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First Industrial Realty Trust Reports First Quarter 2014 Results
"U.S. industrial market fundamentals are strong, demonstrated by 15 consecutive quarters of positive net absorption, as well as measured new supply and improving market rental rates," said
Portfolio Performance – First Quarter 2014
- In-service occupancy was 92.4% at the end of the first quarter, compared to 92.9% at the end of the fourth quarter of 2013, and 89.6% at the end of the first quarter of 2013.
- Tenants were retained in 65.8% of square footage up for renewal.
- Same property cash basis net operating income (NOI) increased 2.3%. Including lease termination fees, same store NOI grew 2.3%. Both measures exclude the impact of the
$0.4 million portion of a one-time restoration fee recognized during the first quarter. - Rental rates increased 3.1% on a cash basis and increased 8.2% on a GAAP basis; leasing costs were
$1.97 per square foot.
Investment and Disposition Activities
In the first quarter of 2014, the Company:
- Acquired a 100% leased 252,000 square-foot bulk warehouse in
Minneapolis for$13.4 million . - Started development of the 351,000 square-foot
First Northwest Commerce Center inHouston with an estimated investment of$19.7 million . - Commenced development of the First Pinnacle Industrial Center, a two-building complex comprised of 598,000 square feet, with an estimated investment of
$25.7 million . - Sold three facilities comprised of 73,000 square feet for a total of
$3.5 million .
Capital Market Activities and Financial Position
In the first quarter, the Company:
- Closed on a
$200 million 7-year unsecured term loan with interest-only payments and an initial interest rate of LIBOR plus 175 basis points. The Company used swaps to convert the LIBOR rate to an initial effective fixed interest rate of 4.04%. - Redeemed all
$50 million of its outstanding Series F Flexible Cumulative Redeemable Preferred Stock and all$25 million of its outstanding Series G Flexible Cumulative Redeemable Preferred Stock. - Received an investment grade rating of BBB- on its unsecured notes from
Standard & Poor's . - Established a new "at-the-market" equity offering program under which the Company may sell, from time to time, up to 13.3 million common shares for an aggregate gross sales price of up to
$200 million . The Company did not issue any shares via this program in 1Q14. - As announced in the Company's press release dated
February 25, 2014 , a common dividend of$0.1025 per share/unit for the quarter endingMarch 31, 2014 was paid onApril 21, 2014 to stockholders of record onMarch 31 , 2014. The new dividend rate represents a 20.6% increase from the prior rate of$0.085 per share.
"Our capital markets actions in the first quarter have provided us with additional financial flexibility and will contribute to our long-term cash flow growth through lower capital costs," said
Outlook for 2014
Mr. Duncan stated, "Prospective tenants are active across our markets seeking facilities to grow their businesses or enhance supply chain efficiencies. We are positioned to grow cash flow as we increase occupancy in our existing portfolio and lease-up our new investments."
Low End of |
High End of |
||||
Guidance for 2014 |
Guidance for 2014 |
||||
(Per share/unit) |
(Per share/unit) |
||||
Net Income Available to Common Stockholders |
0.12 |
0.22 |
|||
Add: Real Estate Depreciation/Amortization |
1.01 |
1.01 |
|||
Less: Non-NAREIT Compliant Gain Through 1Q13 |
(0.03) |
(0.03) |
|||
FFO (NAREIT Definition) |
$1.10 |
$1.20 |
|||
Less: One-Time Restoration Fee, Partially Offset by Loss from Retirement of Debt Related to Planned Early Mortgage Payoffs, Loss from Redemption of Preferred Stock and Acquisition Costs |
(0.01) |
(0.01) |
|||
FFO Before One-Time Restoration Fee, Loss from Retirement of Debt and Preferred Stock and Acquisition Costs |
$1.09 |
$1.19 |
The following assumptions were used:
- The midpoint of FFO guidance was adjusted downward by
$0.02 per share from the prior guidance.$0.01 per share is related to adjusting the lease-up expectations for the 509,000 square-foot 2Q13Chicago acquisition to the end of 2014 from 2Q14. Additionally, full year FFO guidance reflects the impact of a$0.01 non-cash write-off of a deferred rent receivable in 1Q14. - Average quarter-end in-service occupancy of 92.0% to 93.0%, a reduction of 0.5% at both ends of the range. The change is primarily due to the aforementioned revised estimated lease-up date of the
Chicago asset that will enter the in-service portfolio in 2Q14. - Guidance includes a one-time restoration fee of approximately
$0.02 per share. - Same-store NOI on a cash basis of positive 3% to 5% for the full year, excluding the aforementioned one-time restoration fee.
