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First Industrial Realty Trust Reports Second Quarter 2017 Results
- Occupancy of 95.7%, Cash Same Store NOI Grew 4.2% and Cash Rental Rates Up 9.2%
- FFO Per Share of
$0.38 ;$0.39 Excluding$0.01 Income Tax Impact from a Property Sale - Acquired Four Buildings Comprising 514,000 Square Feet in
Southern California ,Orlando and Denver Plus Two Land Parcels inPhoenix for a Total of$79.5 Million - Leased 618,000 Square Feet and a Land Parcel at
First Park @ PV 303 inPhoenix to UPS - Sold Eight Buildings Totaling 717,000 Square Feet for
$38.6 Million ; In 3Q17, Sold Three Buildings Totaling 389,000 Square Feet for$18.3 Million - Closed on
$200 Million of Long-Term Unsecured Notes with a Weighted Average Interest Rate of 4.34% in a Private Placement - Raised Approximately
$75 Million Via an Underwritten Common Stock Offering
"The U.S. industrial real estate market continues to exhibit healthy fundamentals that provide a supportive environment for continuing market rent growth," said
Portfolio Performance – Second Quarter 2017
- In service occupancy was 95.7% at the end of the second quarter, compared to 95.8% at the end of the first quarter of 2017, and 95.8% at the end of the second quarter of 2016. Sales contributed 30 basis points to second quarter 2017 occupancy as compared to the first quarter of 2017.
- Tenants were retained in 79.5% of square footage up for renewal.
- Same property cash basis net operating income (NOI) increased 4.2%. Including lease termination fees, same property NOI increased 4.3%.
- Rental rates increased 9.2% on a cash basis and increased 19.7% on a GAAP basis; leasing costs were
$1.90 per square foot.
Capital Markets Activity
In the second quarter, the Company:
- Closed on
$200 million of fixed rate senior unsecured notes in a private placement offering with a weighted average interest rate of 4.34%. The notes are comprised of two tranches:$125 million with a 10-year term at an interest rate of 4.30% and$75 million with a 12-year term at an interest rate of 4.40%. - Paid off
$102 million of its 5.95% 2017 Senior Unsecured Notes at maturity. - Had its Baa3 senior unsecured debt rating affirmed by Moody's Investor Service which also revised its rating outlook to "positive" from "stable."
- Raised approximately
$75 million via an underwritten offering of 2.56 million common shares.
"Our strong financial position supports our efforts to profitably grow our portfolio through targeted investments," said
Investment and Disposition Activities
In the second quarter, the Company:
- Acquired four buildings totaling 514,000 square feet and two land parcels for
$79.5 million comprising: - a 123,000 square-foot facility in
San Diego for$21.5 million ; - a 106,000 square-foot building in the Inland Empire for
$12.5 million ; - a 181,000 square-foot facility in
Denver for$11.2 million ; - a 103,000 square-foot building in
Orlando for$8.0 million ; - a 66-acre land parcel in
Phoenix for$11.6 million fully leased to UPS; and - a 97-acre development site in
Phoenix for$14.7 million . - Sold eight buildings comprised of 717,000 square feet for
$38.6 million .
In the third quarter to date, the Company:
- Sold three buildings totaling 389,000 square feet for
$18.3 million .
"In a highly competitive investment market, our team was successful in sourcing four quality building acquisitions in markets with strong long-term rent growth characteristics," said
In the second quarter, the Company signed the following development lease:
- 618,000 square feet plus a 66-acre land parcel at
First Park @ PV 303 inPhoenix to UPS, a global leader in logistics.
Outlook for 2017
Mr. Baccile stated, "Excluding the loss on retirement of debt from our financing activities and the income tax impact from the sale of one of our assets during the second quarter, the midpoint of our revised FFO guidance is
Low End of |
High End of |
|||||
Guidance for 2017 |
Guidance for 2017 |
|||||
(Per share/unit) |
(Per share/unit) |
|||||
Net Income Available to Common Stockholders |
0.87 |
0.95 |
||||
Add: Real Estate Depreciation/Amortization |
0.95 |
0.95 |
||||
Less: Non-NAREIT Compliant Gains through July 26, 2017 |
(0.33) |
(0.33) |
||||
FFO (NAREIT Definition) |
$1.49 |
$1.57 |
||||
Add: Loss from Retirement of Debt and Tax from a Property Sale from Taxable REIT Subsidiary through 2Q17 |
$0.02 |
$0.02 |
||||
FFO Excluding Loss from Retirement of Debt and Tax from a Property Sale from Taxable REIT Subsidiary through 2Q17 |
$1.51 |
$1.59 |
The following assumptions were used:
- Average quarter-end in service occupancy of 95.5% to 96.5%.
- Same-store NOI growth on a cash basis before termination fees of 3.5% to 5.0% for the full year, an increase of 25 basis points at the midpoint, reflecting second quarter results.
