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First Industrial Realty Trust Reports First Quarter 2015 Results
Both EPS and FFO per share results for the first quarter of 2015 reflect
"We are off to a good start this year, as we delivered strong same store NOI growth benefiting from broad-based tenant demand across our markets," said
Portfolio Performance – First Quarter 2015
- In-service occupancy was 94.3% at the end of the first quarter, compared to 94.3% at the end of the fourth quarter of 2014, and 92.4% at the end of the first quarter of 2014.
- Tenants were retained in 60.5% of square footage up for renewal.
- Same property cash basis net operating income (NOI) increased 6.2%. Including lease termination fees, same property NOI increased 6.0%. Both measures exclude the impact of the
$0.4 million portion of a one-time restoration fee recognized during the first quarter of 2014. - Rental rates increased 2.6% on a cash basis and increased 9.3% on a GAAP basis; leasing costs were
$2.66 per square foot.
Capital Market Activities
In the first quarter, the Company:
- Closed a new
$625 million senior unsecured revolving credit facility maturing onMarch 11, 2019 , with a one-year extension option subject to certain conditions. The initial interest rate is LIBOR plus 115 basis points, a reduction of 35 basis points from the prior facility. - As announced in the Company's press release dated
February 19, 2015 , the board of directors declared a common dividend of$0.1275 per share/unit for the quarter endingMarch 31, 2015 which was paid onApril 20, 2015 to stockholders of record onMarch 31, 2015 . The new dividend rate represents a 24.4% increase from the prior rate of$0.1025 per share.
In the second quarter, the Company:
- Plans to settle its interest rate protection agreement related to an unsecured debt issuance that the Company no longer anticipates executing in 2015. The estimated cash cost to settle this agreement is
$13.0 million , or$0.11 per share, based on the swap rate as ofMarch 31, 2015 , and has been reflected in the Company's first quarter results and in updated 2015 guidance.
"We continue to enhance our capital position, adding more flexibility and tenor through our new
Investment and Disposition Activities
In the first quarter, the Company:
- Started development of
First Park @Ocean Ranch inSouthern California , a three-building park totaling approximately 237,000 square feet, total estimated investment of$27.5 million . - Sold nine properties comprising 525,000 square feet for a total of
$26.6 million .
In the second quarter to date, the Company:
- Acquired a 21-acre development site in
Phoenix for the development of a 386,000 square-foot distribution center with estimated total investment of$21.1 million . The Company will be relocating an existing customer from an 80,000 square-foot space to a 170,000 square-foot space in this building upon its completion, anticipated to occur by the end of the first quarter of 2016. - Sold one building in the
Detroit market totaling 160,000 square feet for$5.9 million .
"We are pleased to replenish our pipeline of new investments as we develop on these recently-acquired sites to meet growing tenant demand for industrial facilities," said
Outlook for 2015
Mr. Duncan stated, "The industrial real estate environment continues to exhibit fundamental strength. Our team remains focused on meeting or exceeding our year-end occupancy target of 95%, while executing on the building and leasing of our new development investments."
Low End of |
High End of |
|||||
Guidance for 2015 |
Guidance for 2015 |
|||||
(Per share/unit) |
(Per share/unit) |
|||||
Net Income Available to Common Stockholders |
0.24 |
0.34 |
||||
Add: Real Estate Depreciation/Amortization |
0.99 |
0.99 |
||||
Add: Non-NAREIT Compliant Gains Through 1Q15 |
(0.07) |
(0.07) |
||||
FFO (NAREIT Definition) |
$1.16 |
$1.26 |
||||
FFO Before Impact of Mark-to-Market of Interest Rate Protection Agreement in 1Q15 |
$1.27 |
$1.37 |
The following assumptions were used:
- Average quarter-end in-service occupancy of 93.5% to 94.5%, with year-end occupancy expected to be 95%.
- Same-store NOI on a cash basis of positive 3% to 5% for the full year, excluding the one-time restoration fee recognized in the comparative period of 2014.
