INVESTORS
Approaching three decades as a public company focused on top U.S. markets
Press Release
First Industrial Realty Trust Reports Second Quarter Results
CHICAGO, July 26, 2005 /PRNewswire-FirstCall via COMTEX/ -- First Industrial Realty Trust, Inc. (NYSE: FR), the nation's largest provider of diversified industrial real estate, today announced results for the quarter ended June 30, 2005. Diluted net income available to common stockholders per share (EPS) was $0.46, compared to $0.35 in second quarter 2004. Net income available to common stockholders in the quarter was $19.4 million, compared to $14.1 million in second quarter 2004. For the six months ended June 30, 2005, EPS was $0.79, compared to $0.93 a year ago.
"Occupancy improved, the pace of new investments is up significantly, and we continue to earn strong returns from our active real estate investment process," said Mike Brennan, president and chief executive officer. "We produced solid results for the quarter and I am particularly pleased with the success of our development team. We recently announced new build-to-suit starts for Pier I in Washington, Staples in Georgia, and Mary Kay in Illinois. These projects reflect the growth of our customer franchise with Corporate America and the increasing demand for industrial real estate solutions tied to supply chain reconfiguration."
Second quarter 2005 highlights are provided below:
Portfolio Performance
- Increased occupancy to 91.1%, up from 90.8% at March 31, 2005
- Retained tenants in 72.8% of square footage up for renewal
- Leased 6.4 million square feet
- Same property net operating income (NOI) decreased by 2.3%
Second Quarter On Balance Sheet 2005 Investment Statistics
(in millions)
Property Acquisitions (Excluding Land) $131.6
Square Feet 4.1 million
Stabilized Weighted Average Capitalization Rate 9.8%
Developments Placed In Service $14.0
Square Feet 0.3 million
Expected Weighted Average First-Year
Stabilized Yield 9.1%
Land Acquisitions $10.8
----
Total Property Investment $156.4
=====
Property Sales (Excluding Land) $125.7
Square Feet 2.2 million
Weighted Average Capitalization Rate 7.7%
Land Sales $ 10.1
----
Total Property Sales $135.8
=====
"Our pipeline of investment opportunities, both on balance sheet and for our joint ventures, has grown substantially since the first quarter and now exceeds $1 billion," said Johannson Yap, chief investment officer. "We also realized strong investment returns as the unleveraged internal rate of return on dispositions for the quarter was 15%."
Solid Financial Position
- Fixed-charge coverage was 2.5 times and interest coverage was 2.8 times.
- 96% of real estate assets are unencumbered by mortgages.
- The weighted average maturity of permanent debt at the end of the quarter was 8.9 years, one of the longest in the REIT industry.
- 100% of the Company's permanent debt is fixed rate.
"Our $950 million joint venture with CalSTRS is off to a great start," said Mike Havala, chief financial officer. "In three months since the venture started, we have already invested $128 million. This additional source of capital gives us the capacity to expand our business across the country and support all of the industrial real estate needs of our customers."
Supplemental Reporting Measure
Second quarter FFO per share/unit on a diluted basis was $0.86, compared to $0.67 per share/unit on a diluted basis for the same quarter in 2004. For the six months ended June 30, 2005, FFO per share/unit was $1.67 per share compared with $1.49 per share a year ago.
First Industrial defines FFO as net income available to common stockholders, plus depreciation and amortization of real estate, minus accumulated depreciation and amortization on real estate sold.
Outlook for 2005
Mr. Brennan stated, "The environment for industrial real estate continues to strengthen as companies invest to meet the increased demand of an improving economy, and we are well positioned to meet this growing demand."
"We are increasing our guidance range for full-year 2005 FFO per share/unit by $0.05 to between $3.45 and $3.65, and full-year 2005 EPS to between $1.65 and $1.85. Investment volume assumptions for 2005, which include both new developments and acquisitions, are assumed to be approximately $650 million to $750 million with an 8.5% to 9.5% average cap rate. Sales volume in 2005 is assumed to be approximately $550 million to $650 million with a 7.5% to 8.5% average cap rate, with book gains from property sales/fees of between $110 million and $120 million. Our assumption for net economic gains for on balance sheet transactions in 2005 is between $80 million and $90 million. Our estimate for third quarter 2005 FFO per share/unit is in the range of $0.85 to $0.95."