- General and administrative expense of approximately
$26 million to $27 million . - Guidance includes the incremental costs expected in 2017 related to the Company's completed and under construction developments as of
June 30, 2017 . In total, the Company expects to capitalize$0.03 per share of interest related to these projects in 2017. - Guidance reflects the impact of the property sales in the third quarter to-date and the planned retirement of
$55 million of its 7.5% 2017 Notes maturity in December. - 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;
- any future NAREIT-compliant gains or losses;
- any future impairment gains or losses; or
- any future equity issuance.
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
Conference Call
The Company's second quarter 2017 supplemental information can be viewed at www.firstindustrial.com under the "Investors" tab.
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 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
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 |
Six Months Ended |
|||||||
June 30, |
June 30, |
June 30, |
June 30, |
|||||
2017 |
2016 |
2017 |
2016 |
|||||
Statement of Operations and Other Data: |
||||||||
Total Revenues |
$ 97,579 |
$ 93,015 |
$ 194,962 |
$ 186,482 |
||||
Property Expenses |
(26,897) |
(26,875) |
(55,383) |
(55,242) |
||||
General and Administrative |
(6,785) |
(6,433) |
(14,818) |
(14,107) |
||||
Acquisition Costs (a) |
- |
(155) |
- |
(219) |
||||
Depreciation of Corporate FF&E |
(166) |
(195) |
(335) |
(367) |
||||
Depreciation and Other Amortization of Real Estate |
(28,874) |
(28,530) |
(57,199) |
(59,486) |
||||
Total Expenses |
(62,722) |
(62,188) |
(127,735) |
(129,421) |
||||
Gain on Sale of Real Estate |
20,860 |
36,775 |
28,869 |
44,026 |
||||
Interest Expense |
(14,915) |
(14,589) |
(29,284) |
(30,848) |
||||
Amortization of Deferred Financing Costs |
(780) |
(782) |
(1,558) |
(1,655) |
||||
Loss from Retirement of Debt |
- |
- |
(1,653) |
- |
||||
Income from Operations Before Income Tax Provision |
40,022 |
52,231 |
63,601 |
68,584 |
||||
Income Tax Provision |
(1,169) |
(123) |
(1,257) |
(181) |
||||
Net Income |
38,853 |
52,108 |
62,344 |
68,403 |
||||
Net Income Attributable to the Noncontrolling Interest |
(1,291) |
(1,879) |
(2,073) |
(2,486) |
||||
Net Income Available to First Industrial Realty Trust, Inc.'s |
||||||||
Common Stockholders and Participating Securities |
$ 37,562 |
$ 50,229 |
$ 60,271 |
$ 65,917 |
||||
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 |
$ 37,562 |
$ 50,229 |
$ 60,271 |
$ 65,917 |
||||
Depreciation and Other Amortization of Real Estate |
28,874 |
28,530 |
57,199 |
59,486 |
||||
Noncontrolling Interest |
1,291 |
1,879 |
2,073 |
2,486 |
||||
Gain on Sale of Depreciable Real Estate |
(20,860) |
(36,775) |
(28,869) |
(44,026) |
||||
Funds From Operations (NAREIT) ("FFO") (b) |
$ 46,867 |
$ 43,863 |
$ 90,674 |
$ 83,863 |
||||
Loss from Retirement of Debt |
- |
- |
1,653 |
- |
||||
Restricted Stock/Unit Amortization |
1,822 |
1,507 |
4,923 |
4,470 |
||||
Amortization of Debt Discounts/(Premiums) and Hedge Costs |
25 |
64 |
89 |
136 |
||||
Amortization of Deferred Financing Costs |
780 |
782 |
1,558 |
1,655 |
||||
Depreciation of Corporate FF&E |
166 |
195 |
335 |
367 |
||||
Non-incremental Building Improvements |
(3,535) |
(2,821) |
(5,882) |
(3,946) |
||||
Non-incremental Leasing Costs |
(6,130) |
(6,445) |
(10,533) |
(13,121) |
||||
Capitalized Interest |
(880) |
(870) |
(1,907) |
(1,319) |
||||
Capitalized Overhead |
(82) |
(156) |
(158) |
(241) |
||||
Straight-Line Rent, Amortization of Above (Below) Market Leases and Lease Inducements |
||||||||
(1,500) |
(1,470) |
(3,081) |
(3,317) |
|||||
Adjusted Funds From Operations ("AFFO") (b) |
$ 37,533 |
$ 34,649 |
$ 77,671 |
$ 68,547 |
||||
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 STOCKHOLDERS AND PARTICIPATING SECURITIES TO ADJUSTED EBITDA (b) AND NOI (b) |
||||||||
Three Months Ended |
Six Months Ended |
|||||||
June 30, 2017 |
June 30, 2016 |
June 30, 2017 |
June 30, 2016 |
|||||
Net Income Available to First Industrial Realty Trust, Inc.'s |
||||||||
Common Stockholders and Participating Securities |
$ 37,562 |