- General and administrative expense of approximately
$24 million to $25 million . - Guidance has been adjusted from the guidance provided on
February 19, 2015 to reflect that the Company no longer plans to issue approximately$250 million of unsecured debt this year. As a result of this change, the expected EPS and FFO dilution of$0.03 to $0.05 per share associated with such an issuance is no longer assumed to occur. - Guidance reflects the payoff of approximately
$23 million of secured debt with an interest rate of 5.58% in the fourth quarter of 2015. - Guidance includes the incremental costs related to the Company's four developments in process and the planned development start in
Phoenix in 2Q15. In total, the Company expects to capitalize$0.02 per share of interest related to these projects in 2015. - Other than the above, 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;
- any additional changes in the final termination value of the anticipated settlement of the interest rate protection agreement; or
- issuance of additional equity.
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
FFO Definition
About
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 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 future plans, strategies and expectations of the Company, and are generally identifiable by use of the words "believe," "expect," "intend," "plan," "anticipate," "estimate," "project," "seek," "target," "potential," "focus," "may," "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) 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) in the Company's current and potential market areas; difficulties in identifying and consummating acquisitions and dispositions; our ability to manage the integration of properties we acquire; environmental liabilities; delays 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; 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 2015 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, |
|||
2015 |
2014 |
|||
Statement of Operations and Other Data: |
||||
Total Revenues |
$ 89,942 |
$ 83,861 |
||
Property Expenses |
(29,791) |
(30,316) |
||
General and Administrative |
(6,966) |
(5,521) |
||
Acquisition Costs |
- |
(35) |
||
Depreciation of Corporate FF&E |
(170) |
(122) |
||
Depreciation and Other Amortization of Real Estate |
(28,136) |
(27,749) |
||
Total Expenses |
(65,063) |
(63,743) |
||
Gain on Sale of Real Estate |
7,930 |
- |
||
Interest Income |
24 |
702 |
||
Interest Expense |
(16,642) |
(19,046) |
||
Amortization of Deferred Financing Costs |
(746) |
(804) |
||
Mark-to-Market Loss on Interest Rate Protection Agreements |
(12,990) |
- |
||
Income from Continuing Operations Before Equity in Income of |
||||
Joint Ventures and Income Tax Provision |
2,455 |
970 |
||
Equity in Income of Joint Ventures (a) |
71 |
2,966 |
||
Income Tax Provision |
(60) |
(10) |
||
Income from Continuing Operations |
2,466 |
3,926 |
||
Discontinued Operations: |
||||
Income Attributable to Discontinued Operations |
- |
406 |
||
Gain on Sale of Real Estate |
- |
735 |
||
Income from Discontinued Operations |
- |
1,141 |
||
Net Income |
2,466 |
5,067 |
||
Net Income Attributable to the Noncontrolling Interest |
(93) |
(104) |
||
Net Income Attributable to First Industrial Realty Trust, Inc. |
2,373 |
4,963 |
||
Preferred Dividends |
- |
(1,019) |
||
Redemption of Preferred Stock |
- |
(1,462) |
||
Net Income Available to First Industrial Realty Trust, Inc.'s |
||||
Common Stockholders and Participating Securities |
$ 2,373 |
$ 2,482 |
||
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 |
$ 2,373 |
$ 2,482 |
||
Depreciation and Other Amortization of Real Estate |
28,136 |
27,749 |
||
Depreciation and Other Amortization of Real Estate Included in Discontinued Operations |
- |
916 |
||
Noncontrolling Interest |
93 |
104 |
||
Equity in Depreciation and Other Amortization of Joint Ventures (a) |
17 |
37 |
||
Non-NAREIT Compliant Gain (b) |
(7,930) |
(735) |
||
Non-NAREIT Compliant Gain from Joint Ventures (a) (b) |
(63) |
(2,979) |
||
Funds From Operations (NAREIT) ("FFO") (b) |
$ 22,626 |
$ 27,574 |
||
Restricted Stock/Unit Amortization |