Low End of High End of Low End of High End
of
Guidance for Guidance for Guidance Guidance
3Q 2005 3Q 2005 for 2005 for 2005
(Per share/ (Per Share/ (Per Share/ (Per
Share/
/unit) unit) unit) unit)
Net Income Available to Common
Stockholders $0.40 $0.50 $1.65 $1.85
Add: Real Estate
Depreciation/Amortization 0.60 0.60 2.40 2.40
Less: Accumulated
Depreciation/Amortization on
Real Estate Sold (0.15) (0.15) (0.60) (0.60)
FFO $0.85 $0.95 $3.45 $3.65
Mr. Brennan continued, "A number of factors could impact our ability to deliver results in line with our assumptions, such as interest rates, the overall economy, the supply and demand of industrial 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 for 2005. However, I believe that First Industrial has the proper strategic and tactical design to deliver such results. We believe our I-N-D-L infrastructure -- with its offensive and defensive characteristics -- will continue to support our efforts and prove its value."
First Industrial Realty Trust, Inc., the nation's largest provider of diversified industrial real estate, serves every aspect of Corporate America's industrial real estate needs, including customized supply chain solutions, through its unique I-N-D-L operating platform, which utilizes a pure Industrial focus and National scope to provide Diverse facility types, while offering Local, full-service management and expertise. The Company owns, operates and has under development 88.5 million square feet of industrial real estate in markets throughout the United States. Building, buying, selling, leasing and managing industrial property in major markets nationwide, First Industrial develops long-term relationships with corporate real estate directors, tenants and brokers to better serve customers with creative, flexible industrial real estate solutions.
This press release contains forward-looking information about the Company. A number of factors could cause the Company's actual results to differ materially from those anticipated, including changes in: economic conditions generally and the real estate market specifically, legislative/regulatory changes (including changes to laws governing the taxation of real estate investment trusts), availability of financing, interest rate levels, competition, supply and demand for industrial properties in the Company's current and proposed market areas, potential environmental liabilities, slippage in development or lease-up schedules, tenant credit risks, higher-than-expected costs and changes in general accounting principles, policies and guidelines applicable to real estate investment trusts. For further information on these and other factors that could impact the Company and the statements contained herein, reference should be made to the Company's filings with the Securities and Exchange Commission.
A schedule of selected financial information is attached.
First Industrial Realty Trust, Inc. will host a quarterly conference call at 12:00 p.m. Central time, 1:00 p.m. Eastern time, on Wednesday, July 27, 2005. The call-in number is (800) 865-4460 and the passcode is "First Industrial." The conference call will also be webcast live on First Industrial's web site, http://www.firstindustrial.com, under the "Investor Relations" tab. A replay will also be available on the web site.
The Company's second quarter supplemental information can be viewed on First Industrial's web site, http://www.firstindustrial.com, under the "Investor Relations" tab.
FIRST INDUSTRIAL REALTY TRUST, INC.
