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First Industrial Realty Trust Reports Fourth Quarter and Full Year 2014 Results
Full year 2014 FFO was
"
Portfolio Performance – Fourth Quarter 2014
- In-service occupancy was 94.3% at the end of the fourth quarter, compared to 93.9% at the end of the third quarter of 2014, and 92.9% at the end of the fourth quarter of 2013.
- Tenants were retained in 63.9% 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 5.8%. Both measures exclude the impact of the
$0.4 million portion of a one-time restoration fee recognized during the fourth quarter of 2014. - Rental rates increased 3.1% on a cash basis and increased 10.8% on a GAAP basis; leasing costs were
$2.49 per square foot.
Common Stock Dividend Increased
The board of directors declared a common dividend of
"On the strength of our performance and outlook for 2015, we increased the dividend which is aligned with our expected growth in cash flow," added Mr. Duncan. "We are maintaining a conservative AFFO payout ratio of 50% to 60% that enables us to retain proceeds to help fund new investments or other business needs."
Investment and Disposition Activities
In the fourth quarter, the Company:
- Acquired a 71% leased three-building portfolio in
Phoenix totaling 220,000 square feet, a 100% leased 200,000 distribution center inMinneapolis , a 100% leased 133,000 square-foot facility in the Inland Empire, and a land parcel inAtlanta ; total combined investment of$42.8 million . - Started the development of the two-building, 585,000 square-foot First 33 Commerce Center in the
Lehigh Valley inEastern Pennsylvania with an estimated investment of$43.8 million ; also started the 153,000 square-footFirst Arlington Commerce Center @I-20 inDallas , 41% pre-leased, estimated investment of$9.5 million . - Leased the remaining half of the 489,000 square-foot First Bandini Logistics Center development in
Southern California . - Sold 9 facilities comprising 967,000 square feet and two land parcels for a total of
$43.6 million .
For the full year 2014, the Company:
- Acquired eight buildings totaling 1.1 million square feet and six land parcels for a total investment of
$95.7 million . - Placed in service five developments, each 100% leased, totaling 1.6 million square feet with a total investment of
$115.2 million . - Sold 29 facilities totaling 2.0 million square feet and two land parcels for a total of
$102.6 million .
In the first quarter of 2015 to date, the Company:
- Sold a six-building flex and light industrial portfolio in the
Atlanta market totaling 299,000 square feet for$12.9 million .
"In 2014, we invested in high quality acquisitions and developments using the strength of our platform and team," said
Capital Market Activities
In the fourth quarter, the Company:
- Received an investment grade rating of Baa3 on its unsecured notes from
Moody's Investors Service .
Outlook for 2015
Mr. Duncan stated, "In 2015, we expect to grow FFO and overall cash flow as we drive towards our year-end occupancy goal of 95% and increase rents in the portfolio. On the strength of our investment grade ratings, we anticipate issuing unsecured debt in the second quarter which would reduce our long-term capital costs, but could result in short-term dilution in 2015."
Low End of |
High End of |
||||
Guidance for 2015 |
Guidance for 2015 |
||||
(Per share/unit) |
(Per share/unit) |
||||
Net Income Available to Common Stockholders |
0.21 |
0.31 |
|||
Add: Real Estate Depreciation/Amortization |
1.01 |
1.01 |
|||
FFO (NAREIT Definition) |
$1.22 |
$1.32 |
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 2014.
- General and administrative expense of approximately
$24 million to $25 million . - Guidance assumes the anticipated issuance of approximately
$250 million of unsecured debt in the second quarter, with proceeds assumed to pay down the Company's unsecured line of credit in the near term. Given the Company's interest rate protection agreements related to such a debt issuance, guidance assumes the effective interest rate of this unsecured debt to be approximately 4.5%. The EPS and FFO dilution associated with this scenario would be approximately$0.03 to $0.05 per share. The expected long-term use for any such issuance would be to pay off$218 million of maturities in the first quarter of 2016 at a weighted average interest rate of 6.3%. - 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 three developments in process and planned development start in
Southern California in 2015. In total, the Company expects to capitalize$0.01 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, 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. 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; risks related to our investments in properties through joint ventures; 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 fourth quarter and full year 2014 supplemental information can be viewed at www.firstindustrial.com under the "Investor Relations" tab.
