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First Industrial Realty Trust Reports Third Quarter 2014 Results
"
Portfolio Performance – Third Quarter 2014
- In-service occupancy was 93.9% at the end of the third quarter, compared to 93.0% at the end of the second quarter of 2014, and 91.2% at the end of the third quarter of 2013.
- Same property cash basis net operating income (NOI) increased 4.9%. Including lease termination fees, same store NOI grew 5.7%. Both measures exclude the impact of the
$1.0 million portion of a one-time restoration fee recognized during the third quarter of 2014. - Rental rates increased 1.6% on a cash basis and increased 9.4% on a GAAP basis; leasing costs were
$1.89 per square foot. - Tenants were retained in 78.9% of square footage up for renewal.
Investment and Disposition Activities
In the third quarter of 2014, the Company:
- Sold 15 properties comprised of 925,000 square feet for a total of
$54.2 million ; third quarter sales included a portfolio of six light industrial and flex buildings totaling 370,000 square feet and one land parcel inBaltimore for$28.5 million , as well as a 119,000 square-foot vacant facility inChicago for$10.5 million . - Acquired development sites in
Houston andSouthern California , comprised of 47 and 16 developable acres, respectively, for a total of$21.8 million .
In the fourth quarter to date, the Company:
- Sold two buildings totaling 35,000 square feet in
Detroit and one land parcel inToronto for a total of$3.3 million .
The Company anticipates starting the following two new developments in the fourth quarter.
First Arlington Commerce Center @I-20 , a 153,000 square-foot building in theDallas market; estimated total investment of$9.5 million .- First 33 Commerce Center, a two-building, 585,000 square-foot project in the
Lehigh Valley inPennsylvania ; estimated total investment of$44 million .
"We are enhancing our portfolio through new investments and execution of targeted asset sales, levering the strengths of the
As previously announced, the Company:
- Commenced the lease on its 708,000 square-foot First Logistics Center @
I-83 inYork, PA. - Leased approximately half of its 489,000 square-foot First Bandini Logistics Center in Los Angeles.
- Signed a 377,000 square-foot full-building lease at its First Pinnacle Industrial Center in Dallas. The 598,000 square-foot two-building complex is 87% pre-leased and completion is expected in the first quarter of 2015.
- Leased approximately half of the 142,000 square-foot building at its Interstate North Business Park development in Minneapolis. The two-building, 239,000 square-foot project is 70% pre-leased and is expected to be completed in the fourth quarter of 2014.
Capital Market Activities and Financial Position
In the third quarter, the Company:
- Paid off
$25.2 million of secured debt with an interest rate 6.7%. - Received an investment grade rating of BBB- on its unsecured notes from
Fitch Ratings .
In the fourth quarter to date, the Company:
- Received an investment grade rating of Baa3 on its unsecured notes from
Moody's Investors Service .
"We are pleased to now have earned investment grade ratings from all three agencies," said
Outlook for 2014
Mr. Duncan stated, "The U.S. industrial real estate market continues to enjoy positive net absorption, with incremental demand outpacing new supply. We remain focused on capturing the cash flow growth opportunities within our portfolio and through disciplined new investment."
Low End of |
High End of |
||
Guidance for 2014 |
Guidance for 2014 |
||
(Per share/unit) |
(Per share/unit) |
||
Net Income Available to Common Stockholders |
0.30 |
0.34 |
|
Add: Real Estate Depreciation/Amortization |
1.00 |
1.00 |
|
Less: Non-NAREIT Compliant Gain Through 3Q14 |
(0.16) |
(0.16) |
|
FFO (NAREIT Definition)* |
$1.14 |
$1.18 |
|
FFO Before One-Time Restoration Fee, Loss from Retirement of Debt, Loss from Redemption of Preferred Stock and Acquisition Costs* |
$1.14 |
$1.18 |
|
*NAREIT FFO guidance reflects the one-time restoration fee, offset by loss from retirement of debt related to mortgage payoffs, loss from redemption of preferred stock and acquisition costs. The net impact of these items is less than one-half cent per share. |
|||||
As a result, the guidance range for these two metrics is the same. |
The following assumptions for full year 2014 were used:
- Average quarter-end in-service occupancy of 93% to 93.5%, an increase of 0.5% at the bottom end of the range.
- Guidance includes a one-time restoration fee of approximately
$0.02 per share. - Guidance reflects occupancy for the remaining half of the Company's First Bandini Logistics Center development by year-end.
