- Year-End Occupancy of 98.8% and Full Year Cash Same Store
NOI Growth of 10.1%, Both Company Records
- Cash Rental Rates Up 26.7% in 2022, Highest Annual Increase
in Company History
- Cash Rental Rate Increase of 33% on Leases Signed To Date
Commencing in 2023
- Started a Million Square-Foot Development in Northern California, Estimated Investment of
$126 Million
- Placed In Service 4.1 Million Square Feet of Developments in
2022; 100% Leased, Estimated Total Investment of $448 Million, Cash Yield of 6.6%
- Sold One Property for $54
Million in the Fourth Quarter; $178
Million Sold in 2022
- Increased First Quarter 2023 Dividend to $0.32 Per Share, an 8.5% Increase
CHICAGO, Feb. 8, 2023
/PRNewswire/ -- First Industrial Realty Trust, Inc. (NYSE: FR), a
leading fully integrated owner, operator and developer of
industrial real estate, today announced results for the fourth
quarter and full year 2022. First Industrial's diluted net income
available to common stockholders per share (EPS) was $0.62 in the fourth quarter, compared to
$0.87 a year ago. Full year 2022 EPS
was $2.72, compared to $2.09 in 2021.
First Industrial's fourth quarter FFO was $0.60 per share/unit on a diluted basis, compared
to $0.52 per share/unit a year ago.
Full year 2022 FFO was $2.28 per
share/unit on a diluted basis versus $1.97 per share/unit in 2021. Excluding the
income related to insurance claim settlements, fourth quarter and
full year 2022 FFO was $0.59 and
$2.27 per share/unit,
respectively.
"2022 was an outstanding year for First Industrial due to the
contributions of our entire team as reflected in our strong
performance," said Peter E. Baccile,
First Industrial's president and chief executive officer. "We
established new company highs for year-end occupancy and cash
rental rate growth, which contributed to record annual cash same
store NOI growth. We are well positioned to capture additional rent
growth in our portfolio, demonstrated by the 33% growth in cash
rental rates on signed leases commencing in 2023."
Portfolio Performance
- In service occupancy was 98.8% at the end of the fourth quarter
of 2022, compared to 98.3% at the end of the third quarter of 2022,
and 98.1% at the end of the fourth quarter of 2021.
- In the fourth quarter, cash rental rates increased 41.1%. For
the full year, cash rental rates increased 26.7%, which is the
highest annual increase in company history.
- The Company has achieved a cash rental rate increase of
approximately 33% on leases signed to date commencing in 2023
reflecting 50% of 2023 rollovers.
- In the fourth quarter, cash basis same store net operating
income before termination fees and the income related to insurance
claim settlements ("SS NOI") increased 7.6% reflecting higher
average occupancy, increases in rental rates on new and renewal
leasing and contractual rent escalations, slightly offset by higher
free rent. For the full year, calculated under the same
methodology, SS NOI increased 10.1% which is a company record.
Development Leasing
During the fourth quarter, the Company:
- Leased the remaining 66,000 square feet at the 133,000
square-foot First Park Miami Building 9 in South Florida.
- Leased 100% of the 72,000 square-foot First Loop Logistics Park
Building 1 in Central Florida. The
lease is expected to commence upon completion in the first quarter
of 2023.
- Leased 54,000 square feet at its 81,000 square-foot First Loop
Logistics Park Building 2 in Central
Florida. The lease is expected to commence upon completion
in the first quarter of 2023.
Investment and Disposition Activities
In the fourth quarter, the Company:
- Commenced development of First Stockton Logistics Center in
Northern California - 1.0 million
square feet; $126 million estimated
investment.
- Acquired two sites totaling 55 acres in the Philadelphia and Houston markets for $17
million.
- Acquired a 47,000 square-foot building in the Inland Empire for
$15 million.
- Sold a 581,000 square-foot building in Minneapolis for $54
million.
For the full year 2022, the Company:
- Placed in service ten developments, 100% leased, totaling 4.1
million square feet, with an estimated total investment of
$448 million and a cash yield of
6.6%.
- Acquired 13 sites totaling 134 acres for a total of
$162 million that can support
approximately 2.0 million square feet of development.
- Acquired 11 buildings totaling 487,000 square feet for a total
of $137 million.
- Sold nine buildings comprised of 2.2 million square feet and
one land parcel for $178 million;
exited the Cleveland market.