- JV FFO of approximately
$0.4 million . - General and administrative expense of approximately
$23 million to $24 million . - Guidance reflects the previously-disclosed planned payoff of approximately
$44 million of secured debt with a weighted average interest rate of 6.8%; in addition, the Company plans to prepay an additional two secured loans totaling approximately$22 million with a weighted average interest rate of 4.8%. Guidance also reflects the payoff of$82 million of 6.42% Senior Notes due 2014. - Guidance includes the incremental costs related to the Company's five developments in process, including its first quarter 2014 development starts in
Dallas andHouston , and its completed developments. In total, the Company expects to capitalize$0.01 per share of interest related to its development projects in 2014. - Guidance does not include the impact of:
- any other future debt repurchases prior to maturity or future debt issuances,
- any other future property sales or investments,
- any future impairment gains or losses,
- any future NAREIT-compliant gains or losses, or
- issuance of additional equity, which the Company may elect to do, depending on market conditions.
A number of factors could impact our ability to deliver results in line with our assumptions, such as interest rates, the economies of
FFO Definition
About
Forward-Looking Information
This press release and the presentation to which it refers may contain certain 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 and are including this statement for purposes of complying with those safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words "believe," "expect," "intend," "plan," "anticipate," "estimate," "project," "seek," "target," "potential," "focus," "may," "should" or similar expressions. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. 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) to us and to our potential counterparties; the availability and attractiveness of terms of additional debt repurchases; interest rates; our credit agency ratings; our ability to comply with applicable financial covenants; competition; changes in supply and demand for industrial properties (including land, the supply and demand for which is inherently more volatile than other types of industrial property) in the Company's current and proposed market areas; difficulties in identifying and consummating acquisitions and dispositions; our ability to manage the integration of properties we acquire; risks related to our investments in properties through joint ventures; environmental liabilities; slippages in development or lease-up schedules; tenant creditworthiness; higher-than-expected costs; changes in asset valuations and related impairment charges; changes in general accounting principles, policies and guidelines applicable to real estate investment trusts; international business risks; and those additional factors described under the "Risk Factors" and elsewhere in the Company's annual report on Form 10-K for the year ended
A schedule of selected financial information is attached.
The Company's first quarter supplemental information can be viewed at www.firstindustrial.com under the "Investor Relations" tab.