Selected Financial Data
(In thousands, except for per share/unit and property data)
(Unaudited)
Three Months Ended Six Months Ended
Restated (e) Restated (e)
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
Statement of Operations
and Other Data:
Total Revenues $86,423 $74,129 $172,263 $150,702
Property Expenses (29,932) (25,241) (60,273) (51,705)
General &
Administrative
Expense (11,571) (9,665) (23,493) (16,888)
Amortization of
Deferred Financing
Costs (510) (464) (1,019) (910)
Depreciation of
Corporate F,F&E (337) (321) (657) (640)
Depreciation and
Amortization of Real
Estate (28,332) (22,578) (55,183) (42,771)
Total Expenses (70,682) (58,269) (140,625) (112,914)
Interest Income 448 866 837 1,578
Interest Expense (25,890) (23,922) (51,693) (47,556)
Mark-to-Market /
Gain on Settlement of
Interest Rate Protection
Agreement(a) (1,404) 1,450 (463) 1,450
Loss from
Continuing
Operations Before
Income Tax
Benefit, Equity in
Net
(Loss) Income of
Joint Ventures
and Income
Allocated to
Minority
Interest (11,105) (5,746) (19,681) (6,740)
Equity in Net (Loss)
Income of Joint
Ventures (b) (98) 301 (220) 546
Income Tax Benefit 1,871 1,453 3,837 2,262
Minority Interest
Allocable to
Continuing Operations 1,503 2,250 2,677 2,954
Loss from
Continuing
Operations (7,829) (1,742) (13,387) (978)
Income from
Discontinued
Operations (Including
Gain on Sale of Real
Estate of $33,690 and
$28,273 for the Three
Months Ended June 30,
2005 and 2004,
respectively and
$47,186 and $55,484
for the Six Months Ended
June 30, 2005 and 2004,
respectively (c)) 34,581 31,924 49,747 63,793
Provision for Income
Taxes Allocable to
Discontinued
Operations (Including
a provision allocable
to Gain on Sale of Real
Estate of $2,611 and
$1,565 for the Three
Months Ended June 30,
2005 and 2004,
respectively and
$5,782 and $3,675
for the Six Months
Ended June 30, 2005
and 2004, respectively) (2,527) (2,110) (6,188) (4,685)
Minority Interest
Allocable to
Discontinued
Operations (c) (4,193) (4,099) (5,706) (8,287)
Income Before Gain
on Sale of Real
Estate 20,032 23,973 24,466 49,843
Gain on Sale of Real
Estate 3,232 3,337 24,716 6,583
Provision for Income
Taxes Allocable to
Gain on Sale of Real
Estate (1,252) (710) (8,977) (1,424)
Minority Interest
Allocable to Gain on
Sale of Real Estate (259) (361) (2,062) (723)
Net Income 21,753 26,239 38,143 54,279
Preferred Dividends (2,310) (4,790) (4,620) (9,834)
Redemption of
Preferred Stock - (7,359) - (7,359)
Net Income
Available to
Common
Stockholders $19,443 $14,090 $33,523 $37,086
RECONCILIATION OF
NET INCOME
AVAILABLE TO
COMMON STOCKHOLDERS
TO FFO (d) AND FAD
(d)
Net Income
Available to
Common
Stockholders $19,443 $14,090 $33,523 $37,086
Add: Depreciation and
Amortization of Real
Estate 28,332 22,578 55,183 42,771
Add: Depreciation and
Amortization of Real
Estate Included
in Discontinued
Operations 703 2,329 1,826 4,635
Add: Income Allocated
to Minority Interest 2,949 2,210 5,091 6,056
Add: Depreciation and
Amortization of Real
Estate- Joint
Ventures (b) 494 476 829 909
Less: Accumulated
Depreciation/Amortiza-
tion on Real Estate
Sold (9,766) (10,194) (15,190) (22,021)
Less: Accumulated
Depreciation/Amortiza-
tion on Real Estate
Sold-Joint Ventures
(b) - - - (5)
Funds From
Operations ("FFO")
(d) $42,155 $31,489 $81,262 $69,431
Add: Restricted Stock
Amortization 2,930 1,930 4,820 3,334
Add: Amortization of
Deferred Financing
Costs 510 464 1,019 910
Add: Depreciation of
Corporate F,F&E 337 321 657 640
Add: Redemption of
Preferred Stock - 7,359 - 7,359
Less: Non-Incremental
Capital Expenditures (11,118) (10,969) (21,701) (18,187)
Less: Straight-Line
Rent (1,813) (1,116) (4,063) (2,812)
Funds Available for
Distribution
("FAD") (d) $33,001 $29,478 $61,994 $60,675
FIRST INDUSTRIAL REALTY TRUST, INC.
