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First Industrial Realty Trust Reports Third Quarter 2016 Results
"The industrial real estate market continues to experience broad-based tenant demand that has exceeded new supply," said
Portfolio Performance – Third Quarter 2016
- In service occupancy was 95.4% at the end of the third quarter, compared to 95.8% at the end of the second quarter of 2016, and 95.5% at the end of the third quarter of 2015. Dispositions helped occupancy by 15 basis points since the end of the second quarter of 2016.
- Tenants were retained in 63.4% of square footage up for renewal.
- Same property cash basis net operating income (NOI) increased 3.5%. Including lease termination fees, same property cash basis NOI increased 3.4%.
- Rental rates increased 11.0% on a cash basis and increased 20.4% on a GAAP basis; leasing costs were
$2.00 per square foot.
In the third quarter, the Company signed:
- A full building 601,000 square-foot lease at
First Park 94 - Building I in theChicago market. - A 69,000 square-foot expansion lease at its
First Northwest Commerce Center inHouston to bring this 352,000 square-foot development to 100% leased.
In the fourth quarter to date, the Company signed:
- A full building 234,000 square-foot lease at First Arlington Commerce Center II in
Dallas .
Investment and Disposition Activities
In the third quarter, the Company:
- Acquired a 99,000 square-foot building in the
San Diego market ofSouthern California for$11.9 million . - Acquired a vacant, recently constructed 121,000 square-foot development in the
Chicago market for$9.0 million . - Acquired a 26-acre development site in
Dallas for$3.0 million that can accommodate a 420,000 square-foot building. - Started its second development at
First Park 94 - Building II in theChicago market, a 602,000 square-foot building with an estimated investment of$29.9 million . - Started development of a 618,000 square-foot distribution center in
Phoenix with an estimated investment of$32.8 million . - Started a 243,000 square-foot development in the Inland Empire of
Southern California with an estimated investment of$17.8 million .
In the fourth quarter to date, the Company:
- Acquired a 63,000 square-foot building in the
Doral submarket ofMiami for$8.4 million .
"Using the strength of our platform, we are developing and acquiring high quality, well-located assets that meet the needs of a range of tenants and will contribute to long-term cash flow growth," said
Outlook for 2016
Mr. Duncan stated, "Due to the incremental compensation related to our new CEO hire and an increase in our projected performance-based compensation, we are reducing by
Low End of |
High End of |
|||||
Guidance for 2016 |
Guidance for 2016 |
|||||
(Per share/unit) |
(Per share/unit) |
|||||
Net Income Available to Common Stockholders |
0.96 |
1.00 |
||||
Add: Real Estate Depreciation/Amortization |
0.97 |
0.97 |
||||
Less: Non-NAREIT Compliant Gains Through 3Q16 |
(0.51) |
(0.51) |
||||
FFO (NAREIT Definition) |
$1.42 |
$1.46 |
||||
FFO Before Impact of Acquisition Costs |
$1.43 |
$1.47 |
The following assumptions were used:
- Average quarter-end in service occupancy of 95.25% to 95.75%, a narrowing of the range.
- Fourth quarter same-store NOI on a cash basis before termination fees of 2.5% to 4.0%. This implies a quarterly average same-store NOI range for 2016 of approximately 5.5% to 5.9%, compared to the midpoint of our prior guidance of 5.0% from our second quarter results press release.
- General and administrative expense of approximately
$26.5 million to $27.5 million , an increase of$1.5 million reflecting increased performance-related compensation and incremental compensation expense related to our new CEO hire. - Guidance includes the incremental costs related to the Company's developments under construction as of
September 30, 2016 . In total, the Company expects to capitalize$0.03 per share of interest related to its development projects in 2016. - Guidance reflects the aforementioned
$8.4 million acquisition inMiami in the fourth quarter to-date. - Other than the above, guidance does not include the impact of:
- any future debt repurchases or future debt issuances,
- any future investments,
- any future property sales,
- any future impairment gains or losses,
- any future NAREIT-compliant gains or losses, or
- any future equity issuances.
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 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.