FIRST INDUSTRIAL REALTY TRUST, INC. |
|||
Selected Financial Data |
|||
(Unaudited) |
|||
(In thousands except per share/unit data) |
|||
Three Months Ended |
|||
March 31, |
March 31, |
||
2014 |
2013 |
||
Statement of Operations and Other Data: |
|||
Total Revenues |
$ 86,168 |
$ 80,624 |
|
Property Expenses |
(31,314) |
(26,658) |
|
General & Administrative |
(5,556) |
(6,463) |
|
Depreciation of Corporate FF&E |
(122) |
(208) |
|
Depreciation and Other Amortization of Real Estate |
(28,650) |
(26,096) |
|
Total Expenses |
(65,642) |
(59,425) |
|
Interest Income |
702 |
563 |
|
Interest Expense |
(19,046) |
(18,963) |
|
Amortization of Deferred Financing Costs |
(804) |
(854) |
|
Mark-to-Market Loss on Interest Rate Protection Agreements |
- |
(4) |
|
Loss from Retirement of Debt |
- |
(1,150) |
|
Income from Continuing Operations Before Equity in Income of Joint Ventures and Income Tax (Provision) Benefit |
1,378 |
791 |
|
Equity in Income of Joint Ventures (a) |
2,966 |
20 |
|
Income Tax (Provision) Benefit |
(10) |
62 |
|
Income from Continuing Operations |
4,334 |
873 |
|
Discontinued Operations: |
|||
(Loss) Income Attributable to Discontinued Operations |
(2) |
816 |
|
Gain (Loss) on Sale of Real Estate |
735 |
(3,074) |
|
Income (Loss) from Discontinued Operations |
733 |
(2,258) |
|
Income (Loss) Before Gain on Sale of Real Estate |
5,067 |
(1,385) |
|
Gain on Sale of Real Estate |
- |
262 |
|
Net Income (Loss) |
5,067 |
(1,123) |
|
Net (Income) Loss Attributable to the Noncontrolling Interest |
(104) |
220 |
|
Net Income (Loss) Attributable to First Industrial Realty Trust, Inc. |
4,963 |
(903) |
|
Preferred Dividends |
(1,019) |
(3,837) |
|
Redemption of Preferred Stock |
(1,462) |
- |
|
Net Income (Loss) Available to First Industrial Realty Trust, Inc.'s Common Stockholders and Participating Securities |
$ 2,482 |
$ (4,740) |
|
RECONCILIATION OF NET INCOME (LOSS) AVAILABLE TO FIRST INDUSTRIAL REALTY TRUST, INC.'S COMMON STOCKHOLDERS AND PARTICIPATING SECURITIES TO FFO (b) AND AFFO (b) |
|||
Net Income (Loss) Available to First Industrial Realty Trust, Inc.'s Common Stockholders and Participating Securities |
$ 2,482 |
$ (4,740) |
|
Depreciation and Other Amortization of Real Estate |
28,650 |
26,096 |
|
Depreciation and Other Amortization of Real Estate Included in Discontinued Operations |
15 |
1,321 |
|
Noncontrolling Interest |
104 |
(220) |
|
Equity in Depreciation and Other Amortization of Joint Ventures (a) |
37 |
55 |
|
Non-NAREIT Compliant (Gain) Loss (b) |
(735) |
3,074 |
|
Non-NAREIT Compliant Gain from Joint Ventures (a) (b) |
(2,979) |
- |
|
Funds From Operations (NAREIT) ("FFO") (b) |
$ 27,574 |
$ 25,586 |
|
Loss from Retirement of Debt |
- |
1,150 |
|
Restricted Stock/Unit Amortization |
1,575 |
1,826 |
|
Amortization of Debt Discounts / (Premiums) and Hedge Costs |
1,034 |
956 |
|
Amortization of Deferred Financing Costs |
804 |
854 |
|
Depreciation of Corporate FF&E |
122 |
208 |
|
Redemption of Preferred Stock |
1,462 |
- |
|
Mark-to-Market Loss on Interest Rate Protection Agreements |
- |
4 |
|
NAREIT Compliant Economic Gain (b) |
- |
(262) |
|
One Time Restoration Fee (d) |
(389) |
- |
|
Non-Incremental Capital Expenditures (d) |
(7,369) |
(11,597) |
|
Capitalized Interest and Overhead |
(448) |
(1,007) |
|
Straight-Line Rent and Amortization of Above (Below) Market Leases and Lease Inducements |
126 |
(1,209) |
|
Adjusted Funds From Operations ("AFFO") (b) |
$ 24,491 |
$ 16,509 |
FIRST INDUSTRIAL REALTY TRUST, INC. |
|||
Selected Financial Data |
|||
(Unaudited) |
|||
(In thousands except per share/unit data) |
|||
Three Months Ended |
|||
March 31, |
March 31, |
||
2014 |
2013 |
||
