First Industrial Realty Trust Reports First Quarter 2019 Results

Low End of 

High End of 

Guidance for 2019

Guidance for 2019

(Per share/unit)

(Per share/unit)

Net Income

0.80

0.90

Add:   Real Estate Depreciation/Amortization

0.92

0.92

Less:   Net Gain on Sale of Real Estate Including FR's Share of Joint Venture Gain, Net of Allocable Income Tax Provision, Through April 23, 2019

(0.07)

(0.07)

FFO (NAREIT Definition)

$1.65

$1.75

FIRST INDUSTRIAL REALTY TRUST, INC.

Selected Financial Data

(Unaudited)

 (In thousands except per share/Unit data)

Three Months Ended

March 31,

March 31,

2019

2018

Statements of Operations and Other Data:

    Total Revenues (a)

$    104,541

$         99,771

    Property Expenses (a)

(30,168)

(29,411)

    General and Administrative (b) 

(6,802)

(8,143)

    Impairment of Real Estate 

-

(2,756)

    Depreciation of Corporate FF&E 

(200)

(183)

    Depreciation and Other Amortization of Real Estate 

(29,855)

(28,132)

        Total Expenses

(67,025)

(68,625)

    (Loss) Gain on Sale of Real Estate 

(208)

20,089

    Interest Expense 

(12,767)

(12,791)

    Amortization of Debt Issuance Costs 

(831)

(855)

    Loss from Retirement of Debt 

-

(39)

       Income from Operations Before Equity in Income of  

          Joint Venture and Income Tax Provision 

23,710

37,550

    Equity in Income of Joint Venture 

844

-

    Income Tax Provision 

(214)

(86)

         Net Income 

24,340

37,464

    Net Income Attributable to the Noncontrolling Interest 

(537)

(1,172)

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

             Common Stockholders and Participating Securities 

$      23,803

$         36,292

 RECONCILIATION OF NET INCOME AVAILABLE TO  

 FIRST INDUSTRIAL REALTY TRUST, INC.'S COMMON 

 STOCKHOLDERS AND PARTICIPATING SECURITIES TO  

 FFO (c) AND AFFO (c) 

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

         Common Stockholders and Participating Securities 

$      23,803

$         36,292

     Depreciation and Other Amortization of Real Estate 

29,855

28,132

     Impairment of Depreciable Real Estate 

-

2,285

     Noncontrolling Interest 

537

1,172

     Loss (Gain) on Sale of Depreciable Real Estate 

208

(20,073)

     Gain on Sale of Real Estate from Joint Venture 

(967)

-

     Income Tax Provision - Gain on Sale of Real Estate from Joint Venture 

218

-

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

$      53,654

$         47,808

     Loss from Retirement of Debt 

-

39

     Amortization of Stock Based Compensation 

1,762

1,689

     Amortization of Debt Discounts (Premiums) and Hedge Costs 

25

(14)

     Amortization of Debt Issuance Costs 

831

855

     Depreciation of Corporate FF&E 

200

183

     Impairment of Non-Depreciable Real Estate 

-

471

     Gain on Sale of Non-Depreciable Real Estate 

-

(16)

     Non-incremental Building Improvements 

(1,551)

(937)

     Non-incremental Leasing Costs 

(3,598)

(5,594)

     Capitalized Interest 

(944)

(1,602)

     Capitalized Overhead 

(794)

(104)

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

        and Lease Inducements 

(3,075)

(775)

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

$      46,510

$         42,003

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 

Three Months Ended

 STOCKHOLDERS AND PARTICIPATING SECURITIES TO  

March 31,

March 31,

 ADJUSTED EBITDA (c) AND NOI (c) 

2019

2018

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

         Common Stockholders and Participating Securities 

$      23,803

$         36,292

     Interest Expense 

12,767

12,791

     Depreciation and Other Amortization of Real Estate 

29,855

28,132

     Impairment of Real Estate 

-

2,756

     Severance Expense (b) 

-

1,298

     Income Tax Provision 

214

86

     Noncontrolling Interest 

537

1,172

     Loss from Retirement of Debt 

-

39

     Amortization of Debt Issuance Costs 

831

855

     Depreciation of Corporate FF&E 

200

183

     Loss (Gain) on Sale of Real Estate 

208

(20,089)

     Gain on Sale of Real Estate from Joint Venture  

(967)

-

     Adjusted EBITDA (c) 

$      67,448

$         63,515

     General and Administrative (b) 

6,802

6,845

     FFO from Joint Venture 

123

-

     Net Operating Income ("NOI") (c) 

$      74,373

$         70,360

     Non-Same Store NOI 

(4,265)

(2,266)

     Same Store NOI Before Same Store Adjustments (c) 