Selected Financial Data
(In thousands, except for per share/unit and property data)
(Unaudited)
Three Months Ended Six Months Ended
Restated (e) Restated (e)
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
RECONCILIATION OF NET INCOME AVAILABLE TO
COMMON STOCKHOLDERS TO EBITDA (d) AND NOI (d)
Net Income
Available
to Common
Stockholders $19,443 $14,090 $33,523 $37,086
Add: Interest
Expense 25,890 23,922 51,693 47,556
Add: Interest
Expense
Included in
Discontinued
Operations 172 64 344 128
Add:
Depreciation
and
Amortization
of Real
Estate 28,332 22,578 55,183 42,771
Add:
Depreciation
and
Amortization
of Real Estate
Included in
Discontinued
Operations 703 2,329 1,826 4,635
Add:
Preferred
Dividends 2,310 4,790 4,620 9,834
Add:
Redemption of
Preferred
Stock - 7,359 - 7,359
Add:
Provision for
Income Taxes
/ Income Tax
Benefit 1,908 1,367 11,328 3,847
Add: Income
Allocated to
Minority
Interest 2,949 2,210 5,091 6,056
Add:
Amortization
of Deferred
Financing
Costs 510 464 1,019 910
Add:
Depreciation
of Corporate
F,F&E 337 321 657 640
Add:
Depreciation
and
Amortization
of Real Estate-
Joint Ventures (b) 494 476 829 909
Less:
Accumulated
Depreciation/
Amortization
on Real
Estate Sold -
Joint Ventures
(b) - - - (5)
Less:
Accumulated
Depreciation/
Amortization
on Real
Estate Sold (9,766) (10,194) (15,190) (22,021)
EBITDA (d) $73,282 $69,776 $150,923 $139,705
Add: General
and
Administrative
Expense 11,571 9,665 23,493 16,888
Less: Net
Economic
Gains (25,248) (20,049) (45,384) (36,199)
Less:
Provision for
Income Taxes
/ Income Tax
Benefit (1,908) (1,367) (11,328) (3,847)
Less: Equity
in FFO of
Joint
Ventures (b) (396) (777) (609) (1,450)
Net
Operating
Income
("NOI")
(d) $57,301 $57,248 $117,095 $115,097
Weighted Avg.
Number of
Shares/Units
Outstanding-
Basic 48,759 46,909 48,693 46,569
Weighted Avg.
Number of
Shares/Units
Outstanding-
Diluted (f) 48,759 46,909 48,693 46,569
Weighted Avg.
Number of Shares
Outstanding-
Basic 42,285 40,336 42,222 39,933
Weighted Avg.
Number of Shares
Outstanding-
Diluted (f) 42,285 40,336 42,222 39,933
Per Share/Unit
Data:
FFO:
- Basic $0.86 $0.67 $1.67 $1.49
- Diluted (f) $0.86 $0.67 $1.67 $1.49
Loss from
Continuing
Operations
Less
Preferred
Stock
Dividends
Per Weighted
Average
Common
Share
Outstanding:
- Basic $(0.20) $(0.29) $(0.10) $(0.34)
- Diluted (f) $(0.20) $(0.29) $(0.10) $(0.34)
Net Income
Available to
Common
Stockholders
Per Weighted
Average Common
Share
Outstanding:
- Basic $0.46 $0.35 $0.79 $0.93
- Diluted (f) $0.46 $0.35 $0.79 $0.93
Dividends/Dis-
tributions $0.6950 $0.6850 $1.3900 $1.3700
FFO Payout Ratio 80.4% 102.0% 83.3% 91.9%
FAD Payout Ratio 102.7% 109.0% 109.2% 105.1%
Balance Sheet Data
(end of period):
Real Estate
Before
Accumulated
Depreciation $2,922,451 $2,739,957
Real Estate
Held For
Sale, Net 52,641 14,787
Total Assets 2,769,358 2,679,728
Debt 1,636,422 1,475,791
Debt/Accrued
Interest on
Real Estate
Held For
Sale 13,732 -
Total
Liabilities 1,788,144 1,605,491
Stockholders'
Equity and
Minority
Interest $981,214 $1,074,237
Property Data (end
of period):
Total In-Service
Properties 848 814
Total Gross
Leasable Area
(in sq ft) 64,482,336 59,178,370
Occupancy 91.1% 88.6%
a) Represents the mark to market of an interest rate protection agreement
used to hedge a prospective transaction that does not qualify for
hedge accounting in accordance with Statement of Financial Accounting
Standard No. 133, "Accounting for Derivative Instruments and Hedging
Activities."