$ 50,229 |
$ 60,271 |
$ 65,917 |
||||
Interest Expense |
14,915 |
14,589 |
29,284 |
30,848 |
||||
Depreciation and Other Amortization of Real Estate |
28,874 |
28,530 |
57,199 |
59,486 |
||||
Income Tax Provision |
1,169 |
123 |
1,257 |
181 |
||||
Noncontrolling Interest |
1,291 |
1,879 |
2,073 |
2,486 |
||||
Loss from Retirement of Debt |
- |
- |
1,653 |
- |
||||
Amortization of Deferred Financing Costs |
780 |
782 |
1,558 |
1,655 |
||||
Depreciation of Corporate FF&E |
166 |
195 |
335 |
367 |
||||
Gain on Sale of Depreciable Real Estate |
(20,860) |
(36,775) |
(28,869) |
(44,026) |
||||
Adjusted EBITDA (b) |
$ 63,897 |
$ 59,552 |
$ 124,761 |
$ 116,914 |
||||
General and Administrative |
6,785 |
6,433 |
14,818 |
14,107 |
||||
Acquisition Costs (a) |
- |
155 |
- |
219 |
||||
Net Operating Income ("NOI") (b) |
$ 70,682 |
$ 66,140 |
$ 139,579 |
$ 131,240 |
||||
Non-Same Store NOI |
(5,265) |
(2,575) |
(9,104) |
(4,638) |
||||
Same Store NOI Before Same Store Adjustments (b) |
$ 65,417 |
$ 63,565 |
$ 130,475 |
$ 126,602 |
||||
Lease Inducement Amortization |
186 |
233 |
370 |
460 |
||||
Straight-line Rent |
368 |
(546) |
556 |
(2,121) |
||||
Above (Below) Market Lease Amortization |
(261) |
(269) |
(533) |
(533) |
||||
Lease Termination Fees |
(178) |
(68) |
(456) |
(197) |
||||
Same Store NOI (Cash Basis without Termination Fees) (b) |
$ 65,532 |
$ 62,915 |
$ 130,412 |
$ 124,211 |
||||
Weighted Avg. Number of Shares/Units Outstanding - Basic |
121,339 |
120,486 |
121,109 |
117,791 |
||||
Weighted Avg. Number of Shares Outstanding - Basic |
117,299 |
116,191 |
117,070 |
113,492 |
||||
Weighted Avg. Number of Shares/Units Outstanding - Diluted |
121,819 |
120,853 |
121,561 |
118,070 |
||||
Weighted Avg. Number of Shares Outstanding - Diluted |
117,779 |
116,558 |
117,522 |
113,771 |
||||
Per Share/Unit Data: |
||||||||
Net Income Available to First Industrial Realty Trust, Inc.'s |
||||||||
Common Stockholders and Participating Securities |
$ 37,562 |
$ 50,229 |
$ 60,271 |
$ 65,917 |
||||
Less: Allocation to Participating Securities |
(129) |
(180) |
(154) |
(217) |
||||
Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders |
$ 37,433 |
$ 50,049 |
$ 60,117 |
$ 65,700 |
||||
Basic/Diluted Per Share/Unit |
$ 0.32 |
$ 0.43 |
$ 0.51 |
$ 0.58 |
||||
FFO (NAREIT) |
$ 46,867 |
$ 43,863 |
$ 90,674 |
$ 83,863 |
||||
Less: Allocation to Participating Securities |
(155) |
(152) |
(268) |
(266) |
||||
FFO (NAREIT) Allocable to Common Stockholders and Unitholders |
$ 46,712 |
$ 43,711 |
$ 90,406 |
$ 83,597 |
||||
Basic Per Share/Unit |
$ 0.38 |
$ 0.36 |
$ 0.75 |
$ 0.71 |
||||
Diluted Per Share/Unit |
$ 0.38 |
$ 0.36 |
$ 0.74 |
$ 0.71 |
||||
Common Dividends/Distributions Per Share/Unit |
$ 0.21 |
$ 0.19 |
$ 0.42 |
$ 0.38 |
||||
Balance Sheet Data (end of period): |
||||||||
Gross Real Estate Investment |
$ 3,458,472 |
$ 3,328,319 |
||||||
Real Estate and Other Assets Held For Sale, Net |
6,593 |
- |
||||||
Total Assets |
2,863,963 |
2,728,198 |
||||||
Debt |
1,340,541 |
1,312,033 |
||||||
Total Liabilities |
1,490,686 |
1,480,211 |
||||||
Total Equity |
$ 1,373,277 |
$ 1,247,987 |
a) Effective January 1, 2017, we adopted Accounting Standards Update ("ASU") No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business" ("ASU 2017-01"), which clarifies the framework for determining whether an integrated set of assets and activities meets the definition of a business. The revised framework establishes a screen for determining whether an integrated set of assets and activities is a business and narrows the definition of a business, which is expected to result in fewer transactions being accounted for as business combinations. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset acquisitions. We anticipate that our acquisitions of real estate in the future will generally not meet the definition of a business combination; and accordingly, transaction costs which have historically been expensed, will be capitalized as part of the basis of the real estate assets acquired. ASU 2017-01 was applied prospectively. |
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SOURCE
Art Harmon, Vice President, Investor Relations and Marketing, 312-344-4320