The Company's third quarter 2016 supplemental information can be viewed at www.firstindustrial.com under the "Investors" 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, |
||||
2016 |
2015 |
2016 |
2015 |
||||
Statement of Operations and Other Data: |
|||||||
Total Revenues |
$ 93,562 |
$ 92,159 |
$ 280,044 |
$ 272,614 |
|||
Property Expenses |
(27,539) |
(28,044) |
(82,781) |
(85,662) |
|||
General and Administrative |
(5,983) |
(5,900) |
(20,090) |
(19,026) |
|||
Acquisition Costs |
(119) |
(45) |
(338) |
(364) |
|||
Impairment of Real Estate |
- |
(626) |
- |
(626) |
|||
Depreciation of Corporate FF&E |
(213) |
(179) |
(580) |
(520) |
|||
Depreciation and Other Amortization of Real Estate |
(28,602) |
(28,410) |
(88,088) |
(84,419) |
|||
Total Expenses |
(62,456) |
(63,204) |
(191,877) |
(190,617) |
|||
Gain on Sale of Real Estate |
16,802 |
2,957 |
60,828 |
13,084 |
|||
Interest Expense |
(14,407) |
(16,674) |
(45,255) |
(49,679) |
|||
Amortization of Deferred Financing Costs |
(782) |
(781) |
(2,437) |
(2,291) |
|||
Mark-to-Market and Settlement Loss on Interest Rate Protection Agreements |
- |
- |
- |
(11,546) |
|||
Income from Continuing Operations Before Equity in (Loss) Income of Joint Ventures and Income Tax (Provision) Benefit |
|||||||
32,719 |
14,457 |
101,303 |
31,565 |
||||
Equity in (Loss) Income of Joint Ventures (a) |
- |
(6) |
- |
61 |
|||
Income Tax (Provision) Benefit |
(51) |
14 |
(232) |
(127) |
|||
Net Income |
32,668 |
14,465 |
101,071 |
31,499 |
|||
Net Income Attributable to the Noncontrolling Interest |
(1,149) |
(548) |
(3,635) |
(1,197) |
|||
Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders and Participating Securities |
|||||||
$ 31,519 |
$ 13,917 |
$ 97,436 |
$ 30,302 |
||||
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 |
|||||||
$ 31,519 |
$ 13,917 |
$ 97,436 |
$ 30,302 |
||||
Depreciation and Other Amortization of Real Estate |
28,602 |
28,410 |
88,088 |
84,419 |
|||
Impairment of Depreciated Real Estate |
- |
626 |
- |
626 |
|||
Noncontrolling Interest |
1,149 |
548 |
3,635 |
1,197 |
|||
Equity in Depreciation and Other Amortization of Joint Ventures (a) |
- |
- |
- |
17 |
|||
Gain on Sale of Depreciable Real Estate |
(16,802) |
(2,883) |
(60,828) |
(13,010) |
|||
Gain on Sale of Depreciable Real Estate from Joint Ventures (a) |
- |
- |
- |
(63) |
|||
Funds From Operations (NAREIT) ("FFO") (b) |
$ 44,468 |
$ 40,618 |
$ 128,331 |
$ 103,488 |
|||
Restricted Stock/Unit Amortization |
1,428 |
1,507 |
5,898 |
5,574 |
|||
Amortization of Debt Discounts / (Premiums) and Hedge Costs |
64 |
148 |
200 |
444 |
|||
Amortization of Deferred Financing Costs |
782 |
781 |
2,437 |
2,291 |
|||
Depreciation of Corporate FF&E |
213 |
179 |
580 |
520 |
|||
Mark-to-Market and Settlement Loss on Interest Rate Protection Agreements |
- |
- |
- |
11,546 |
|||
Gain on Sale of Non-Depreciable Real Estate |
- |
(74) |
- |
(74) |
|||
Non-incremental Building Improvements |
(5,088) |
(4,697) |
(9,034) |
(10,256) |
|||
Non-incremental Leasing Costs |
(6,435) |
(6,726) |
(19,556) |
(20,307) |
|||
Capitalized Interest |
(960) |
(660) |
(2,279) |
(1,685) |
|||
Capitalized Overhead |
(148) |
(73) |
(389) |
(167) |
|||
Straight-Line Rent, Amortization of Above (Below) Market Leases |
|||||||
and Lease Inducements |
(1,833) |
(1,303) |
(5,150) |
(5,030) |
|||
Adjusted Funds From Operations ("AFFO") (b) |
$ 32,491 |
$ 29,700 |
$ 101,038 |
$ 86,344 |
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 EBITDA (b) AND NOI (b) |
|||||||
Three Months Ended |
Nine Months Ended |
||||||
September 30, |
September 30, |
September 30, |
September 30, |
||||
2016 |
2015 |
2016 |
2015 |
||||
Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders and Participating Securities |
|||||||
$ 31,519 |
$ 13,917 |
$ 97,436 |
$ 30,302 |
||||
Interest Expense |
14,407 |
16,674 |
45,255 |
49,679 |
|||
Depreciation and Other Amortization of Real Estate |
28,602 |
28,410 |
88,088 |
84,419 |
|||
Impairment of Depreciated Real Estate |
- |