- Same-store NOI on a cash basis of positive 3.25% to 4% before termination fees and excluding the aforementioned one-time restoration fee. This is a narrowing of the range and a reduction from the prior midpoint of 4%. The change in same store guidance was due primarily to a lease termination fee received in the third quarter that economically offsets the lost rental income from the lease in the fourth quarter. Since the economics were in the form of a termination fee instead of rent, they are excluded from same store guidance. Same store guidance was also adjusted for the impact of third quarter asset sales.
- JV FFO of approximately
$0.4 million . - General and administrative expense of approximately
$23 million to $24 million . - Guidance includes the incremental costs related to the Company's developments in process and its completed developments. Guidance also reflects the initial costs related to the anticipated fourth quarter development starts. In total, the Company expects to capitalize
$0.01 per share of interest in 2014 related to its development projects. - 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 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; 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 third 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 |
Nine Months Ended |
|||||||
September 30, |
September 30, |
September 30, |
September 30, |
|||||
2014 |
2013 |
2014 |
2013 |
|||||
Statement of Operations and Other Data: |
||||||||
Total Revenues |
$ 87,077 |
$ 79,708 |
$ 256,347 |
$ 238,732 |
||||
Property Expenses |
(27,566) |
(25,312) |
(85,396) |
(77,527) |
||||
General & Administrative |
(5,389) |
(5,137) |
(18,053) |
(17,001) |
||||
Impairment of Real Estate |
- |
(1,047) |
- |
(1,047) |
||||
Depreciation of Corporate FF&E |
(137) |
(137) |
(388) |
(509) |
||||
Depreciation and Other Amortization of Real Estate |
(27,984) |
(26,955) |
(83,692) |
(79,389) |
||||
Total Expenses |
(61,076) |
(58,588) |
(187,529) |
(175,473) |
||||
Interest Income |
681 |
591 |
2,054 |
1,754 |
||||
Interest Expense |
(17,322) |
(17,997) |
(55,292) |
(55,391) |
||||
Amortization of Deferred Financing Costs |
(753) |
(781) |
(2,360) |
(2,468) |
||||
Mark-to-Market Gain on Interest Rate Protection Agreements |
- |
- |
- |
52 |
||||
Loss from Retirement of Debt |
(32) |
(662) |
(655) |
(6,248) |
||||
Income from Continuing Operations Before Equity in (Loss) Income of Joint Ventures and Income Tax Provision |
||||||||
8,575 |
2,271 |
12,565 |
958 |
|||||
Equity in (Loss) Income of Joint Ventures (a) |
(14) |
72 |
3,508 |
119 |
||||
Income Tax Provision |
(103) |
(63) |
(192) |
(4) |
||||
Income from Continuing Operations |
8,458 |
2,280 |
15,881 |
1,073 |
||||
Discontinued Operations: |
||||||||
Income Attributable to Discontinued Operations |
309 |
949 |
1,102 |
1,726 |
||||
Gain on Sale of Real Estate |
13,428 |
5,243 |
14,483 |
15,650 |
||||
Income from Discontinued Operations |
13,737 |
6,192 |
15,585 |
17,376 |
||||
Income Before Gain on Sale of Real Estate |
22,195 |
8,472 |
31,466 |
18,449 |
||||
Gain on Sale of Real Estate |
- |
291 |
- |
553 |
||||
Net Income |
22,195 |
8,763 |
31,466 |
19,002 |
||||
Net Income Attributable to the Noncontrolling Interest |
(868) |
(219) |
(1,137) |
(244) |
||||
Net Income Attributable to First Industrial Realty Trust, Inc. |
21,327 |
8,544 |
30,329 |
18,758 |
||||
Preferred Dividends |
- |
(1,392) |
(1,019) |
(7,506) |
||||
Redemption of Preferred Stock |
- |
(2,121) |
(1,462) |
(5,667) |
||||
Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders and Participating Securities |
