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Classified in: Business
Subjects: ERN, CCA

First Industrial Realty Trust Reports First Quarter 2018 Results


CHICAGO, April 24, 2018 /PRNewswire/ --

First Industrial Realty Trust logo. (PRNewsFoto/First Industrial Realty Trust)

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 2018. Diluted net income available to common stockholders per share (EPS) was $0.30 in the first quarter, compared to $0.19 a year ago.

First Industrial's first quarter FFO was $0.38 per share/unit on a diluted basis, compared to $0.36 per share/unit a year ago. First quarter results reflect a previously disclosed severance charge as well as an impairment charge related to the anticipated sale of an excess land parcel that together resulted in a $0.02 per share impact.

"We are off to a good start in 2018 as our team and our portfolio delivered solid growth in same store cash NOI and rental rates," said Peter E. Baccile, First Industrial's president and chief executive officer. "Industrial real estate fundamentals continue to be favorable and we seek to grow cash flow as we serve tenants' logistics needs through our development investments and portfolio."

Portfolio Performance ? First Quarter 2018

Capital Markets

Investment and Disposition Activities

In the first quarter, the Company:

In the second quarter to date, the Company:

"We are using our platform to create value through development and lease up of high quality distribution facilities while adding select acquisitions that will contribute to our long-term cash flow growth," said Johannson Yap, chief investment officer. "Our project-specific joint venture at the PV-303 business park is an extension of our overall strategy, offering us potential to participate in additional growth in this strategic location, while helping us manage our portfolio allocation and risk."

Outlook for 2018

Mr. Baccile stated, "Our team and our portfolio continue to perform well. Given the health of the leasing markets, we remain focused on growing long-term cash flow through rent growth, contractual escalations and securing longer lease terms. Investment through development continues to offer strong risk-adjusted returns and by continuing our track record of execution from construction through lease-up, we can drive future cash flow and further elevate our portfolio."












Low End of 

High End of 


Guidance for 2018

Guidance for 2018


(Per share/unit)

(Per share/unit)






Net Income

0.75

0.85

Add:   Real Estate Depreciation/Amortization

0.92

0.92

Add:   Impairment of Depreciable Real Estate - 1Q18

0.02

0.02

Less: Gain on Sale of Depreciable Real Estate - 1Q18

(0.16)

(0.16)






FFO (NAREIT Definition)

$1.53

$1.63






Plus: Severance Charge and Impairment of Non-Depreciable Real Estate

0.02

0.02

FFO Before Severance Charge and Impairment of Non-Depreciable Real Estate

$1.55

$1.65

The following assumptions were used:

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 Wednesday, April 25, 2018 at 9:30 a.m. CDT (10:30 a.m. EDT). 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 2018 supplemental information can be viewed at www.firstindustrial.com under the "Investors" tab. 

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. 

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 64.3 million square feet of industrial space as of March 31, 2018. For more information, please visit us at www.firstindustrial.com.

Forward-Looking Information

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; 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; changes in 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; difficulties in identifying and consummating acquisitions and dispositions; 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; changes in general accounting principles, policies and guidelines applicable to real estate investment trusts; 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, 2017, 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 is attached.



FIRST INDUSTRIAL REALTY TRUST, INC.

Selected Financial Data

(Unaudited)

 (In thousands except per share/Unit data)



Three Months Ended

March 31,

March 31,

2018

2017


Statement of Operations and Other Data:


    Total Revenues

$     99,771

$     97,383


    Property Expenses

(29,411)

(28,486)

    General and Administrative (a) 

(8,143)

(8,033)

    Impairment of Real Estate 

(2,756)

-

    Depreciation of Corporate FF&E 

(183)

(169)

    Depreciation and Other Amortization of Real Estate 

(28,132)

(28,325)


        Total Expenses

(68,625)

(65,013)


    Gain on Sale of Real Estate 

20,089

8,009

    Interest Expense 

(12,791)

(14,369)

    Amortization of Debt Issuance Costs 

(855)

(778)

    Loss from Retirement of Debt 

(39)

(1,653)


         Income from Operations Before Income Tax Provision 

37,550

23,579


    Income Tax Provision 

(86)

(88)


         Net Income 

37,464

23,491


    Net Income Attributable to the Noncontrolling Interest 

(1,172)

(782)


         Net Income Available to First Industrial Realty Trust, Inc.'s 


             Common Stockholders and Participating Securities 

$    36,292

$    22,709


 RECONCILIATION OF NET INCOME AVAILABLE TO  


 FIRST INDUSTRIAL REALTY TRUST, INC.'S COMMON 


 STOCKHOLDERS AND PARTICIPATING SECURITIES TO  


 FFO (b) AND AFFO (b) 