b) Represents the Company's share of net income, depreciation and
amortization of real estate and accumulated depreciation and
amortization on real estate sold from the Company's joint ventures in
which it owns minority equity interests.
c) In August 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("FAS 144"). FAS 144
requires that the operations and gain (loss) on sale of qualifying
properties sold and properties that are classified as held for sale be
presented in discontinued operations. FAS 144 also requires that
prior periods be restated.
d) Investors in and analysts following the real estate industry utilize
FFO, NOI, EBITDA and FAD, variously defined, as supplemental
performance measures. While the Company believes net income available
to common stockholders, as defined by GAAP, is the most appropriate
measure, it considers FFO, NOI, EBITDA and FAD, given their wide use
by and relevance to investors and analysts, appropriate supplemental
performance measures. FFO, reflecting the assumption that real estate
asset values rise or fall with market conditions, principally adjusts
for the effects of GAAP depreciation and amortization of real estate
assets. NOI provides a measure of rental operations, and does not
factor in depreciation and amortization and non-property specific
expenses such as general and administrative expenses. EBITDA provides
a tool to further evaluate the ability to incur and service debt and
to fund dividends and other cash needs. FAD provides a tool to
further evaluate the ability to fund dividends. In addition, FFO,
NOI, EBITDA and FAD are commonly used in various ratios, pricing
multiples/yields and returns and valuation calculations used to
measure financial position, performance and value.
The Company calculates FFO to be equal to net income available to
common stockholders, plus depreciation and amortization on real
estate, minus accumulated depreciation and amortization on real estate
sold.
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 Net Economic Gains, minus general and administrative
expenses. Net Economic Gains equal the gain on sale of real estate
and the gain on sale of real estate from discontinued operations less
accumulated depreciation and amortization on real estate sold
(excluding the recapture of accumulated amortization related to
above/below market leases as this amortization is included in revenues
and FFO) and provision for income taxes/income tax benefit. EBITDA
includes EBITDA from discontinued operations.
FAD is defined as EBITDA, minus GAAP interest expense, minus preferred
stock dividends, minus preferred stock redemption costs, minus
straight-line rental income, minus provision 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 FAD 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 FAD should not be considered as
substitutes for net income available to common stockholders
(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 FAD, as calculated by the
Company, may not be comparable to similarly titled, but variously
calculated, measures of other REITs or to the definition of FFO
published by NAREIT.
e) In 2004, the Company classified its entire tax provision to income
from discontinued operations. Based on a review of its presentation
of income taxes under FAS 109, the Company has reconsidered such
presentation and determined that the Company's income tax provision
should be allocated between income from continuing operations, income
from discontinued operations and gain on sale of real estate. This
reclassification does not impact net income available to common
stockholders or FFO.
f) Pursuant to Statement of Financial Accounting Standard No. 128,
"Earnings Per Share," the weighted average number of shares/units
outstanding -- diluted and weighted average number of shares
outstanding -- diluted are the same as weighted average number of
shares/units outstanding -- basic and weighted average number of
shares outstanding -- basic, respectively, as the dilutive effect of
stock options and restricted stock was excluded because its inclusion
would have been antidilutive to the loss from continuing operations
per share.
SOURCE First Industrial Realty Trust, Inc.
Sean P. O'Neill, SVP, Investor Relations and Corporate Communications, +1-312-344-4401, or Art Harmon, Sr. Manager, Investor Relations and Corporate Communications, +1-312-344-4320, both of First Industrial Realty Trust, Inc.