Neither this press release nor the presentation to which it refers shall constitute an offer of any securities for sale.
FIRST INDUSTRIAL REALTY TRUST, INC. |
||||||||
Selected Financial Data |
||||||||
(Unaudited) |
||||||||
(In thousands except per share/unit data) |
||||||||
Three Months Ended |
Twelve Months Ended |
|||||||
December 31, |
December 31, |
December 31, |
December 31, |
|||||
2014 |
2013 |
2014 |
2013 |
|||||
Statement of Operations and Other Data: |
||||||||
Total Revenues |
$ 90,333 |
$ 81,620 |
$ 344,599 |
$ 318,454 |
||||
Property Expenses |
(30,000) |
(27,049) |
(114,499) |
(103,714) |
||||
General & Administrative |
(5,476) |
(5,820) |
(23,418) |
(22,821) |
||||
Acquisition Costs |
(849) |
(331) |
(960) |
(331) |
||||
Depreciation of Corporate FF&E |
(138) |
(109) |
(526) |
(618) |
||||
Depreciation and Other Amortization of Real Estate |
(28,323) |
(27,593) |
(111,371) |
(106,333) |
||||
Total Expenses |
(64,786) |
(60,902) |
(250,774) |
(233,817) |
||||
Interest Income |
56 |
600 |
2,110 |
2,354 |
||||
Interest Expense |
(16,886) |
(18,167) |
(72,178) |
(73,558) |
||||
Amortization of Deferred Financing Costs |
(738) |
(757) |
(3,098) |
(3,225) |
||||
Mark-to-Market Gain on Interest Rate Protection Agreements |
- |
- |
- |
52 |
||||
Loss from Retirement of Debt |
- |
(389) |
(655) |
(6,637) |
||||
Income from Continuing Operations Before Equity in (Loss) Income of |
||||||||
Joint Ventures and Income Tax (Provision) Benefit |
7,979 |
2,005 |
20,004 |
3,623 |
||||
Equity in (Loss) Income of Joint Ventures (a) |
(9) |
17 |
3,499 |
136 |
||||
Income Tax (Provision) Benefit |
(46) |
217 |
(238) |
213 |
||||
Income from Continuing Operations |
7,924 |
2,239 |
23,265 |
3,972 |
||||
Discontinued Operations: |
||||||||
Income Attributable to Discontinued Operations |
193 |
1,156 |
1,835 |
2,222 |
||||
Gain on Sale of Real Estate |
11,505 |
18,694 |
25,988 |
34,344 |
||||
Income from Discontinued Operations |
11,698 |
19,850 |
27,823 |
36,566 |
||||
Income Before (Loss) Gain on Sale of Real Estate |
19,622 |
22,089 |
51,088 |
40,538 |
||||
(Loss) Gain on Sale of Real Estate |
(83) |
547 |
(83) |
1,100 |
||||
Provision for Income Taxes Allocable to Gain on Sale of Real Estate |
- |
(210) |
- |
(210) |
||||
Net Income |
19,539 |
22,426 |
51,005 |
41,428 |
||||
Net Income Attributable to the Noncontrolling Interest |
(758) |
(877) |
(1,895) |
(1,121) |
||||
Net Income Attributable to First Industrial Realty Trust, Inc. |
18,781 |
21,549 |
49,110 |
40,307 |
||||
Preferred Dividends |
- |
(1,227) |
(1,019) |
(8,733) |
||||
Redemption of Preferred Stock |
- |
- |
(1,462) |
(5,667) |
||||
Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders and Participating Securities |
||||||||
$ 18,781 |
$ 20,322 |
$ 46,629 |
$ 25,907 |
|||||
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 |
||||||||
$ 18,781 |
$ 20,322 |
$ 46,629 |
$ 25,907 |
|||||
Depreciation and Other Amortization of Real Estate |
28,323 |
27,593 |
111,371 |
106,333 |
||||
Depreciation and Other Amortization of Real Estate Included in Discontinued Operations |
158 |
1,369 |
2,388 |
7,727 |
||||
Impairment of Depreciated Real Estate Included in Discontinued Operations |
