- Rental rates increased 12.7% on a cash basis and increased 25.5% on a straight-line basis.
- The Company, to-date, has signed approximately 72% of 2022 rollovers by square footage at a cash rental rate increase of 20%.
- Same property cash basis net operating income before termination fees (“SS NOI”) increased 14.4% reflecting higher average occupancy, increases in rental rates on new and renewal leasing, contractual rent escalations and lower free rent.
- Tenant retention of square footage up for renewal was 72.3% and leasing costs were $2.45 per square foot.
During the first quarter, the Company:
- Leased 66,000 square feet at its 133,000 square-foot First Park Miami Building 9 in South Florida.
- Leased 100,000 square feet at its 200,000 square-foot First Park Miami Building 11 in South Florida.
Investment and Disposition Activities
In the first quarter, the Company:
- Commenced development of five projects totaling 1.3 million square feet, with an estimated total investment of $168 million comprised of:
- First Lehigh Logistics Center in the Lehigh Valley - 105,000 square feet; $16 million estimated investment.
- First 76 Logistics Center in Denver - 200,000 square feet; $34 million estimated investment.
- First Park 94 Building D in the Chicago market - 451,000 square feet; $38 million estimated investment.
- First Park Miami Building 10 in South Florida - 198,000 square feet; $37 million estimated investment.
- First Rider Logistics Center in the Inland Empire - 324,000 square feet; $44 million estimated investment.
- Acquired three sites in the Inland Empire and one in Northern California for $55 million that can support up to 710,000 square feet of development
- Acquired two buildings totaling 41,000 square feet in the Inland Empire and Los Angeles plus a leased land site in Northern California for $28 million.
In the second quarter, the Company:
- Plans to commence development of one project comprised of:
- First Elm Logistics Center in the Inland Empire - 83,000 square feet; $21 million estimated investment
- Acquired a 15,000 square-foot building in the Oakland market of Northern California for $8 million.
On April 18, 2022, the Company:
- Closed a new $425 million unsecured term loan facility that refinances its $260 million unsecured term loan facility previously scheduled to mature in September of this year. The additional proceeds will be used to pay off a maturing mortgage loan this year and pay down the line of credit. The new term loan matures on October 18, 2027 and provides for interest-only payments currently at an interest rate of SOFR plus a SOFR adjustment of 10 basis points plus a credit spread of 85 basis points based on the Company's current credit ratings and consolidated leverage ratio. This is a 25 basis point reduction in the credit spread compared to the prior term loan.
“We are pleased to close on this new $425 million term loan which will serve to refinance a $260 million term loan and a $67 million mortgage loan maturing this year,” said Scott A. Musil, First Industrial's chief financial officer. “We thank our lending partners for their many years of strong support of First Industrial.”
Common Stock Dividend
In the first quarter, the Company:
- Paid a common dividend of $0.295 per share/unit for the quarter ending March 31, 2022 on April 18, 2022 to stockholders of record on March 31, 2022. The new dividend rate represented an 9.3% increase from the prior rate of $0.27 per share/unit.
Outlook for 2022
“Given our first quarter performance and our outlook for the remainder of the year, we are increasing our midpoint FFO guidance by $0.01 per share,” added Mr. Baccile.
The following assumptions were used for guidance:
- Average quarter-end in service occupancy of 97.5% to 98.5%, an increase of 25 basis points at the midpoint. This reflects anticipated incremental leasing in the overall portfolio expected to more than offset a revised lease-up assumption for the 644,000 square-foot facility in Baltimore from 2Q22 to 4Q22.
- Same store NOI growth on a cash basis before termination fees of 7.75% to 8.75% for the full year, an increase of 50 basis points at the midpoint.
- General and administrative expense of approximately $33.5 million to $34.5 million.
- Includes the incremental costs expected in 2022 related to the Company’s developments completed and under construction as of March 31, 2022 and the aforementioned planned second quarter start of First Elm Logistics Center. In total, the Company expects to capitalize $0.09 per share of interest in 2022.
- Reflects the aforementioned $425 million term loan transaction that refinances the $260 million term loan and the expected payoff of a $67 million mortgage loan coming due in 3Q22.
- 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, April 21, 2022 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 9392409. 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 2022 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 68.6 million square feet of industrial space as of March 31, 2022. 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 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, 2021, 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 in the PDF below.
Contact: Art Harmon, Vice President, Investor Relations and Marketing - (312) 344-4320