||||||||
$ 21,327 |
$ 5,031 |
$ 27,848 |
$ 5,585 |
|||||
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 |
||||||||
$ 21,327 |
$ 5,031 |
$ 27,848 |
$ 5,585 |
|||||
Depreciation and Other Amortization of Real Estate |
27,984 |
26,955 |
83,692 |
79,389 |
||||
Depreciation and Other Amortization of Real Estate Included in Discontinued Operations |
187 |
1,571 |
1,586 |
5,709 |
||||
Impairment of Depreciated Real Estate |
- |
1,047 |
- |
1,047 |
||||
Impairment of Depreciated Real Estate Included in Discontinued Operations |
- |
- |
- |
1,605 |
||||
Noncontrolling Interest |
868 |
219 |
1,137 |
244 |
||||
Equity in Depreciation and Other Amortization of Joint Ventures (a) |
25 |
114 |
91 |
224 |
||||
Non-NAREIT Compliant Gain (b) |
(13,428) |
(5,243) |
(14,483) |
(15,650) |
||||
Non-NAREIT Compliant Gain from Joint Ventures (a) (b) |
- |
(111) |
(3,346) |
(111) |
||||
Funds From Operations (NAREIT) ("FFO") (b) |
$ 36,963 |
$ 29,583 |
$ 96,525 |
$ 78,042 |
||||
Loss from Retirement of Debt |
32 |
662 |
655 |
6,248 |
||||
Restricted Stock/Unit Amortization |
1,351 |
1,769 |
6,248 |
4,436 |
||||
Amortization of Debt Discounts / (Premiums) and Hedge Costs |
148 |
998 |
1,924 |
2,928 |
||||
Amortization of Deferred Financing Costs |
753 |
781 |
2,360 |
2,468 |
||||
Depreciation of Corporate FF&E |
137 |
137 |
388 |
509 |
||||
Redemption of Preferred Stock |
- |
2,121 |
1,462 |
5,667 |
||||
Mark-to-Market Gain on Interest Rate Protection Agreements |
- |
- |
- |
(52) |
||||
NAREIT Compliant Economic Gain (b) |
- |
(291) |
- |
(553) |
||||
One-Time Restoration Fee (d) |
(1,014) |
- |
(2,236) |
- |
||||
Non-Incremental Capital Expenditures (d) |
(11,849) |
(13,163) |
(31,713) |
(36,725) |
||||
Capitalized Interest and Overhead |
(336) |
(1,122) |
(1,205) |
(3,233) |
||||
Straight-Line Rent and Amortization of Above (Below) Market Leases |
||||||||
and Lease Inducements |
(571) |
(779) |
(1,173) |
(2,913) |
||||
Adjusted Funds From Operations ("AFFO") (b) |
$ 25,614 |
$ 20,696 |
$ 73,235 |
$ 56,822 |
FIRST INDUSTRIAL REALTY TRUST, INC. |
||||||||
Selected Financial Data |
||||||||
(Unaudited) |
||||||||
(In thousands except per share/unit data) |
||||||||
Three Months Ended |
Nine Months Ended |
|||||||
September 30, |
September 30, |
September 30, |
September 30, |
|||||
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 |
||||||||
$ 21,327 |
$ 5,031 |
$ 27,848 |
$ 5,585 |
|||||
Interest Expense |
17,322 |
17,997 |
55,292 |
55,391 |
||||
Depreciation and Other Amortization of Real Estate |
27,984 |
26,955 |
83,692 |
79,389 |
||||
Depreciation and Other Amortization of Real Estate Included in Discontinued Operations |
187 |
1,571 |
1,586 |
5,709 |
||||
Impairment of Depreciated Real Estate |
- |
1,047 |
- |
1,047 |
||||
Impairment of Depreciated Real Estate Included in Discontinued Operations |
- |
- |
- |
1,605 |
||||
Preferred Dividends |
- |
1,392 |
1,019 |
7,506 |
||||
Redemption of Preferred Stock |
- |
2,121 |
1,462 |
5,667 |
||||
Income Tax Provision |
103 |
63 |
192 |
4 |
||||
Noncontrolling Interest |
868 |
219 |
1,137 |
244 |
||||
Loss from Retirement of Debt |
32 |
662 |
655 |
6,248 |
||||
Amortization of Deferred Financing Costs |
753 |
781 |
2,360 |
2,468 |
||||
Depreciation of Corporate FF&E |
137 |
137 |
388 |
509 |
||||
Equity in Depreciation and Other Amortization of Joint Ventures (a) |
25 |
114 |
91 |
224 |
||||
NAREIT Compliant Economic Gain (b) |
- |
(291) |
- |
(553) |
||||
Non-NAREIT Compliant Gain (b) |
(13,428) |
(5,243) |
(14,483) |
(15,650) |
||||
