First Industrial Realty Trust Reports Second Quarter 2017 Results

Low End of 

High End of 

Guidance for 2017

Guidance for 2017

(Per share/unit)

(Per share/unit)

Net Income Available to Common Stockholders

0.87

0.95

Add:   Real Estate Depreciation/Amortization

0.95

0.95

Less:  Non-NAREIT Compliant Gains through July 26, 2017

(0.33)

(0.33)

FFO (NAREIT Definition)

$1.49

$1.57

Add: Loss from Retirement of Debt and Tax from a Property Sale from Taxable REIT Subsidiary through 2Q17

$0.02

$0.02

FFO Excluding Loss from Retirement of Debt and Tax from a Property Sale from Taxable REIT Subsidiary through 2Q17

$1.51

$1.59

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,

2017

2016

2017

2016

Statement of Operations and Other Data:

    Total Revenues

$     97,579

$     93,015

$  194,962

$  186,482

    Property Expenses

(26,897)

(26,875)

(55,383)

(55,242)

    General and Administrative  

(6,785)

(6,433)

(14,818)

(14,107)

    Acquisition Costs (a) 

-

(155)

-

(219)

    Depreciation of Corporate FF&E 

(166)

(195)

(335)

(367)

    Depreciation and Other Amortization of Real Estate 

(28,874)

(28,530)

(57,199)

(59,486)

        Total Expenses

(62,722)

(62,188)

(127,735)

(129,421)

    Gain on Sale of Real Estate 

20,860

36,775

28,869

44,026

    Interest Expense 

(14,915)

(14,589)

(29,284)

(30,848)

    Amortization of Deferred Financing Costs 

(780)

(782)

(1,558)

(1,655)

    Loss from Retirement of Debt 

-

-

(1,653)

-

         Income from Operations Before Income Tax Provision 

40,022

52,231

63,601

68,584

    Income Tax Provision 

(1,169)

(123)

(1,257)

(181)

         Net Income 

38,853

52,108

62,344

68,403

    Net Income Attributable to the Noncontrolling Interest 

(1,291)

(1,879)

(2,073)

(2,486)

         Net Income Available to First Industrial Realty Trust, Inc.'s 

             Common Stockholders and Participating Securities 

$    37,562

$    50,229

$   60,271

$   65,917

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 

$    37,562

$    50,229

$   60,271

$   65,917

     Depreciation and Other Amortization of Real Estate 

28,874

28,530

57,199

59,486

     Noncontrolling Interest 

1,291

1,879

2,073

2,486

     Gain on Sale of Depreciable Real Estate 

(20,860)

(36,775)

(28,869)

(44,026)

     Funds From Operations (NAREIT) ("FFO") (b) 

$    46,867

$    43,863

$   90,674

$   83,863

     Loss from Retirement of Debt 

-

-

1,653

-

     Restricted Stock/Unit Amortization 

1,822

1,507

4,923

4,470

     Amortization of Debt Discounts/(Premiums) and Hedge Costs 

25

64

89

136

     Amortization of Deferred Financing Costs 

780

782

1,558

1,655

     Depreciation of Corporate FF&E 

166

195

335

367

     Non-incremental Building Improvements 

(3,535)

(2,821)

(5,882)

(3,946)

     Non-incremental Leasing Costs 

(6,130)

(6,445)

(10,533)

(13,121)

     Capitalized Interest 

(880)

(870)

(1,907)

(1,319)

     Capitalized Overhead 

(82)

(156)

(158)

(241)

     Straight-Line Rent, Amortization of Above (Below) Market Leases and Lease Inducements 

(1,500)

(1,470)

(3,081)

(3,317)

     Adjusted Funds From Operations ("AFFO") (b) 

$    37,533

$    34,649

$   77,671

$   68,547

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 ADJUSTED EBITDA (b) AND NOI (b)

Three Months Ended

Six Months Ended

June 30,

2017

June 30,

2016

June 30,

2017

June 30,

2016

     Net Income Available to First Industrial Realty Trust, Inc.'s 

         Common Stockholders and Participating Securities 

$    37,562

$    50,229

$   60,271

$   65,917

     Interest Expense 

14,915

14,589

29,284

30,848

     Depreciation and Other Amortization of Real Estate 

28,874

28,530

57,199

59,486

     Income Tax Provision 

1,169

123

1,257

181

     Noncontrolling Interest 

1,291

1,879

2,073

2,486

     Loss from Retirement of Debt 

-

-

1,653

-

     Amortization of Deferred Financing Costs 

780

782

1,558

1,655

     Depreciation of Corporate FF&E 

166

195

335

367

     Gain on Sale of Depreciable Real Estate 

(20,860)

(36,775)

(28,869)

(44,026)

     Adjusted EBITDA (b) 

$    63,897

$    59,552

$ 124,761

$ 116,914

     General and Administrative 

6,785

6,433

14,818

14,107

     Acquisition Costs (a) 

-

155

-

219

     Net Operating Income ("NOI") (b) 

$    70,682

$    66,140

$ 139,579

$ 131,240

     Non-Same Store NOI 

(5,265)

(2,575)

(9,104)

(4,638)

     Same Store NOI Before Same Store Adjustments (b) 

$    65,417

$    63,565

$ 130,475

$ 126,602

     Lease Inducement Amortization 

186

233

370

460

     Straight-line Rent 

368

(546)

556

(2,121)

     Above (Below) Market Lease Amortization 

(261)

(269)

(533)

(533)

     Lease Termination Fees 

(178)

(68)

(456)

(197)