2,561 |
1,575 |
||
Amortization of Debt Discounts / (Premiums) and Hedge Costs |
149 |
1,034 |
||
Amortization of Deferred Financing Costs |
746 |
804 |
||
Depreciation of Corporate FF&E |
170 |
122 |
||
Redemption of Preferred Stock |
- |
1,462 |
||
Mark-to-Market Loss on Interest Rate Protection Agreements |
12,990 |
- |
||
One-Time Restoration Fee (c) |
- |
(389) |
||
Non-Incremental Capital Expenditures (c) |
(7,162) |
(7,369) |
||
Capitalized Interest and Overhead |
(504) |
(448) |
||
Straight-Line Rent, Amortization of Above (Below) Market Leases |
||||
and Lease Inducements |
(2,174) |
126 |
||
Adjusted Funds From Operations ("AFFO") (b) |
$ 29,402 |
$ 24,491 |
FIRST INDUSTRIAL REALTY TRUST, INC. |
||||
Selected Financial Data |
||||
(Unaudited) |
||||
(In thousands except per share/unit data) |
||||
Three Months Ended |
||||
March 31, |
March 31, |
|||
2015 |
2014 |
|||
RECONCILIATION OF NET INCOME AVAILABLE TO |
||||
FIRST INDUSTRIAL REALTY TRUST, INC.'S COMMON |
||||
STOCKHOLDERS AND PARTICIPATING SECURITIES TO |
||||
EBITDA (b) AND NOI (b) |
||||
Net Income Available to First Industrial Realty Trust, Inc.'s |
||||
Common Stockholders and Participating Securities |
$ 2,373 |
$ 2,482 |
||
Interest Expense |
16,642 |
19,046 |
||
Depreciation and Other Amortization of Real Estate |
28,136 |
27,749 |
||
Depreciation and Other Amortization of Real Estate Included in Discontinued Operations |
- |
916 |
||
Preferred Dividends |
- |
1,019 |
||
Redemption of Preferred Stock |
- |
1,462 |
||
Income Tax Provision |
60 |
10 |
||
Mark-to-Market Loss on Interest Rate Protection Agreements |
12,990 |
- |
||
Noncontrolling Interest |
93 |
104 |
||
Amortization of Deferred Financing Costs |
746 |
804 |
||
Depreciation of Corporate FF&E |
170 |
122 |
||
Equity in Depreciation and Other Amortization of Joint Ventures (a) |
17 |
37 |
||
Non-NAREIT Compliant Gain (b) |
(7,930) |
(735) |
||
Non-NAREIT Compliant Gain from Joint Ventures (a) (b) |
(63) |
(2,979) |
||
EBITDA (b) |
$ 53,234 |
$ 50,037 |
||
General and Administrative |
6,966 |
5,521 |
||
Acquisition Costs |
- |
35 |
||
FFO from Joint Ventures (b) |
(89) |
(116) |
||
Net Operating Income ("NOI") (b) |
$ 60,111 |
$ 55,477 |
||
Weighted Avg. Number of Shares/Units Outstanding - Basic |
114,681 |
114,245 |
||
Weighted Avg. Number of Shares Outstanding - Basic |
110,310 |
109,676 |
||
Weighted Avg. Number of Shares/Units Outstanding - Diluted |
115,046 |
114,784 |
||
Weighted Avg. Number of Shares Outstanding - Diluted |
110,675 |
110,215 |
||
Per Share/Unit Data: |
||||
FFO (NAREIT) |
$ 22,626 |
$ 27,574 |
||
Less: Allocation to Participating Securities |
(63) |
(73) |
||
FFO (NAREIT) Allocable to Common Stockholders and Unitholders |
$ 22,563 |
$ 27,501 |
||
Basic/Diluted Per Share/Unit |
$ 0.20 |
$ 0.24 |
||
Net Income Available to First Industrial Realty Trust Inc.'s Common Stockholders and Participating Securities |
$ 2,373 |
$ 2,482 |
||
Less: Allocation to Participating Securities |
(41) |
(32) |
||
Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders |
$ 2,332 |
$ 2,450 |
||
Basic/Diluted Per Share |
$ 0.02 |
$ 0.02 |
||
Common Dividends/Distributions |
$ 0.1275 |
$ 0.1025 |
||
Balance Sheet Data (end of period): |
||||
Gross Real Estate Investment |
$ 3,163,040 |
$ 3,137,177 |
||
Real Estate and Other Assets Held For Sale, Net |
4,915 |
- |
||
Total Assets |
2,553,758 |
2,582,738 |
||
Debt |
1,329,883 |
1,373,012 |
||
Total Liabilities |
1,471,064 |
1,495,240 |
||
Total Equity |
$ 1,082,694 |
$ 1,087,498 |
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 available to
As used herein, the Company calculates FFO to be equal to net income 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, 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, 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 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 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) Non-incremental capital expenditures of
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SOURCE
Art Harmon, Vice President, Investor Relations and Corporate Communications, 312-344-4320