First Industrial Realty Trust Reports First Quarter 2018 Results

CHICAGO, April 24, 2018 /PRNewswire/ --

• Occupancy of 97.1%, Up 130 Basis Points from 1Q17
• Cash Same Store NOI Grew 6.1%
• Cash Rental Rates Were Up 9.3%
• Formed Joint Venture That Acquired 532 Net Acres for Future Development and Land Sales at the PV-303 Business Park in Phoenix
• Closed on $300 Million Private Placement of Unsecured Notes
• Earned 'BBB' Unsecured Credit Rating from Standard and Poor's Global Ratings
• Increased First Quarter 2018 Dividend to $0.2175 Per Share, a 3.6% Increase
• Acquired Five Buildings Comprised of 354,000 Square Feet Plus One Development Site for $61 Million
• Sold Eight Buildings Comprised of 485,000 Square Feet Plus One Land Parcel for $42.4 Million

First Industrial Realty Trust, Inc. (NYSE: FR), a leading fully integrated owner, operator and developer of industrial real estate, today announced results for the first quarter of 2018. Diluted net income available to common stockholders per share (EPS) was $0.30 in the first quarter, compared to $0.19 a year ago.

First Industrial's first quarter FFO was $0.38 per share/unit on a diluted basis, compared to $0.36 per share/unit a year ago. First quarter results reflect a previously disclosed severance charge as well as an impairment charge related to the anticipated sale of an excess land parcel that together resulted in a $0.02 per share impact.

"We are off to a good start in 2018 as our team and our portfolio delivered solid growth in same store cash NOI and rental rates," said Peter E. Baccile, First Industrial's president and chief executive officer. "Industrial real estate fundamentals continue to be favorable and we seek to grow cash flow as we serve tenants' logistics needs through our development investments and portfolio."

Portfolio Performance – First Quarter 2018

• In service occupancy was 97.1% at the end of the first quarter, compared to 97.3% at the end of the fourth quarter of 2017, and 95.8% at the end of the first quarter of 2017.
• Tenants were retained in 77.0% of square footage up for renewal.
• Same property cash basis net operating income (NOI) increased 6.1%. Including lease termination fees, same property NOI increased 5.7%. 
• Rental rates increased 9.3% on a cash basis and increased 18.0% on a straight-line basis; leasing costs were $1.46 per square foot.

Capital Markets

• Closed on a private placement offering on February 15^th for $300 million of fixed rate senior unsecured notes with a weighted average interest rate of 3.91%. The notes are comprised of two tranches: $150 million of 3.86% Series C Guaranteed Senior Notes with a 10-year term and $150 million of 3.96% Series D Guaranteed Senior Notes with a 12-year term.
• Paid off $158 million of secured debt maturities at a weighted average interest rate of 4.50% on March 1, 2018.
• Received an upgrade of our senior unsecured debt ratings to 'BBB' from Standard and Poor's Global Ratings in February.
• The board of directors declared a common dividend of $0.2175 per share/unit for the quarter ending March 31, 2018 that was paid on April 16, 2018 to stockholders of record on March 29, 2018. The new dividend rate represented a 3.6% increase from the prior rate of $0.21 per share. 

Investment and Disposition Activities

In the first quarter, the Company:

• Leased 100% of its First Sycamore 215 Logistics Center, a 243,000 square-foot development in Southern California.
• Acquired a three-building portfolio in San Diego comprised of 225,000 square feet for $36.7 million. Also acquired a 35,000 square-foot, 100% leased building in Seattle for $5.6 million, a 94,000 square-foot building in Orlando for $8.7 million and a development site in Dallas for $10.0 million that can accommodate four buildings totaling 727,000 square feet.
• Sold eight buildings comprised of 485,000 square feet plus one land parcel for $42.4 million.