     Same Store NOI (Cash Basis without Termination Fees) (b) 

$    65,532

$    62,915

$ 130,412

$ 124,211

Weighted Avg. Number of Shares/Units Outstanding - Basic

121,339

120,486

121,109

117,791

Weighted Avg. Number of Shares Outstanding - Basic

117,299

116,191

117,070

113,492

Weighted Avg. Number of Shares/Units Outstanding - Diluted

121,819

120,853

121,561

118,070

Weighted Avg. Number of Shares Outstanding - Diluted

117,779

116,558

117,522

113,771

Per Share/Unit Data:

 Net Income Available to First Industrial Realty Trust, Inc.'s 

       Common Stockholders and Participating Securities 

$     37,562

$     50,229

$    60,271

$    65,917

 Less: Allocation to Participating Securities 

(129)

(180)

(154)

(217)

 Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders 

$     37,433

$     50,049

$    60,117

$    65,700

 Basic/Diluted Per Share/Unit 

$         0.32

$         0.43

$       0.51

$       0.58

 FFO (NAREIT)  

$     46,867

$     43,863

$    90,674

$    83,863

 Less: Allocation to Participating Securities 

(155)

(152)

(268)

(266)

 FFO (NAREIT) Allocable to Common Stockholders and Unitholders 

$     46,712

$     43,711

$    90,406

$    83,597

 Basic Per Share/Unit 

$         0.38

$         0.36

$       0.75

$       0.71

 Diluted Per Share/Unit 

$         0.38

$         0.36

$       0.74

$       0.71

 Common Dividends/Distributions Per Share/Unit 

$         0.21

$         0.19

$       0.42

$       0.38

Balance Sheet Data (end of period):

      Gross Real Estate Investment

$ 3,458,472

$ 3,328,319

      Real Estate and Other Assets Held For Sale, Net

6,593

-

      Total Assets

2,863,963

2,728,198

      Debt

1,340,541

1,312,033

      Total Liabilities

1,490,686

1,480,211

      Total Equity

$ 1,373,277

$ 1,247,987

a) Effective January 1, 2017, we adopted Accounting Standards Update ("ASU") No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business" ("ASU 2017-01"), which clarifies the framework for determining whether an integrated set of assets and activities meets the definition of a business. The revised framework establishes a screen for determining whether an integrated set of assets and activities is a business and narrows the definition of a business, which is expected to result in fewer transactions being accounted for as business combinations. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset acquisitions. We anticipate that our acquisitions of real estate in the future will generally not meet the definition of a business combination; and accordingly, transaction costs which have historically been expensed, will be capitalized as part of the basis of the real estate assets acquired. ASU 2017-01 was applied prospectively. 

b) Investors in, and analysts following, the real estate industry utilize funds from operations ("FFO"), net operating income ("NOI"), adjusted EBITDA and adjusted funds from operations ("AFFO"), variously defined below, as supplemental performance measures.  While we believe net income available to First Industrial Realty Trust, Inc.'s common stockholders and participating securities, as defined by GAAP, is the most appropriate measure, we consider FFO, NOI, adjusted EBITDA and AFFO, 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.  Adjusted EBITDA provides a tool to further evaluate the ability to incur and service debt and to fund dividends and other cash needs.  AFFO provides a tool to further evaluate the ability to fund dividends.  In addition, FFO, NOI, adjusted EBITDA and AFFO are commonly used in various ratios, pricing multiples/yields and returns and valuation calculations used to measure financial position, performance and value.

As used herein, we calculate FFO to be equal to net income available to First Industrial Realty Trust, Inc.'s common stockholders and participating securities, plus depreciation and other amortization of real estate, minus gain on sale of depreciable real estate.

NOI is defined as our revenues, minus property expenses such as real estate taxes, repairs and maintenance, property management, utilities, insurance and other expenses.

Adjusted EBITDA is defined as NOI, minus general and administrative expenses and acquisition costs.

AFFO is defined as adjusted 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/unit amortization, minus non-incremental capital expenditures. Non-incremental capital expenditures refer to building improvements and leasing costs required to maintain current revenues plus tenant improvements amortized back to the tenant over the lease term. Excluded are first generation leasing costs, capital expenditures underwritten at acquisition and development/redevelopment costs. 

FFO, NOI, adjusted 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, adjusted 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, adjusted 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 January 1, 2016 and held as an in service property through the end of the current reporting period, and developments and redevelopments that were placed in service or were substantially completed for 12 months prior to January 1, 2016 (the "Same Store Pool"). We define SS NOI as NOI, less NOI of properties not in the Same Store Pool, less the impact of straight-line rent, the amortization of lease inducements, the amortization of above (below) market rent and the impact of lease termination fees. We exclude straight-line rent, amortization of lease inducements and above (below) market rent in calculating SS NOI because we believe it provides a better measure of actual cash basis rental growth for a year-over-year comparison. In addition, we believe that SS NOI helps the investing public compare the operating performance of a company's real estate as compared to other companies. While SS NOI is a relevant and widely used measure of operating performance of real estate investment trusts, it does not represent cash flow from operations or net income as defined by GAAP and should not be considered as an alternative to those measures in evaluating our liquidity or operating performance. SS NOI also does not reflect general and administrative expense, acquisition costs, interest expense, depreciation and amortization, income tax benefit and expense, gains and losses on retirement of debt, sale of real estate, capital expenditures and leasing costs, or trends in development and construction activities that could materially impact our results from operations. Further, our computation of SS NOI may not be comparable to that of other real estate companies, as they may use different methodologies for calculating SS NOI.