First Industrial Realty Trust Reports Second Quarter 2018 Results

Low End of 

High End of 

Guidance for 2018

Guidance for 2018

(Per share/unit)

(Per share/unit)

Net Income

0.98

1.06

Add:   Real Estate Depreciation/Amortization

0.89

0.89

Add:   Impairment of Depreciable Real Estate - 1Q18

0.02

0.02

Less: Gain on Sale of Depreciable Real Estate Through July 25, 2018

(0.36)

(0.36)

FFO (NAREIT Definition)

$1.53

$1.61

Plus: Severance Charge and Impairment of Non-Depreciable Real Estate

0.01

0.01

FFO Before Severance Charge and Impairment of Non-Depreciable Real Estate⁽¹⁾

$1.55

$1.63

(1) Does not sum due to rounding

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,

2018

2017

2018

2017

Statement of Operations and Other Data:

    Total Revenues

$     98,845

$     97,579

$  198,616

$  194,962

    Property Expenses

(28,553)

(26,897)

(57,964)

(55,383)

    General and Administrative (a) 

(6,746)

(6,785)

(14,889)

(14,818)

    Impairment of Real Estate 

-

-

(2,756)

-

    Depreciation of Corporate FF&E 

(188)

(166)

(371)

(335)

    Depreciation and Other Amortization of Real Estate 

(28,448)

(28,874)

(56,580)

(57,199)

        Total Expenses

(63,935)

(62,722)

(132,560)

(127,735)

    Gain on Sale of Real Estate 

25,067

20,860

45,156

28,869

    Interest Expense 

(12,603)

(14,915)

(25,394)

(29,284)

    Amortization of Debt Issuance Costs 

(845)

(780)

(1,700)

(1,558)

    Loss from Retirement of Debt 

-

-

(39)

(1,653)

       Income from Operations Before Equity in Loss of Joint Venture and Income Tax Provision 

46,529

40,022

84,079

63,601

    Equity in Loss of Joint Venture 

(2)

-

(2)

-

    Income Tax Provision 

(123)

(1,169)

(209)

(1,257)

         Net Income 

46,404

38,853

83,868

62,344

    Net Income Attributable to the Noncontrolling Interest 

(1,195)

(1,291)

(2,367)

(2,073)

         Net Income Available to First Industrial Realty Trust, Inc.'sCommon Stockholders and Participating Securities

$    45,209

$    37,562

$   81,501

$   60,271

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

$    45,209

$    37,562

$   81,501

$   60,271

     Depreciation and Other Amortization of Real Estate 

28,448

28,874

56,580

57,199

     Impairment of Depreciable Real Estate 

-

-

2,285

-

     Noncontrolling Interest 

1,195

1,291

2,367

2,073

     Gain on Sale of Depreciable Real Estate 

(25,067)

(20,860)

(45,140)

(28,869)

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

$    49,785

$    46,867

$   97,593

$   90,674

     Loss from Retirement of Debt 

-

-

39

1,653

     Restricted Stock/Unit Amortization 

1,997

1,822

3,686

4,923

     Amortization of Debt (Premiums)/Discounts and Hedge Costs 

(10)

25

(24)

89

     Amortization of Debt Issuance Costs 

845

780

1,700

1,558

     Depreciation of Corporate FF&E 

188

166

371

335

     Impairment of Non-Depreciable Real Estate 

-

-

471

-

     Gain on Sale of Non-Depreciable Real Estate 

-

-

(16)

-

     Non-incremental Building Improvements 

(3,868)

(3,535)

(4,805)

(5,882)

     Non-incremental Leasing Costs 

(6,548)

(6,130)

(12,142)

(10,533)

     Capitalized Interest 

(1,715)

(880)

(3,317)

(1,907)

     Capitalized Overhead 

(255)

(82)

(359)

(158)

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

(410)

(1,500)

(1,185)

(3,081)