     Net Income Available to First Industrial Realty Trust, Inc.'s 


         Common Stockholders and Participating Securities 

$    36,292

$    22,709


     Depreciation and Other Amortization of Real Estate 

28,132

28,325

     Impairment of Depreciable Real Estate 

2,285

-

     Noncontrolling Interest 

1,172

782

     Gain on Sale of Depreciable Real Estate 

(20,073)

(8,009)


     Funds From Operations (NAREIT) ("FFO") (b) 

$    47,808

$    43,807


     Loss from Retirement of Debt 

39

1,653

     Restricted Stock/Unit Amortization 

1,689

3,101

     Amortization of Debt (Premiums)/Discounts and Hedge Costs 

(14)

64

     Amortization of Debt Issuance Costs 

855

778

     Depreciation of Corporate FF&E 

183

169

     Impairment of Non-Depreciable Real Estate 

471

-

     Gain on Sale of Non-Depreciable Real Estate 

(16)

-

     Non-incremental Building Improvements 

(937)

(2,347)

     Non-incremental Leasing Costs 

(5,594)

(4,403)

     Capitalized Interest 

(1,602)

(1,027)

     Capitalized Overhead 

(104)

(76)

     Straight-Line Rent, Amortization of Above (Below) Market Leases 


        and Lease Inducements 

(775)

(1,581)


     Adjusted Funds From Operations ("AFFO") (b) 

$    42,003

$    40,138




FIRST INDUSTRIAL REALTY TRUST, INC.

Selected Financial Data

(Unaudited)

 (In thousands except per share/Unit data)






 RECONCILIATION OF NET INCOME AVAILABLE TO  


 FIRST INDUSTRIAL REALTY TRUST, INC.'S COMMON 

Three Months Ended

 STOCKHOLDERS AND PARTICIPATING SECURITIES TO  

March 31,

March 31,

 ADJUSTED EBITDA (b) AND NOI (b) 

2018

2017


     Net Income Available to First Industrial Realty Trust, Inc.'s 


         Common Stockholders and Participating Securities 

$    36,292

$    22,709


     Interest Expense 

12,791

14,369

     Depreciation and Other Amortization of Real Estate 

28,132

28,325

     Impairment of Real Estate 

2,756

-

     Severance Expense (a) 

1,298

-

     Income Tax Provision 

86

88

     Noncontrolling Interest 

1,172

782

     Loss from Retirement of Debt 

39

1,653

     Amortization of Debt Issuance Costs 

855

778

     Depreciation of Corporate FF&E 

183

169

     Gain on Sale of Real Estate 

(20,089)

(8,009)


     Adjusted EBITDA (b) 

$    63,515

$    60,864


     General and Administrative (a) 

6,845

8,033


     Net Operating Income ("NOI") (b) 

$    70,360

$    68,897


     Non-Same Store NOI 

(2,432)

(3,197)


     Same Store NOI Before Same Store Adjustments (b) 

$    67,928

$    65,700


     Straight-line Rent 

(306)

(1,639)

     Above (Below) Market Lease Amortization 

(204)

(283)

     Lease Termination Fees 

(17)

(278)


     Same Store NOI (Cash Basis without Termination Fees) (b) 

$    67,401

$    63,500


Weighted Avg. Number of Shares/Units Outstanding - Basic

123,729

120,877

Weighted Avg. Number of Shares Outstanding - Basic

119,846

116,837


Weighted Avg. Number of Shares/Units Outstanding - Diluted

124,094

121,301

Weighted Avg. Number of Shares Outstanding - Diluted

120,211

117,261


Per Share/Unit Data:


 Net Income Available to First Industrial Realty Trust, Inc.'s 


       Common Stockholders and Participating Securities 

$     36,292

$     22,709

 Less: Allocation to Participating Securities 

(97)

(67)

 Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders 

$     36,195

$     22,642


 Basic and Diluted Per Share 

$         0.30

$         0.19


 FFO (NAREIT)(b)  

$     47,808

$     43,807

 Less: Allocation to Participating Securities 

(124)

(113)

 FFO (NAREIT) Allocable to Common Stockholders and Unitholders 

$     47,684

$     43,694


 Basic Per Share/Unit 

$         0.39

$         0.36

 Diluted Per Share/Unit 

$         0.38

$         0.36


 Common Dividends/Distributions Per Share/Unit 

$     0.2175

$     0.2100


Balance Sheet Data (end of period):


      Gross Real Estate Investment

$ 3,543,805

$ 3,396,002

      Real Estate and Other Assets Held For Sale, Net

16,725

4,471

      Total Assets

3,044,595

2,805,058

      Debt

1,401,881

1,371,297

      Total Liabilities

1,557,131

1,519,528

      Total Equity

$ 1,487,464

$ 1,285,530

 

  a)


March 31,

2018

General and Administrative per the Form 10-Q

8,143

Severance Expense

(1,298)