RECONCILIATION OF NET INCOME (LOSS) AVAILABLE TO FIRST INDUSTRIAL REALTY TRUST, INC.'S COMMON STOCKHOLDERS AND PARTICIPATING SECURITIES TO EBITDA (b) AND NOI (b) |
|||
Net Income (Loss) Available to First Industrial Realty Trust, Inc.'s Common Stockholders and Participating Securities |
$ 2,482 |
$ (4,740) |
|
Interest Expense |
19,046 |
18,963 |
|
Depreciation and Other Amortization of Real Estate |
28,650 |
26,096 |
|
Depreciation and Other Amortization of Real Estate Included in Discontinued Operations |
15 |
1,321 |
|
Preferred Dividends |
1,019 |
3,837 |
|
Redemption of Preferred Stock |
1,462 |
- |
|
Income Tax Provision (Benefit) |
10 |
(62) |
|
Noncontrolling Interest |
104 |
(220) |
|
Loss from Retirement of Debt |
- |
1,150 |
|
Amortization of Deferred Financing Costs |
804 |
854 |
|
Depreciation of Corporate FF&E |
122 |
208 |
|
Equity in Depreciation and Other Amortization of Joint Ventures (a) |
37 |
55 |
|
NAREIT Compliant Economic Gain (b) |
- |
(262) |
|
Non-NAREIT Compliant (Gain) Loss (b) |
(735) |
3,074 |
|
Non-NAREIT Compliant Gain from Joint Ventures (a) (b) |
(2,979) |
- |
|
EBITDA (b) |
$ 50,037 |
$ 50,274 |
|
General and Administrative |
5,521 |
6,463 |
|
Acquisition Costs |
35 |
- |
|
Mark-to-Market Loss on Interest Rate Protection Agreements |
- |
4 |
|
FFO from Joint Ventures (b) |
(116) |
(133) |
|
Net Operating Income ("NOI") (b) |
$ 55,477 |
$ 56,608 |
|
RECONCILIATION OF GAIN ON SALE OF REAL ESTATE TO NAREIT COMPLIANT ECONOMIC GAIN (b) |
|||
Gain on Sale of Real Estate |
$ - |
$ 262 |
|
Gain (Loss) on Sale of Real Estate included in Discontinued Operations |
735 |
(3,074) |
|
Non-NAREIT Compliant (Gain) Loss (b) |
(735) |
3,074 |
|
NAREIT Compliant Economic Gain (b) |
$ - |
$ 262 |
|
Weighted Avg. Number of Shares/Units Outstanding - Basic (c) |
114,245 |
105,477 |
|
Weighted Avg. Number of Shares Outstanding - Basic (c) |
109,676 |
100,774 |
|
Weighted Avg. Number of Shares/Units Outstanding - Diluted (c) |
114,784 |
105,477 |
|
Weighted Avg. Number of Shares Outstanding - Diluted (c) |
110,215 |
100,774 |
|
Per Share/Unit Data: |
|||
FFO (NAREIT) |
$ 27,574 |
$ 25,586 |
|
Less: Allocation to Participating Securities |
(73) |
(96) |
|
FFO (NAREIT) Allocable to Common Stockholders and Unitholders |
$ 27,501 |
$ 25,490 |
|
Basic/Diluted Per Share/Unit (c) |
$ 0.24 |
$ 0.24 |
|
Income from Continuing Operations, including Gain on Sale of Real Estate, Net |
$ 4,334 |
$ 1,135 |
|
Add: Noncontrolling Interest Allocable to Continuing Operations and Gain on Sale of Real Estate |
(75) |
120 |
|
Less: Preferred Dividends |
(1,019) |
(3,837) |
|
Less: Redemption of Preferred Stock |
(1,462) |
- |
|
Less: Allocation to Participating Securities |
(23) |
(36) |
|
Income (Loss) from Continuing Operations Available to First Industrial Realty Trust, Inc.'s Common Stockholders |
$ 1,755 |
$ (2,618) |
|
Basic/Diluted Per Share (c) |
$ 0.02 |
$ (0.03) |
|
Net Income (Loss) Available |
$ 2,482 |
$ (4,740) |
|
Less: Allocation to Participating Securities |
(32) |
(36) |
|
Net Income (Loss) Available to First Industrial Realty Trust, Inc.'s Common Stockholders |
$ 2,450 |
$ (4,776) |
|
Basic/Diluted Per Share (c) |
$ 0.02 |
$ (0.05) |
|
Common Dividends/Distributions |
$ 0.1025 |
$ 0.085 |
|
Balance Sheet Data (end of period): |
|||
Gross Real Estate Investment |
$ 3,137,177 |
$ 3,116,359 |
|
Real Estate and Other Assets Held For Sale, Net |
- |
19,000 |
|
Total Assets |
2,582,738 |
2,628,749 |
|
Debt |
1,373,012 |
1,234,365 |
|
Total Liabilities |
1,495,240 |
1,364,060 |
|
Total Equity |
$ 1,087,498 |
$ 1,264,689 |
a) Represents the Company's pro rata share of net income (loss), depreciation and amortization on real estate and non-NAREIT compliant gain (loss), if applicable.