$      70,108

$         68,094

     Straight-line Rent 

101

(594)

     Above (Below) Market Lease Amortization 

(251)

(253)

     Lease Termination Fees 

(571)

(11)

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

$      69,387

$         67,236

Weighted Avg. Number of Shares/Units Outstanding - Basic

128,818

123,729

Weighted Avg. Number of Shares Outstanding - Basic

126,194

119,846

Weighted Avg. Number of Shares/Units Outstanding - Diluted

129,178

124,094

Weighted Avg. Number of Shares Outstanding - Diluted

126,456

120,211

Per Share/Unit Data:

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

       Common Stockholders and Participating Securities 

$      23,803

$         36,292

 Less: Allocation to Participating Securities 

(60)

(97)

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

$      23,743

$         36,195

 Basic and Diluted Per Share 

$          0.19

$             0.30

 FFO (NAREIT) (c) 

$      53,654

$         47,808

 Less: Allocation to Participating Securities 

(137)

(124)

 FFO (NAREIT) Allocable to Common Stockholders and Unitholders 

$      53,517

$         47,684

 Basic Per Share/Unit 

$          0.42

$             0.39

 Diluted Per Share/Unit 

$          0.41

$             0.38

 Common Dividends/Distributions Per Share/Unit 

$      0.2300

$         0.2175

Balance Sheet Data (end of period):

March 31,

December 31,

2019

2018

      Gross Real Estate Investment

$ 3,724,985

$    3,673,644

      Total Assets

3,178,654

3,142,691

      Debt

1,326,456

1,297,783

      Total Liabilities

1,512,690

1,462,780

      Total Equity

$ 1,665,964

$    1,679,911

a) We adopted Accounting Standards Update No. 2016-02, Leases (Topic 842) ("ASU 2016-02") effective January 1, 2019.  Prior to the adoption of ASU 2016-02, we included reimbursement revenue related to real estate taxes paid directly by certain tenants to the taxing authorities in Total Revenues with a corresponding expense amount in Property Expenses.  Additionally, ASU 2016-02 requires credit losses on lease receivables be presented within Total Revenues. Prior to the adoption of ASU 2016-02, we included the credit losses on lease receivables within Property Expenses.  The 2018 Statement of Operations has not been restated for either of these changes.

Three Months Ended

March 31, 2018

     General and Administrative per the Form 10-Q

8,143

     Severance Expense

(1,298)

     General and Administrative per Reconciliation within the Selected Financial Data

c) 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.

In accordance with the restated NAREIT definition of FFO which we adopted effective January 1, 2019, 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, plus impairment of real estate, minus gain or plus loss on sale of real estate, net of any income tax provision or benefit associated with the sale of real estate. We also exclude the same adjustments from our share of net income from an unconsolidated joint venture. For the comparative 2018 period, if applicable, gain and losses from the sale of non-depreciable real estate as well as impairment of non-depreciable real estate were not excluded from FFO.

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 the equity in FFO loss from our investment in a joint venture. For the three months ended March 31, 2018, $1,298 of severance expense included in general and administrative expense was not deducted to arrive at adjusted EBITDA.

AFFO is defined as adjusted EBITDA minus GAAP interest expense, minus capitalized interest and overhead, (minus)/plus amortization of debt (premiums)/discounts 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 amortization of stock based compensation, minus severance expense and minus non-incremental capital expenditures. Effective with the adoption of the restated NAREIT definition of FFO on January 1, 2019, we exclude the income tax provision or benefit related to gain or loss on sale of real estate. 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, 2018 and held as an in service property through the end of the current reporting period (including nine land parcels that are leased under ground lease arrangements), and developments and redevelopments that were placed in service prior to January 1, 2018 (the "Same Store Pool"). Properties which are at least 75% occupied at acquisition are placed in service, unless we anticipate tenant move-outs within two years of ownership would drop occupancy below 75%. Acquired properties with occupancy greater than 75% at acquisition, but with tenants that we anticipate will move out within two years of ownership, will be placed in service upon the earlier of reaching 90% occupancy or twelve months after move out. Acquisitions that are less than 75% occupied at the date of acquisition, developments and redevelopments are placed in service as they reach the earlier of a) stabilized occupancy (generally defined as 90% occupied), or b) one year subsequent to acquisition or development/redevelopment construction completion.

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 above (below) market rent and the impact of lease termination fees. We exclude straight-line rent 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, interest expense, depreciation and amortization, income tax benefit and expense, gains and losses on retirement of debt, impairment of real estate, gains and losses on the sale of real estate, equity in income or loss from our joint venture, mark-to-market and settlement gains and losses on derivative instruments, capital expenditures and leasing costs. 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.