- Sold 391 acres at its Camelback 303 business park joint venture
in Phoenix; First Industrial's
share of the gain and promote before tax is $102 million.
"Through our development efforts in 2022, we placed in service
more than four million square feet of premier logistics space, all
100% leased, deploying $448 million
in capital," said Johannson Yap,
First Industrial's chief investment officer. "Our team is focused
on building upon our excellent development track record of value
creation through lease-up within our current pipeline."
Capital
On November 1, 2022, the
Company:
- Borrowed the entire $300 million
of the delayed draw unsecured term loan that closed in August.
In the fourth quarter, the Company:
- Entered into interest rate swaps to effectively fix the all-in
interest rate on the entire $300
million unsecured term loan at 4.88%. The new fixed rate
became effective on December 1,
2022.
Common Stock Dividend Increased
The board of directors declared a common dividend of
$0.32 per share/unit for the quarter
ending March 31, 2023 payable on
April 17, 2023 to stockholders of
record on March 31, 2023. The new
dividend rate represents an 8.5% increase from the prior rate of
$0.295 per share/unit. This
represents a payout ratio of approximately 70% for our anticipated
2023 Adjusted Funds from Operations (AFFO) as defined in our
supplemental information report.
Outlook for 2023
"Industrial real estate fundamentals support further market rent
growth, which is benefiting our operating results and our earnings,
with higher interest rates a partial offset." added Mr. Baccile.
"While the overall economic picture is evolving, we have positioned
our company to perform throughout the cycle with our well-located
portfolio and pipeline and our strong balance sheet with no debt
maturities for the next few years."
|
|
Low End of
|
|
High End
of
|
|
|
Guidance for
2023
|
|
Guidance for
2023
|
|
|
(Per
share/unit)
|
|
(Per
share/unit)
|
Net Income
|
|
$
1.09
|
|
$
1.19
|
Add: Real Estate
Depreciation/Amortization
|
|
1.20
|
|
1.20
|
|
|
|
|
|
FFO (NAREIT Definition)
(1)
|
|
$
2.29
|
|
$
2.39
|
|
|
|
|
|
(1) 2023 FFO per share guidance is impacted by
an additional $0.02 per share in real
estate taxes in one of our markets that we will accrue in 2023 but
will not be recoverable from our tenants until the taxes are paid
in 2024. Excluding this impact, the midpoint of our FFO per share
guidance is $2.36.
The following assumptions were used for guidance:
- Average quarter-end in service occupancy of 97.75% to
98.75%.
- SS NOI growth on a cash basis before termination fees of 7.5%
to 8.5% for the full year. This range assumes 2023 bad debt expense
of $1 million and excludes
$1.4 million of income related to
insurance claim settlements recognized in 4Q22.
- Includes the incremental costs expected in 2023 related to the
Company's developments completed and under construction as of
December 31, 2022. In total, the
Company expects to capitalize $0.08
per share of interest in 2023.
- General and administrative expense of $34.0 million to $35.0
million.
- Other than the transactions discussed in this release, guidance
does not include the impact of:
-
- any future investments or property sales,
- any future debt repurchases prior to maturity or future debt
issuances, or
- any future equity issuances.
Conference Call
First Industrial will host its fourth quarter and full year 2022
results conference call on Thursday,
February 9, 2023 at 10:00 a.m.
CST (11:00 a.m. EST). The
conference call may be accessed by dialing (877) 870-4263, passcode
"First Industrial". The conference call will also be webcast live
on the Investors page of the Company's website at
www.firstindustrial.com. The replay will also be available on the
website.
The Company's fourth quarter and full year 2022 supplemental
information can be viewed at www.firstindustrial.com under the
"Investors" tab.
FFO Definition
In accordance with the NAREIT definition of FFO, First
Industrial calculates 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. First Industrial
also excludes the same adjustments from its share of net income
from unconsolidated 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 68.9 million square feet
of industrial space as of December 31,
2022. For more information, please visit us at
www.firstindustrial.com.
Forward-Looking Statements
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; the uncertainty and economic impact of
pandemics, epidemics or other public health emergencies or fear of
such events, such as the outbreak of coronavirus disease 2019
(COVID-19); 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; our ability to retain 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; our ability to identify,
acquire, develop and/or manage properties on favorable terms; our
ability to dispose of properties on favorable terms; 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;
potential natural disasters and other potentially catastrophic
events such as acts of war and/or terrorism; technological
developments, particularly those affecting supply chains and
logistics; litigation, including costs associated with prosecuting
or defending claims and any adverse outcomes; risks associated with
our investments in joint ventures, including our lack of sole
decision-making authority; 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, 2021, 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.
