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First Industrial Realty Trust Reports Second Quarter 2015 Results
Both EPS and FFO per share results for the second quarter of 2015 reflect a
"Our team delivered an excellent second quarter in all aspects of our business, including achieving our year-end occupancy target of 95% ahead of schedule. We are raising our FFO per share guidance for the year on the strength of our performance," said
Portfolio Performance – Second Quarter 2015
- In-service occupancy was 95.1% at the end of the second quarter, compared to 94.3% at the end of the first quarter of 2015, and 93.0% at the end of the second quarter of 2014.
- Tenants were retained in 83.4% of square footage up for renewal.
- Same property cash basis net operating income (NOI) increased 4.7%. Including lease termination fees, same property NOI increased 5.3%. Both measures exclude the impact of the
$0.8 million portion of a one-time restoration fee recognized during the second quarter of 2014. - Rental rates increased 4.0% on a cash basis and increased 11.9% on a GAAP basis; leasing costs were
$2.92 per square foot.
In the second quarter, the Company:
- Placed in service its 377,000 square-foot First Pinnacle Industrial Center I development in
Dallas , which is 100% leased on a long-term basis to a beverage company. - Placed in service its 556,000 square-foot First 36 Logistics Center in the Inland Empire for which the Company signed a long-term, full-building lease with an auto manufacturer.
- Leased 78% of its 352,000 square-foot
First Northwest Commerce Center inHouston . - Leased the remaining 80,000 square feet of its 222,000 square-foot First Pinnacle Industrial Center II in
Dallas .
Investment and Disposition Activities
In the second quarter, the Company:
- Acquired two 100% leased buildings in
Southern California : a 45,000 square-foot building in theSouth Bay submarket ofLos Angeles for$5.4 million and a 172,000 square-foot distribution center inRiverside in the Inland Empire for$14.8 million . - Commenced development of First Park Tolleson, a 386,000 square-foot multi-tenant distribution center with estimated total investment of
$21.5 million . The building is 44% pre-leased to an existing customer relocating from an 80,000 square-foot space to a 170,000 square-foot space in this building upon its expected completion by the end of the first quarter of 2016. - Acquired a 24-acre development site in the Great Southwest submarket of
Dallas which is developable to 302,000 square feet. - Completed three building sales comprised of 384,000 square feet as well as one land parcel for gross proceeds of
$16.0 million .
In the third quarter to date, the Company:
- Sold a 7,200 square-foot building in
Tampa as well as a land parcel inMilwaukee for gross proceeds of$1.3 million .
"By executing on our developments from planning through lease-up, we are creating value and meeting growing tenant demand in our target markets," said
Outlook for 2015
Mr. Duncan stated, "We continue to see broad-based demand in the industrial market that is exceeding new supply. Our team is focused on delivering more cash flow by driving average occupancy in our existing portfolio, leasing up developments and growing rents given the strong fundamentals."
Low End of |
High End of |
||
Guidance for 2015 |
Guidance for 2015 |
||
(Per share/unit) |
(Per share/unit) |
||
Net Income Available to Common Stockholders |
0.31 |
0.39 |
|
Add: Real Estate Depreciation/Amortization |
0.99 |
0.99 |
|
Add: Non-NAREIT Compliant Gains Through 2Q15 |
(0.09) |
(0.09) |
|
FFO (NAREIT Definition) |
$1.21 |
$1.29 |
|
FFO Before Impact of Settlement of Interest Rate Protection Agreement and Acquisition Costs YTD |
$1.31 |
$1.39 |
The following assumptions were used:
- Average quarter-end in-service occupancy of 94.5% to 95.5%, an increase of 100 basis points at the midpoint.
- Same-store NOI growth on a cash basis of positive 4% to 5% for the full year, excluding lease termination fees as well as the one-time restoration fee recognized in the comparative period of 2014. This is an increase of 50 basis points at the midpoint and a narrowing of the range.