General and Administrative per Reconciliation within the Selected Financial Data

6,845

b)

Investors in, and analysts following, the real estate industry utilize funds from operations ("FFO"), net operating income ("NOI"), adjusted EBITDA and adjusted funds from operations ("AFFO"), variously defined below, as supplemental performance measures.  While we believe net income available to First Industrial Realty Trust, Inc.'s common stockholders and participating securities, as defined by GAAP, is the most appropriate measure, we consider FFO, NOI, adjusted EBITDA and AFFO, given their wide use by, and relevance to investors and analysts, appropriate supplemental performance measures.  FFO, reflecting the assumption that real estate asset values rise or fall with market conditions, principally adjusts for the effects of GAAP depreciation and amortization of real estate assets.  NOI provides a measure of rental operations, and does not factor in depreciation and amortization and non-property specific expenses such as general and administrative expenses.  Adjusted EBITDA provides a tool to further evaluate the ability to incur and service debt and to fund dividends and other cash needs.  AFFO provides a tool to further evaluate the ability to fund dividends.  In addition, FFO, NOI, adjusted EBITDA and AFFO are commonly used in various ratios, pricing multiples/yields and returns and valuation calculations used to measure financial position, performance and value.

As used herein, we calculate 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 depreciable real estate, minus gain on sale of depreciable real estate.

NOI is defined as our revenues, minus property expenses such as real estate taxes, repairs and maintenance, property management, utilities, insurance and other expenses.

Adjusted EBITDA is defined as NOI, minus general and administrative expenses. For the three months ended March 31, 2018, $1,298 of severance expense included in general and administrative expense was not deducted to arrive at adjusted EBITDA.

AFFO is defined as adjusted EBITDA minus GAAP interest expense, minus capitalized interest and overhead, (minus)/plus amortization of debt (premiums)/discounts and hedge costs, minus straight-line rental income, amortization of above (below) market leases and lease inducements, minus provision for income taxes or plus benefit for income taxes, plus restricted stock/unit amortization, minus severance expense and minus non-incremental capital expenditures. Non-incremental capital expenditures refer to building improvements and leasing costs required to maintain current revenues plus tenant improvements amortized back to the tenant over the lease term. Excluded are first generation leasing costs, capital expenditures underwritten at acquisition and development/redevelopment costs.

FFO, NOI, adjusted EBITDA and AFFO do not represent cash generated from operating activities in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs, including the repayment of principal on debt and payment of dividends and distributions.  FFO, NOI, adjusted EBITDA and AFFO should not be considered as substitutes for net income available to common stockholders and participating securities (calculated in accordance with GAAP) as a measure of results of operations or cash flows (calculated in accordance with GAAP) as a measure of liquidity.  FFO, NOI, adjusted EBITDA and AFFO as currently calculated by us may not be comparable to similarly titled, but variously calculated, measures of other REITs.

In addition, we consider cash-basis same store NOI ("SS NOI") to be a useful supplemental measure of our operating performance. Same store properties include all properties owned prior to January 1, 2017 and held as an in service property through the end of the current reporting period, and developments and redevelopments that were placed in service prior to January 1, 2017 (the "Same Store Pool"). Properties which are at least 75% occupied at acquisition are placed in service, unless we anticipate tenant move-outs within two years of ownership would drop occupancy below 75%. Acquired properties with occupancy greater than 75% at acquisition, but with tenants that we anticipate will move out within two years of ownership, will be placed in service upon the earlier of reaching 90% occupancy or twelve months after move out. Acquisitions that are less than 75% occupied at the date of acquisition, developments and redevelopments are placed in service as they reach the earlier of a) stabilized occupancy (generally defined as 90% occupied), or b) one year subsequent to acquisition or development/redevelopment construction completion.

We define SS NOI as NOI, less NOI of properties not in the Same Store Pool, less the impact of straight-line rent, the amortization of above (below) market rent and the impact of lease termination fees. We exclude straight-line rent and above (below) market rent in calculating SS NOI because we believe it provides a better measure of actual cash basis rental growth for a year-over-year comparison. In addition, we believe that SS NOI helps the investing public compare the operating performance of a company's real estate as compared to other companies. While SS NOI is a relevant and widely used measure of operating performance of real estate investment trusts, it does not represent cash flow from operations or net income as defined by GAAP and should not be considered as an alternative to those measures in evaluating our liquidity or operating performance. SS NOI also does not reflect general and administrative expense, interest expense, depreciation and amortization, income tax benefit and expense, gains and losses on retirement of debt, impairment of real estate, sale of real estate, capital expenditures and leasing costs, or trends in development and construction activities that could materially impact our results from operations. Further, our computation of SS NOI may not be comparable to that of other real estate companies, as they may use different methodologies for calculating SS NOI.

 

SOURCE First Industrial Realty Trust, Inc.


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