First Industrial Realty Trust Reports Third Quarter 2022 Results
- 2022 FFO Guidance Increased $0.04 at the Midpoint to $2.21 to $2.25 Per Share/Unit
- Occupancy of 98.3%; Cash Rental Rates Up 30.9%; Cash Same Store NOI Grew 8.5%
- 25% Cash Rental Rate Increase on 2022 Rollovers and New Leases Signed To-Date
- Started a 155,000 Square-Foot Development in the Inland Empire, Estimated Investment of $29 Million
- Started a Three-Building 1.8 Million Square-Foot Development at the Camelback 303 Joint Venture in Phoenix; Total Estimated Investment of $210 Million
- Completed $123 Million of Asset Sales in the Third Quarter; Exited Cleveland Market
- Closed $300 Million Unsecured Delayed Draw Term Loan
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 2022. First Industrial's diluted net income available to common stockholders per share (EPS) was $0.94, compared to $0.33 a year ago and third quarter FFO was $0.60 per share/unit on a diluted basis, compared to $0.51 per share/unit a year ago.
“Our team delivered another excellent quarter across our platform in leasing, investments, dispositions and capital markets,” said Peter E. Baccile, First Industrial's president and chief executive officer. “Industrial fundamentals remain strong and continue to support further rent growth.”
- In service occupancy was 98.3% at the end of the third quarter of 2022, compared to 98.4% at the end of the second quarter of 2022, and 97.1% at the end of the third quarter of 2021.
- Cash rental rates increased 30.9% and increased 45.8% on a straight-line basis.
- Cash rental rate growth on the 98% of 2022 rollovers completed and new leases signed to-date is 24.6%.
- Same property cash basis net operating income before termination fees (“SS NOI”) increased 8.5%.
During the third quarter, the Company:
- Leased the remaining 110,000 square feet at the 219,000 square-foot First Park Miami Building 1 in South Florida. The lease is expected to commence upon completion in the first quarter of 2023.
- Leased 43,000 square feet at its 86,000 square-foot First Loop Logistics Park Building 3 in Central Florida. The lease is expected to commence upon completion in the fourth quarter of 2022.
Investment and Disposition Activities
In the third quarter, the Company:
- Commenced development of First Wilson Logistics Center II in the Inland Empire - 155,000 square feet; $29 million estimated investment.
- Acquired three sites in the Inland Empire, South Florida and Seattle for $40 million.
- Acquired three buildings totaling 120,000 square feet in Southern California and South Florida for $45 million.
- Commenced development of three buildings at its Camelback 303 business park joint venture in Phoenix totaling 1.8 million square feet; $210 million total estimated project cost.
- Sold eight buildings comprised of 1.6 million square feet for $123 million; exited the Cleveland market.
In the fourth quarter, the Company:
- Acquired two sites totaling 35 acres in the Inland Empire and in the Philadelphia market for $26 million.
“Our team continued to execute on key transactions that support our capital allocation goals, including the sale of the remainder of our Cleveland holdings, the proceeds from which we are redeploying into value-creating development investments in higher rent growth markets,” said Johannson Yap, First Industrial's chief investment officer.
On August 12, 2022, the Company:
- Closed a $300 million delayed draw unsecured term loan facility. The new and undrawn term loan has an initial maturity date of August 12, 2025 with two one-year extension options and, if borrowings were outstanding under the loan today, would provide for interest-only payments at an interest rate of SOFR plus a credit spread of 85 basis points based on the Company's current credit ratings and consolidated leverage ratio plus a SOFR adjustment of 10 or 15 basis points depending on the tenor of the interest period. The Company may borrow up to the full principal amount on or before August 11, 2023.
Outlook for 2022
“Reflecting the strength of our performance, we are increasing the midpoint of our FFO per share guidance by $0.04,” said Mr. Baccile. “We remain focused on serving incremental supply chain requirements through our development investments and within our portfolio while driving cash flow growth for shareholders.”
The following assumptions were used for guidance:
- In service occupancy at year-end fourth quarter of 98.0% to 98.5%. This implies a full year quarter-end average in service occupancy of 98.2% to 98.3%. This assumes the lease-up of the 644,000 square-foot facility in Baltimore will now occur in 1Q23.
- Fourth quarter SS NOI growth on a cash basis before termination fees of 5.0% to 6.5%. This implies a quarterly average SS NOI growth for the full year 2022 of 9.3% to 9.7% for the full year, an increase of 75 basis points at the midpoint.
- Includes the incremental costs expected in 2022 related to the Company’s developments completed and under construction as of September 30, 2022. In total, the Company expects to capitalize $0.12 per share of interest in 2022, an increase of $0.02 per share.
- General and administrative expense of approximately $34.0 million to $35.0 million
- Other than the transactions discussed in this release, guidance does not include the impact of:
- any future investments or property sales
- any future debt repurchases prior to maturity or future debt issuances, or
- any future equity issuances.
First Industrial will host its quarterly conference call on Thursday, October 20, 2022 at 10:00 a.m. CDT (11:00 a.m. EDT). The conference call may be accessed by dialing (877) 870-4263 and entering the conference ID 10171701. 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 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 68.4 million square feet of industrial space as of September 30, 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) 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 on the pdf link below.
Contact: Art Harmon, Vice President, Investor Relations and Marketing - (312) 344-4320