626 |
- |
626 |
|||
Income Tax Provision (Benefit) |
51 |
(14) |
232 |
127 |
|||
Mark-to-Market and Settlement Loss on Interest Rate Protection Agreements |
- |
- |
- |
11,546 |
|||
Noncontrolling Interest |
1,149 |
548 |
3,635 |
1,197 |
|||
Amortization of Deferred Financing Costs |
782 |
781 |
2,437 |
2,291 |
|||
Depreciation of Corporate FF&E |
213 |
179 |
580 |
520 |
|||
Equity in Depreciation and Other Amortization of Joint Ventures (a) |
- |
- |
- |
17 |
|||
Gain on Sale of Non-Depreciable Real Estate |
- |
(74) |
- |
(74) |
|||
Gain on Sale of Depreciable Real Estate |
(16,802) |
(2,883) |
(60,828) |
(13,010) |
|||
Gain on Sale of Depreciable Real Estate from Joint Ventures (a) |
- |
- |
- |
(63) |
|||
EBITDA (b) |
$ 59,921 |
$ 58,164 |
$ 176,835 |
$ 167,577 |
|||
General and Administrative |
5,983 |
5,900 |
20,090 |
19,026 |
|||
Acquisition Costs |
119 |
45 |
338 |
364 |
|||
FFO from Joint Ventures (b) |
- |
6 |
- |
(79) |
|||
Net Operating Income ("NOI") (b) |
$ 66,023 |
$ 64,115 |
$ 197,263 |
$ 186,888 |
|||
Weighted Avg. Number of Shares/Units Outstanding - Basic |
120,740 |
114,720 |
118,781 |
114,705 |
|||
Weighted Avg. Number of Shares Outstanding - Basic |
116,467 |
110,356 |
114,491 |
110,338 |
|||
Weighted Avg. Number of Shares/Units Outstanding - Diluted |
121,137 |
115,212 |
119,099 |
115,102 |
|||
Weighted Avg. Number of Shares Outstanding - Diluted |
116,864 |
110,848 |
114,809 |
110,735 |
|||
Per Share/Unit Data: |
|||||||
Net Income Available to First Industrial Realty Trust, Inc.'s |
|||||||
Common Stockholders and Participating Securities |
$ 31,519 |
$ 13,917 |
$ 97,436 |
$ 30,302 |
|||
Less: Allocation to Participating Securities |
(110) |
(50) |
(329) |
(141) |
|||
Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders |
$ 31,409 |
$ 13,867 |
$ 97,107 |
$ 30,161 |
|||
Basic/Diluted Per Share |
$ 0.27 |
$ 0.13 |
$ 0.85 |
$ 0.27 |
|||
FFO (NAREIT) |
$ 44,468 |
$ 40,618 |
$ 128,331 |
$ 103,488 |
|||
Less: Allocation to Participating Securities |
(150) |
(137) |
(417) |
(330) |
|||
FFO (NAREIT) Allocable to Common Stockholders and Unitholders |
$ 44,318 |
$ 40,481 |
$ 127,914 |
$ 103,158 |
|||
Basic Per Share/Unit |
$ 0.37 |
$ 0.35 |
$ 1.08 |
$ 0.90 |
|||
Diluted Per Share/Unit |
$ 0.37 |
$ 0.35 |
$ 1.07 |
$ 0.90 |
|||
Common Dividends/Distributions Per Share/Unit |
$ 0.1900 |
$ 0.1275 |
$ 0.5700 |
$ 0.3825 |
|||
Balance Sheet Data (end of period): |
|||||||
Gross Real Estate Investment |
$ 3,364,039 |
$ 3,268,420 |
|||||
Total Assets (c) |
2,767,563 |
2,698,177 |
|||||
Debt (c) |
1,325,092 |
1,462,341 |
|||||
Total Liabilities (c) |
1,504,722 |
1,618,443 |
|||||
Total Equity |
$ 1,262,841 |
$ 1,079,734 |
a) Represents our pro rata share of net income (loss), depreciation and amortization on real estate and gain (loss) on sale of depreciable real estate, 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 we believe net income available to
As used herein, we calculate FFO to be equal to net income available to
NOI is defined as our revenues, minus property expenses such as real estate taxes, repairs and maintenance, property management, utilities, insurance and other expenses.
EBITDA is defined as NOI plus the equity in FFO of our joint ventures, which were accounted for under the equity method of accounting, minus general and administrative expenses and acquisition costs.
AFFO is defined as EBITDA minus GAAP interest expense, minus capitalized interest and overhead, plus amortization of debt discounts / (premiums) and hedge costs, 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 us may not be comparable to similarly titled, but variously calculated, measures of other REITs.
In addition, we consider cash-basis same store NOI ("SS NOI") to be a useful supplemental measure of our operating performance. Same store properties include all properties owned prior to
c) Effective
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SOURCE
Art Harmon, Vice President, Investor Relations and Marketing, 312-344-4320