b) Investors in, and analysts following, the real estate industry utilize funds from operations ("FFO"), net operating income ("NOI"), EBITDA and adjusted funds from operations ("AFFO"), variously defined below, as supplemental performance measures. While the Company believes net income (loss) available to
As used herein, the Company calculates FFO to be equal to net income (loss) available to
NOI is defined as revenues of the Company, minus property expenses such as real estate taxes, repairs and maintenance, property management, utilities, insurance and other expenses. NOI includes NOI from discontinued operations.
EBITDA is defined as NOI plus the equity in FFO of the Company's joint ventures, which are accounted for under the equity method of accounting, plus or minus mark-to-market gain or loss on interest rate protection agreements, minus general and administrative expenses and acquisition costs. EBITDA includes EBITDA from discontinued operations.
AFFO is defined as EBITDA minus GAAP interest expense, minus capitalized interest and overhead, plus amortization of debt discounts / (premiums) and hedge costs, minus preferred stock dividends, plus or minus straight-line rental income and amortization of above (below) market leases and lease inducements, minus provision for income taxes or plus benefit for income taxes, minus or plus mark-to-market gain or loss on interest rate protection agreements, plus restricted stock amortization, minus non-incremental capital expenditures. Non-incremental capital expenditures are building improvements and leasing costs required to maintain current revenues.
FFO, NOI, 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, EBITDA and AFFO should not be considered as substitutes for net income (loss) 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, EBITDA and AFFO as currently calculated by the Company may not be comparable to similarly titled, but variously calculated, measures of other REITs.
In addition, the Company considers cash-basis same store NOI ("SS NOI") to be a useful supplemental measure of its operating performance. Same store properties, for the period beginning
c) In accordance with GAAP, the diluted weighted average number of shares/units outstanding and the diluted weighted average number of shares outstanding are the same as the basic weighted average number of shares/units outstanding and the basic weighted average number of shares outstanding, respectively, for periods in which continuing operations is a loss, as the dilutive effect of awards that have forfeitable rights to dividends or dividend equivalents (restricted units and LTIP Unit Awards) would be antidilutive to the loss from continuing operations per share. The Company has conformed with the GAAP computation of diluted common shares in calculating per share amounts for items included on the Statement of Operations, including FFO and AFFO.
GAAP requires unvested equity based compensation awards that have nonforfeitable rights to dividends or dividend equivalents (restricted stock) ("participating securities") to be included in the two class method of the computation of EPS. Under the two class method, participating security holders are allocated income, in proportion to total weighted average shares outstanding, based upon the greater of net income (after reduction for preferred dividends and redemption of preferred stock) or common dividends declared. The Company conforms the calculation of FFO and AFFO with the calculation of EPS during periods in which common dividends are declared.
d) A one-time restoration fee is excluded from the calculation of AFFO. The adjustment also reduces building improvements by
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SOURCE
Art Harmon, Senior Director, Investor Relations and Corporate Communications, 312-344-4320