- General and administrative expense of approximately
$24 million to $25 million . - 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 developments in process. In total, the Company expects to capitalize
$0.02 per share of interest related to its developments in 2015. - Other than the above, guidance does not include the impact of:
- any future debt repurchases prior to maturity or future debt issuances;
- any future property sales or investments;
- any future impairment losses;
- any future NAREIT-compliant gains or losses; or
- issuance of 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, and are generally identifiable by use of the words "believe," "expect," "intend," "plan," "anticipate," "estimate," "project," "seek," "target," "potential," "focus," "may," "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) 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; 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 second quarter 2015 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 |
Six Months Ended |
|||||||
June 30, |
June 30, |
June 30, |
June 30, |
|||||
2015 |
2014 |
2015 |
2014 |
|||||
Statement of Operations and Other Data: |
||||||||
Total Revenues |
$ 90,456 |
$ 84,044 |
$180,398 |
$167,905 |
||||
Property Expenses |
(27,827) |
(26,921) |
(57,618) |
(57,237) |
||||
General and Administrative |
(6,160) |
(7,032) |
(13,126) |
(12,553) |
||||
Acquisition Costs |
(319) |
(76) |
(319) |
(111) |
||||
Depreciation of Corporate FF&E |
(171) |
(129) |
(341) |
(251) |
||||
Depreciation and Other Amortization of Real Estate |
(27,873) |
(27,532) |
(56,009) |
(55,281) |
||||
Total Expenses |
(62,350) |
(61,690) |
(127,413) |
(125,433) |
||||
Gain on Sale of Real Estate |
2,197 |
- |
10,127 |
- |
||||
Interest Income |
33 |
671 |
57 |
1,373 |
||||
Interest Expense |
(16,363) |
(18,924) |
(33,005) |
(37,970) |
||||
Amortization of Deferred Financing Costs |
(764) |
(803) |
(1,510) |
(1,607) |
||||
Mark-to-Market and Settlement Gain (Loss) on Interest Rate Protection Agreements |
1,444 |
- |
(11,546) |
- |
||||
Loss from Retirement of Debt |
- |
(623) |
- |
(623) |
||||
Income from Continuing Operations Before Equity in (Loss) Income of Joint Ventures and Income Tax Provision |
||||||||
14,653 |
2,675 |
17,108 |
3,645 |
|||||
Equity in (Loss) Income of Joint Ventures (a) |
(4) |
556 |
67 |
3,522 |
||||
Income Tax Provision |
(81) |
(79) |
(141) |
(89) |
||||
Income from Continuing Operations |
14,568 |
3,152 |
17,034 |
7,078 |
||||
Discontinued Operations: |
||||||||
Income Attributable to Discontinued Operations |
- |
732 |
- |
1,138 |
||||
Gain on Sale of Real Estate |
- |
320 |
- |
1,055 |
||||
Income from Discontinued Operations |
- |
1,052 |
- |
2,193 |
||||
Net Income |
14,568 |
4,204 |
17,034 |
9,271 |
||||
Net Income Attributable to the Noncontrolling Interest |
(556) |
(165) |
(649) |
(269) |
||||
Net Income Attributable to First Industrial Realty Trust, Inc. |
14,012 |
4,039 |
16,385 |
9,002 |
||||
Preferred Dividends |
- |
- |
- |
(1,019) |
||||
Redemption of Preferred Stock |
- |
- |
- |
(1,462) |
||||
Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders and Participating Securities |
||||||||
$ 14,012 |
$ 4,039 |
$ 16,385 |
$ 6,521 |
|||||
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 |
||||||||
$ 14,012 |
$ 4,039 |
$ 16,385 |
$ 6,521 |
|||||
Depreciation and Other Amortization of Real Estate |
27,873 |
27,532 |
56,009 |
55,281 |
||||
Depreciation and Other Amortization of Real Estate Included in Discontinued Operations |
- |
910 |
- |
1,826 |
||||
Noncontrolling Interest |
556 |
165 |
649 |
269 |
||||
Equity in Depreciation and Other Amortization of Joint Ventures (a) |
- |
29 |
17 |
66 |
||||
Non-NAREIT Compliant Gain (b) |
(2,197) |
(320) |
(10,127) |
(1,055) |
||||
Non-NAREIT Compliant Gain from Joint Ventures (a) (b) |
- |
(367) |
(63) |
(3,346) |
||||
Funds From Operations (NAREIT) ("FFO") (b) |
$ 40,244 |
$ 31,988 |
$ 62,870 |
$ 59,562 |
||||
Loss from Retirement of Debt |
- |
623 |
- |
623 |
||||
Restricted Stock/Unit Amortization |
1,506 |
3,322 |
4,067 |
4,897 |
||||
Amortization of Debt Discounts / (Premiums) and Hedge Costs |
147 |
742 |
296 |
1,776 |
||||
Amortization of Deferred Financing Costs |
764 |
803 |
1,510 |
1,607 |
||||
Depreciation of Corporate FF&E |
171 |
129 |
341 |
251 |
||||
Redemption of Preferred Stock |