- |
- |
- |
2,652 |
||||
Noncontrolling Interest |
758 |
877 |
1,895 |
1,121 |
||||
Equity in Depreciation and Other Amortization of Joint Ventures (a) |
26 |
49 |
117 |
273 |
||||
Non-NAREIT Compliant Gain (b) |
(11,505) |
(18,694) |
(25,988) |
(34,344) |
||||
Non-NAREIT Compliant Gain from Joint Ventures (a) (b) |
- |
- |
(3,346) |
(111) |
||||
Funds From Operations (NAREIT) ("FFO") (b) |
$ 36,541 |
$ 31,516 |
$ 133,066 |
$ 109,558 |
||||
Loss from Retirement of Debt |
- |
389 |
655 |
6,637 |
||||
Restricted Stock/Unit Amortization |
1,357 |
1,766 |
7,605 |
6,202 |
||||
Amortization of Debt Discounts / (Premiums) and Hedge Costs |
148 |
1,013 |
2,072 |
3,941 |
||||
Amortization of Deferred Financing Costs |
738 |
757 |
3,098 |
3,225 |
||||
Depreciation of Corporate FF&E |
138 |
109 |
526 |
618 |
||||
Redemption of Preferred Stock |
- |
- |
1,462 |
5,667 |
||||
Mark-to-Market Gain on Interest Rate Protection Agreements |
- |
- |
- |
(52) |
||||
NAREIT Compliant Economic Loss (Gain) (b) |
83 |
(547) |
83 |
(1,100) |
||||
One-Time Restoration Fee (d) |
(402) |
- |
(2,638) |
- |
||||
Non-Incremental Capital Expenditures (d) |
(15,455) |
(15,376) |
(47,168) |
(52,101) |
||||
Capitalized Interest and Overhead |
(432) |
(570) |
(1,637) |
(3,803) |
||||
Straight-Line Rent and Amortization of Above (Below) Market Leases |
||||||||
and Lease Inducements |
(1,403) |
(1,055) |
(2,576) |
(3,968) |
||||
Adjusted Funds From Operations ("AFFO") (b) |
$ 21,313 |
$ 18,002 |
$ 94,548 |
$ 74,824 |
FIRST INDUSTRIAL REALTY TRUST, INC. |
||||||||
Selected Financial Data |
||||||||
(Unaudited) |
||||||||
(In thousands except per share/unit data) |
||||||||
Three Months Ended |
Twelve Months Ended |
|||||||
December 31, |
December 31, |
December 31, |
December 31, |
|||||
2014 |
2013 |
2014 |
2013 |
|||||
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 |
||||||||
$ 18,781 |
$ 20,322 |
$ 46,629 |
$ 25,907 |
|||||
Interest Expense |
16,886 |
18,167 |
72,178 |
73,558 |
||||
Depreciation and Other Amortization of Real Estate |
28,323 |
27,593 |
111,371 |
106,333 |
||||
Depreciation and Other Amortization of Real Estate Included in Discontinued Operations |
158 |
1,369 |
2,388 |
7,727 |
||||
Impairment of Depreciated Real Estate Included in Discontinued Operations |
- |
- |
- |
2,652 |
||||
Preferred Dividends |
- |
1,227 |
1,019 |
8,733 |
||||
Redemption of Preferred Stock |
- |
- |
1,462 |
5,667 |
||||
Income Tax Provision (Benefit) |
46 |
(7) |
238 |
(3) |
||||
Noncontrolling Interest |
758 |
877 |
1,895 |
1,121 |
||||
Loss from Retirement of Debt |
- |
389 |
655 |
6,637 |
||||
Amortization of Deferred Financing Costs |
738 |
757 |
3,098 |
3,225 |
||||
Depreciation of Corporate FF&E |
138 |
109 |
526 |
618 |
||||
Equity in Depreciation and Other Amortization of Joint Ventures (a) |
26 |
49 |
117 |
273 |
||||
NAREIT Compliant Economic Loss (Gain) (b) |
83 |
(547) |
83 |
(1,100) |
||||
Non-NAREIT Compliant Gain (b) |
(11,505) |
(18,694) |
(25,988) |
(34,344) |
||||
Non-NAREIT Compliant Gain from Joint Ventures (a) (b) |
- |
- |
(3,346) |
(111) |
||||
EBITDA (b) |
$ 54,432 |
$ 51,611 |
$ 212,325 |
$ 206,893 |
||||
General and Administrative |
5,476 |
