First Industrial Realty Trust Reports Third Quarter 2019 Results

CHICAGO, Oct. 23, 2019 /PRNewswire/ -- 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 2019. Diluted net income available to common stockholders per share (EPS) was $0.62 compared to $0.24 a year ago.

First Industrial's third quarter FFO was $0.44 per share/unit on a diluted basis, compared to $0.41 per share/unit a year ago. Excluding the approximately $0.01 per share gain on sales of land, third quarter 2018 FFO per share was $0.40.

"Our third quarter results reflect the strength of the industrial real estate sector, with strong occupancy levels and cash rental rate growth of 31.9% which exceeded the previous quarterly record established in 2Q19," said Peter E. Baccile, First Industrial's president and chief executive officer. "Our business continues to benefit from tenant demand for quality and well-located spaces to support their evolving supply chain requirements."

Portfolio Performance

• In service occupancy was 97.7% at the end of the third quarter of 2019, compared to 97.3% at the end of the second quarter of 2019, and 97.6% at the end of the third quarter of 2018.
• Tenant retention by square footage was 82.3%.
• Same property cash basis net operating income ("SS NOI") increased 2.9%, reflecting contractual rent escalations and increased rental rates on leasing, offset by a slight decrease in average occupancy and the negative impact of tax true-ups in markets where taxes are paid in arrears.
• Rental rates increased 31.9% on a cash basis and increased 50.4% on a straight-line basis; leasing costs were $1.87 per square foot.

Development Leasing

During the third quarter, the Company:

• Leased 100% of its 120,000 square-foot First Park at Central Crossing Building III in Central New Jersey. The lease will commence upon completion in the fourth quarter.
• Leased 21,000 square feet of its 67,000 square-foot First Glacier Logistics Center in Seattle to bring that building to 100% leased.
• Preleased 333,000 square feet, or 77%, of a 435,000 square-foot building in northwest Dallas at First Park 121; construction expected to start on this new facility in the fourth quarter.

Investment and Disposition Activities

In the third quarter of 2019, the Company:

• Acquired a 6.9-acre site in northeast Philadelphia for $2.0 million on which the Company commenced development of a 100,000 square-foot building; total estimated investment of $12.3 million.
• Acquired three land sites in the Inland Empire comprised of 42 acres for $19.0 million that can support development of up to 774,000 square feet.
• Entered into a 50-year ground lease in South Florida for a site that can support 374,000 square feet of development.
• Acquired three buildings in Southern California: a 91,000 square-foot building in the Inland Empire for $15.2 million, a 44,000 square-foot building in the Inland Empire for $5.6 million and a 41,000 square-foot building in San Diego for $7.3 million.
• Acquired a 54,000 square-foot building in Orlando for $6.3 million.
• Sold eight buildings plus two units comprised of 1.6 million square feet and several land parcels for $94.0 million.
• Recognized the sale of a 618,000 square-foot building in Phoenix for $54.5 million in which the tenant exercised its purchase option; transaction scheduled to close in 3Q20.

In the fourth quarter to date, the Company:

• Acquired a 19.6-acre future development site in South Florida for $19.8 million with three in-place land leases; potentially buildable up to 294,000 square feet.
• Sold one building in Minneapolis comprised of 84,000 square feet for $4.0 million.

"Given strong competition for industrial properties, we are executing on our portfolio management objectives through sales of select assets with proceeds primarily being invested in new developments to service tenant demand," said Johannson Yap, First Industrial's chief investment officer. "Through our platform, we successfully added several sites in high barrier-to-entry markets to support our future growth and value creation."

Capital

During the third quarter of 2019, the Company:

• Closed on a private placement offering on July 23 for $150 million of fixed rate senior unsecured notes with a coupon rate of 3.97%. The 3.97% Series E Guaranteed Senior Notes have a 10-year term and an effective interest rate of 4.23% reflecting the settlement of interest rate protection agreements related to the offering.
• Paid off $40 million of mortgage loans at a weighted average interest rate of 7.3%.

Outlook for 2019

Mr. Baccile stated, "Based on our performance in the third quarter and outlook for the remainder of the year, we are increasing the midpoint of our full-year 2019 FFO per share guidance by $0.01. Our team is serving our customers well while driving value and long-term cash flow growth from leasing, profitable investing and our portfolio management efforts."

The following assumptions were used:

• In service occupancy at year-end fourth quarter of 96.7% to 97.7%. This implies a full year quarter-end average in service occupancy of 97.25% to 97.5%.
• Fourth quarter same-store NOI growth on a cash basis before termination fees of 1.25% to 2.75%. This implies a quarterly average same-store NOI growth for the full year 2019 of 2.8% to 3.2%, an increase of 50 basis points at the midpoint compared to prior guidance due to third quarter performance.
• 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 October 23, 2019 and the aforementioned planned start in Dallas in the fourth quarter. In total, the Company expects to capitalize $0.04 per share of interest related to these development projects in 2019.
• 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, October 24, 2019 at 11:00 a.m. CDT (12:00 p.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 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 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, 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.

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 66.0 million square feet of industrial space as of September 30, 2019. 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, 2018, 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.

SOURCE First Industrial Realty Trust, Inc.