- |
- |
- |
1,462 |
||||
Mark-to-Market and Settlement (Gain) Loss on Interest Rate Protection Agreements |
(1,444) |
- |
11,546 |
- |
||||
One-Time Restoration Fee (c) |
- |
(833) |
- |
(1,222) |
||||
Non-Incremental Capital Expenditures (c) |
(11,978) |
(12,495) |
(19,140) |
(19,864) |
||||
Capitalized Interest and Overhead |
(615) |
(421) |
(1,119) |
(869) |
||||
Straight-Line Rent, Amortization of Above (Below) Market Leases and Lease Inducements |
||||||||
(1,553) |
(728) |
(3,727) |
(602) |
|||||
Adjusted Funds From Operations ("AFFO") (b) |
$ 27,242 |
$ 23,130 |
$ 56,644 |
$ 47,621 |
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, |
|||||
2015 |
2014 |
2015 |
2014 |
|||||
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 |
||||||||
$ 14,012 |
$ 4,039 |
$ 16,385 |
$ 6,521 |
|||||
Interest Expense |
16,363 |
18,924 |
33,005 |
37,970 |
||||
Depreciation and Other Amortization of Real Estate |
27,873 |
27,532 |
56,009 |
55,281 |
||||
Depreciation and Other Amortization of Real Estate Included in Discontinued Operations |
- |
910 |
- |
1,826 |
||||
Preferred Dividends |
- |
- |
- |
1,019 |
||||
Redemption of Preferred Stock |
- |
- |
- |
1,462 |
||||
Income Tax Provision |
81 |
79 |
141 |
89 |
||||
Mark-to-Market and Settlement (Gain) Loss on Interest Rate Protection Agreements |
(1,444) |
- |
11,546 |
- |
||||
Noncontrolling Interest |
556 |
165 |
649 |
269 |
||||
Loss from Retirement of Debt |
- |
623 |
- |
623 |
||||
Amortization of Deferred Financing Costs |
764 |
803 |
1,510 |
1,607 |
||||
Depreciation of Corporate FF&E |
171 |
129 |
341 |
251 |
||||
Equity in Depreciation and Other Amortization of Joint Ventures (a) |
- |
29 |
17 |
66 |
||||
Non-NAREIT Compliant Gain (b) |
(2,197) |
(320) |
(10,127) |
(1,055) |
||||
Non-NAREIT Compliant Gain from Joint Ventures (a) (b) |
- |
(367) |
(63) |
(3,346) |
||||
EBITDA (b) |
$ 56,179 |
$ 52,546 |
$109,413 |
$102,583 |
||||
General and Administrative |
6,160 |
7,032 |
13,126 |
12,553 |
||||
Acquisition Costs |
319 |
76 |
319 |
111 |
||||
FFO from Joint Ventures (b) |
4 |
(242) |
(85) |
(358) |
||||
Net Operating Income ("NOI") (b) |
$ 62,662 |
$ 59,412 |
$122,773 |
$114,889 |
||||
Weighted Avg. Number of Shares/Units Outstanding - Basic |
114,712 |
114,278 |
114,697 |
114,262 |
||||
Weighted Avg. Number of Shares Outstanding - Basic |
110,348 |
109,815 |
110,329 |
109,746 |
||||
Weighted Avg. Number of Shares/Units Outstanding - Diluted |
115,047 |
114,867 |
115,047 |
114,826 |
||||
Weighted Avg. Number of Shares Outstanding - Diluted |
110,683 |
110,404 |
110,679 |
110,310 |
||||
Per Share/Unit Data: |
||||||||
FFO (NAREIT) |
$ 40,244 |
$ 31,988 |
$ 62,870 |
$ 59,562 |
||||
Less: Allocation to Participating Securities |
(137) |
(117) |
(194) |
(188) |
||||
FFO (NAREIT) Allocable to Common Stockholders and Unitholders |
$ 40,107 |
$ 31,871 |
$ 62,676 |
$ 59,374 |
||||
Basic Per Share/Unit |
$ 0.35 |
$ 0.28 |
$ 0.55 |
$ 0.52 |
||||
Diluted Per Share/Unit |
$ 0.35 |
$ 0.28 |
$ 0.54 |
$ 0.52 |
||||
Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders and Participating Securities |
||||||||
$ 14,012 |
$ 4,039 |
$ 16,385 |
$ 6,521 |
|||||
Less: Allocation to Participating Securities |
(50) |
(43) |
(91) |
(75) |
||||
Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders |
$ 13,962 |
$ 3,996 |
$ 16,294 |
$ 6,446 |
||||
Basic/Diluted Per Share |
$ 0.13 |
$ 0.04 |
$ 0.15 |
$ 0.06 |
||||
Common Dividends/Distributions |
$ 0.1275 |
$ 0.1025 |
$ 0.2550 |
$ 0.2050 |
||||
Balance Sheet Data (end of period): |
||||||||
Gross Real Estate Investment |
$ 3,201,037 |
$ 3,166,952 |
||||||
Real Estate and Other Assets Held For Sale, Net |
398 |
4,058 |
||||||
Total Assets |
2,572,258 |
2,590,890 |
||||||
Debt |
1,349,884 |
1,382,951 |
||||||
Total Liabilities |
1,485,432 |
1,513,273 |
||||||
Total Equity |
$ 1,086,826 |
$ 1,077,617 |
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, 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, 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 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) A one-time 2014 restoration fee is excluded from the calculation of AFFO. The adjustment also reduced building improvements by $833 and
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SOURCE
Art Harmon, Vice President, Investor Relations and Marketing, 312-344-4320