5,820 |
23,418 |
22,821 |
||||
Acquisition Costs |
849 |
331 |
960 |
331 |
||||
Mark-to-Market Gain on Interest Rate Protection Agreements |
- |
- |
- |
(52) |
||||
FFO from Joint Ventures (b) |
(27) |
(117) |
(406) |
(529) |
||||
Net Operating Income ("NOI") (b) |
$ 60,730 |
$ 57,645 |
$ 236,297 |
$ 229,464 |
||||
Weighted Avg. Number of Shares/Units Outstanding - Basic (c) |
114,512 |
114,089 |
114,388 |
111,646 |
||||
Weighted Avg. Number of Shares Outstanding - Basic (c) |
110,118 |
109,490 |
109,922 |
106,995 |
||||
Weighted Avg. Number of Shares/Units Outstanding - Diluted (c) |
114,799 |
114,574 |
114,791 |
111,646 |
||||
Weighted Avg. Number of Shares Outstanding - Diluted (c) |
110,405 |
109,975 |
110,325 |
106,995 |
||||
Per Share/Unit Data: |
||||||||
FFO (NAREIT) |
$ 36,541 |
$ 31,516 |
$ 133,066 |
$ 109,558 |
||||
Less: Allocation to Participating Securities |
(147) |
(135) |
(479) |
(457) |
||||
FFO (NAREIT) Allocable to Common Stockholders and Unitholders |
$ 36,394 |
$ 31,381 |
$ 132,587 |
$ 109,101 |
||||
Basic Per Share/Unit (c) |
$ 0.32 |
$ 0.28 |
$ 1.16 |
$ 0.98 |
||||
Diluted Per Share/Unit (c) |
$ 0.32 |
$ 0.27 |
$ 1.16 |
$ 0.98 |
||||
Income from Continuing Operations, including (Loss) Gain on Sale of Real Estate |
$ 7,841 |
$ 2,576 |
$ 23,182 |
$ 4,862 |
||||
Add: Noncontrolling Interest Allocable to Continuing Operations and |
||||||||
(Loss) Gain on Sale of Real Estate |
(306) |
(60) |
(813) |
396 |
||||
Less: Preferred Dividends |
- |
(1,227) |
(1,019) |
(8,733) |
||||
Less: Redemption of Preferred Stock |
- |
- |
(1,462) |
(5,667) |
||||
Less: Allocation to Participating Securities |
(32) |
(6) |
(75) |
- |
||||
Income from Continuing Operations Available to First Industrial Realty Trust, Inc.'s |
||||||||
Common Stockholders |
$ 7,503 |
$ 1,283 |
$ 19,813 |
$ (9,142) |
||||
Basic/Diluted Per Share (c) |
$ 0.07 |
$ 0.01 |
$ 0.18 |
$ (0.09) |
||||
Net Income Available |
$ 18,781 |
$ 20,322 |
$ 46,629 |
$ 25,907 |
||||
Less: Allocation to Participating Securities |
(79) |
(90) |
(175) |
(162) |
||||
Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders |
$ 18,702 |
$ 20,232 |
$ 46,454 |
$ 25,745 |
||||
Basic/Diluted Per Share (c) |
$ 0.17 |
$ 0.18 |
$ 0.42 |
$ 0.24 |
||||
Common Dividends/Distributions |
$ 0.1025 |
$ 0.0850 |
$ 0.4100 |
$ 0.3400 |
||||
Balance Sheet Data (end of period): |
||||||||
Gross Real Estate Investment |
$ 3,183,369 |
$ 3,119,547 |
||||||
Total Assets |
2,581,995 |
2,597,510 |
||||||
Debt |
1,349,846 |
1,296,806 |
||||||
Total Liabilities |
1,491,168 |
1,426,291 |
||||||
Total Equity |
$ 1,090,827 |
$ 1,171,219 |
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, plus mark-to-market gain 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, 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 mark-to-market gain 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 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 the twelve months ended
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) Non-incremental capital expenditures of
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SOURCE
Art Harmon, Vice President, Investor Relations and Corporate Communications, 312-344-4320