In the second quarter to date, the Company:

• Formed a project-specific joint venture with Diamond Realty, the U.S. real estate investment arm of Mitsubishi Corporation, to acquire 532 net acres at the PV-303 business park in Phoenix for future speculative and build-to-suit development as well as land sales to users. The total purchase price was $49.0 million and First Industrial has a 49% interest in the venture. First Industrial will also earn development, asset management, property management, disposition and leasing fees, and potential promote income.
• Leased 100% of the 156,000 square-foot building at The Ranch by First Industrial business park in the Inland Empire West.
• Acquired a 4.6-acre site in the Inland Empire West in Fontana for $3.3 million dollars which can accommodate a 77,000 square-foot building.

"We are using our platform to create value through development and lease up of high quality distribution facilities while adding select acquisitions that will contribute to our long-term cash flow growth," said Johannson Yap, chief investment officer. "Our project-specific joint venture at the PV-303 business park is an extension of our overall strategy, offering us potential to participate in additional growth in this strategic location, while helping us manage our portfolio allocation and risk."

Outlook for 2018

Mr. Baccile stated, "Our team and our portfolio continue to perform well. Given the health of the leasing markets, we remain focused on growing long-term cash flow through rent growth, contractual escalations and securing longer lease terms. Investment through development continues to offer strong risk-adjusted returns and by continuing our track record of execution from construction through lease-up, we can drive future cash flow and further elevate our portfolio."

The following assumptions were used:

• Average quarter-end in service occupancy of 96.5% to 97.5%.
• Same-store NOI growth on a cash basis before termination fees of 4.0% to 5.0% for the full year.  This represents an increase of 25 basis points at the midpoint to 4.5% and a narrowing of the range.
• General and administrative expense of approximately $26 million to $27 million. The aforementioned severance charge of $0.01 per share is excluded from the general and administrative expense guidance range.     
• Guidance includes the incremental costs expected in 2018 related to the Company's developments completed and under construction as of March 31, 2018 plus the planned second quarter start of a 250,000 square-foot building at its First Logistics Center @ I-78/81 project in Central Pennsylvania. In total, the Company expects to capitalize $0.04 per share of interest related to these projects in 2018.
• 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,
• any future gains related to the final settlement of two insurance claims for damaged facilities previously disclosed, 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 First Industrial can achieve such results.

Conference Call

First Industrial will host its quarterly conference call on Wednesday, April 25, 2018 at 9:30 a.m. CDT (10:30 a.m. EDT). The conference call may be accessed by dialing (888) 823-7459, passcode "First Industrial." The conference call will also be webcast live on the Investor Relations page of the Company's website at www.firstindustrial.com. The replay will also be available on the website.

The Company's first quarter 2018 supplemental information can be viewed at www.firstindustrial.com under the "Investors" tab. 

FFO Definition

First Industrial reports FFO in accordance with the NAREIT definition to provide a comparative measure to other REITs. NAREIT recommends that REITs define FFO as net income, excluding gains (or losses) from the sale of previously depreciated property, plus depreciation and amortization, excluding impairments from previously depreciated assets, and after adjustments for unconsolidated partnerships and joint ventures. 

About First Industrial Realty Trust, Inc.

First Industrial Realty Trust, Inc. (NYSE: FR) is a leading fully integrated owner, operator, and developer of industrial real estate with a track record of providing industry-leading customer service to multinational corporations and regional customers. Across major markets in the United States, our local market experts manage, lease, buy, (re)develop, and sell bulk and regional distribution centers, light industrial, and other industrial facility types. In total, we own and have under development approximately 64.3 million square feet of industrial space as of March 31, 2018. For more information, please visit us at www.firstindustrial.com.

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 December 31, 2017, as well as those risks and uncertainties discussed from time to time in our other Exchange Act reports and in our other public filings with the SEC. We caution you not to place undue reliance on forward-looking statements, which reflect our outlook only and speak only as of the date of this press release or the dates indicated in the statements. We assume no obligation to update or supplement forward-looking statements. For further information on these and other factors that could impact us and the statements contained herein, reference should be made to our filings with the SEC.

A schedule of selected financial information is attached.

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SOURCE First Industrial Realty Trust, Inc.