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

$    40,009

$    37,533

$   82,012

$   77,671

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,

June 30,

June 30,

June 30,

2018

2017

2018

2017

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

$    45,209

$    37,562

$   81,501

$   60,271

     Interest Expense 

12,603

14,915

25,394

29,284

     Depreciation and Other Amortization of Real Estate 

28,448

28,874

56,580

57,199

     Impairment of Real Estate 

-

-

2,756

-

     Severance Expense (a) 

-

-

1,298

-

     Income Tax Provision 

123

1,169

209

1,257

     Noncontrolling Interest 

1,195

1,291

2,367

2,073

     Loss from Retirement of Debt 

-

-

39

1,653

     Amortization of Debt Issuance Costs 

845

780

1,700

1,558

     Depreciation of Corporate FF&E 

188

166

371

335

     Gain on Sale of Real Estate 

(25,067)

(20,860)

(45,156)

(28,869)

     Adjusted EBITDA (b) 

$    63,544

$    63,897

$ 127,059

$ 124,761

     General and Administrative (a) 

6,746

6,785

13,591

14,818

     FFO from Joint Venture 

2

-

2

-

     Net Operating Income ("NOI") (b) 

$    70,292

$    70,682

$ 140,652

$ 139,579

     Non-Same Store NOI 

(2,836)

(5,149)

(6,128)

(9,237)

     Same Store NOI Before Same Store Adjustments (b) 

$    67,456

$    65,533

$ 134,524

$ 130,342

     Straight-line Rent 

220

(675)

(122)

(2,339)

     Above (Below) Market Lease Amortization 

(201)

(242)

(405)

(524)

     Lease Termination Fees 

(163)

(178)

(180)

(457)

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

$    67,312

$    64,438

$ 133,817

$ 127,022

Weighted Avg. Number of Shares/Units Outstanding - Basic

126,832

121,339

125,289

121,109

Weighted Avg. Number of Shares Outstanding - Basic

123,616

117,299

121,741

117,070

Weighted Avg. Number of Shares/Units Outstanding - Diluted

127,301

121,819

125,706

121,561

Weighted Avg. Number of Shares Outstanding - Diluted

124,085

117,779

122,158

117,522

Per Share/Unit Data:

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

$     45,209

$     37,562

$    81,501

$    60,271

 Less: Allocation to Participating Securities 

(151)

(129)

(248)

(196)

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

$     45,058

$     37,433

$    81,253

$    60,075

 Basic and Diluted Per Share 

$         0.36

$         0.32

$       0.67

$       0.51

 FFO (NAREIT) (b) 

$     49,785

$     46,867

$    97,593

$    90,674

 Less: Allocation to Participating Securities 

(161)

(155)

(285)

(268)

 FFO (NAREIT) Allocable to Common Stockholders and Unitholders 

$     49,624

$     46,712

$    97,308

$    90,406

 Basic Per Share/Unit 

$         0.39

$         0.38

$       0.78

$       0.75

 Diluted Per Share/Unit 

$         0.39

$         0.38

$       0.77

$       0.74

 Common Dividends/Distributions Per Share/Unit 

$     0.2175

$     0.2100

$    0.4350

$    0.4200

Balance Sheet Data (end of period):

      Gross Real Estate Investment

$ 3,587,145

$ 3,458,472

      Real Estate and Other Assets Held For Sale, Net

16,304

6,593

      Total Assets

3,110,354

2,863,963

      Debt

1,300,552

1,340,541

      Total Liabilities

1,454,542

1,490,686

      Total Equity

$ 1,655,812

$ 1,373,277

a) 

Six Months Ended

June 30, 2018

General and Administrative per the Form 10-Q

14,889

Severance Expense

(1,298)

General and Administrative per Reconcilation within the Selected Financial Data

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, plus impairment of depreciable 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 the equity in FFO loss from our investment in a joint venture. For the six months ended June 30, 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 restricted stock/unit amortization, minus severance expense and 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, 2017 and held as an in service property through the end of the current reporting period, and developments and redevelopments that were placed in service prior to January 1, 2017 (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, 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.