Non-NAREIT Compliant Gain from Joint Ventures (a) (b) |
- |
(111) |
(3,346) |
(111) |
||||
EBITDA (b) |
$ 55,310 |
$ 52,445 |
$ 157,893 |
$ 155,282 |
||||
General and Administrative |
5,389 |
5,137 |
17,942 |
17,001 |
||||
Acquisition Costs |
- |
- |
111 |
- |
||||
Mark-to-Market Gain on Interest Rate Protection Agreements |
- |
- |
- |
(52) |
||||
FFO from Joint Ventures (b) |
(21) |
(134) |
(379) |
(412) |
||||
Net Operating Income ("NOI") (b) |
$ 60,678 |
$ 57,448 |
$ 175,567 |
$ 171,819 |
||||
RECONCILIATION OF GAIN ON SALE OF REAL ESTATE TO NAREIT COMPLIANT ECONOMIC GAIN (b) |
||||||||
Gain on Sale of Real Estate |
$ - |
$ 291 |
$ - |
$ 553 |
||||
Gain on Sale of Real Estate from Discontinued Operations |
13,428 |
5,243 |
14,483 |
15,650 |
||||
Non-NAREIT Compliant Gain (b) |
(13,428) |
(5,243) |
(14,483) |
(15,650) |
||||
NAREIT Compliant Economic Gain (b) |
$ - |
$ 291 |
$ - |
$ 553 |
||||
Weighted Avg. Number of Shares/Units Outstanding - Basic (c) |
114,512 |
114,089 |
114,346 |
110,823 |
||||
Weighted Avg. Number of Shares Outstanding - Basic (c) |
110,072 |
109,474 |
109,856 |
106,154 |
||||
Weighted Avg. Number of Shares/Units Outstanding - Diluted (c) |
114,711 |
114,089 |
114,788 |
110,823 |
||||
Weighted Avg. Number of Shares Outstanding - Diluted (c) |
110,271 |
109,474 |
110,298 |
106,154 |
||||
Per Share/Unit Data: |
||||||||
FFO (NAREIT) |
$ 36,963 |
$ 29,583 |
$ 96,525 |
$ 78,042 |
||||
Less: Allocation to Participating Securities |
(149) |
(127) |
(334) |
(323) |
||||
FFO (NAREIT) Allocable to Common Stockholders and Unitholders |
$ 36,814 |
$ 29,456 |
$ 96,191 |
$ 77,719 |
||||
Basic/Diluted Per Share/Unit (c) |
$ 0.32 |
$ 0.26 |
$ 0.84 |
$ 0.70 |
||||
Income from Continuing Operations, including Gain on Sale of Real Estate |
$ 8,458 |
$ 2,571 |
$ 15,881 |
$ 1,626 |
||||
Add: Noncontrolling Interest Allocable to Continuing Operations and Gain on Sale of Real Estate |
(338) |
31 |
(528) |
486 |
||||
Less: Preferred Dividends |
- |
(1,392) |
(1,019) |
(7,506) |
||||
Less: Redemption of Preferred Stock |
- |
(2,121) |
(1,462) |
(5,667) |
||||
Less: Allocation to Participating Securities |
(34) |
- |
(57) |
- |
||||
Income from Continuing Operations Available to First Industrial Realty Trust, Inc.'s Common Stockholders |
$ 8,086 |
$ (911) |
$ 12,815 |
$ (11,061) |
||||
Basic/Diluted Per Share (c) |
$ 0.07 |
$ 0.00 |
$ 0.12 |
$ (0.10) |
||||
Net Income Available |
$ 21,327 |
$ 5,031 |
$ 27,848 |
$ 5,585 |
||||
Less: Allocation to Participating Securities |
(90) |
(42) |
(123) |
(120) |
||||
Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders |
$ 21,237 |
$ 4,989 |
$ 27,725 |
$ 5,465 |
||||
Basic/Diluted Per Share (c) |
$ 0.19 |
$ 0.05 |
$ 0.25 |
$ 0.05 |
||||
Common Dividends/Distributions |
$ 0.1025 |
$ 0.0850 |
$ 0.3075 |
$ 0.2550 |
||||
Balance Sheet Data (end of period): |
||||||||
Gross Real Estate Investment |
$ 3,155,936 |
$ 3,157,804 |
||||||
Real Estate and Other Assets Held For Sale, Net |
15,413 |
2,291 |
||||||
Total Assets |
2,576,511 |
2,611,115 |
||||||
Debt |
1,343,764 |
1,329,526 |
||||||
Total Liabilities |
1,483,476 |
1,453,657 |
||||||
Total Equity |
$ 1,093,035 |
$ 1,157,458 |
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, minus 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, 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 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 (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 the three and nine 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, Senior Director, Investor Relations and Corporate Communications, 312-344-4320