FIRST INDUSTRIAL
REALTY TRUST, INC. Selected Financial
Data (Unaudited) (In thousands except per
share/Unit data)
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Statements of
Operations and Other Data:
|
|
|
|
|
|
|
|
|
Total Revenues
|
|
$ 144,614
|
|
$ 121,551
|
|
$ 539,929
|
|
$ 476,290
|
|
|
|
|
|
|
|
|
|
Property Expenses
|
|
(37,613)
|
|
(32,914)
|
|
(143,663)
|
|
(131,300)
|
General and Administrative
|
|
(8,755)
|
|
(8,979)
|
|
(33,972)
|
|
(34,610)
|
Joint Venture Development Services Expense
|
|
(591)
|
|
—
|
|
(909)
|
|
—
|
Depreciation of Corporate FF&E
|
|
(261)
|
|
(234)
|
|
(972)
|
|
(891)
|
Depreciation and Other Amortization of Real Estate
|
|
(38,447)
|
|
(33,155)
|
|
(146,448)
|
|
(130,062)
|
Total
Expenses
|
|
(85,667)
|
|
(75,282)
|
|
(325,964)
|
|
(296,863)
|
Gain
on Sale of Real Estate
|
|
44,064
|
|
83,932
|
|
128,268
|
|
150,310
|
Interest Expense
|
|
(15,909)
|
|
(9,729)
|
|
(49,013)
|
|
(44,103)
|
Amortization of Debt Issuance Costs
|
|
(900)
|
|
(757)
|
|
(3,187)
|
|
(3,423)
|
Income from
Operations Before Equity in (Loss) Income
of
Joint Ventures and Income Tax Benefit (Provision)
|
|
$
86,202
|
|
$ 119,715
|
|
$ 290,033
|
|
$ 282,211
|
Equity in (Loss) Income of Joint Ventures (a)
|
|
(3,240)
|
|
(7)
|
|
114,942
|
|
(161)
|
Income Tax Benefit (Provision) (b)
|
|
976
|
|
(2,700)
|
|
(23,363)
|
|
(4,879)
|
Net
Income
|
|
$
83,938
|
|
$ 117,008
|
|
$ 381,612
|
|
$ 277,171
|
Net
Income Attributable to the Noncontrolling Interests
|
|
(1,941)
|
|
(2,591)
|
|
(22,478)
|
|
(6,174)
|
Net Income
Available to First Industrial Realty Trust, Inc.'s
Common Stockholders and Participating Securities
|
|
$
81,997
|
|
$ 114,417
|
|
$ 359,134
|
|
$ 270,997
|
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
|
|
$
81,997
|
|
$ 114,417
|
|
$ 359,134
|
|
$ 270,997
|
Depreciation and Other
Amortization of Real Estate
|
|
38,447
|
|
33,155
|
|
146,448
|
|
130,062
|
Noncontrolling
Interests
|
|
1,941
|
|
2,591
|
|
22,478
|
|
6,174
|
Gain on Sale of Real
Estate
|
|
(44,064)
|
|
(83,932)
|
|
(128,268)
|
|
(150,310)
|
Loss (Gain) on Sale of Real
Estate from Joint Ventures (a)
|
|
3,220
|
|
—
|
|
(115,024)
|
|
—
|
Income Tax (Benefit)
Provision - Allocable to Gain on Sale of
Real Estate, Including Joint
Ventures (b)
|
|
(690)
|
|
2,965
|
|
23,658
|
|
4,853
|
Funds From Operations
("FFO") (NAREIT) (c)
|
|
$
80,851
|
|
$
69,196
|
|
$ 308,426
|
|
$ 261,776
|
Amortization of Equity Based
Compensation
|
|
3,145
|
|
3,147
|
|
15,722
|
|
13,719
|
Amortization of Debt
Discounts and Hedge Costs
|
|
105
|
|
105
|
|
417
|
|
417
|
Amortization of Debt
Issuance Costs
|
|
900
|
|
757
|
|
3,187
|
|
3,423
|
Depreciation of Corporate
FF&E
|
|
261
|
|
234
|
|
972
|
|
891
|
Non-incremental Building
Improvements
|
|
(5,814)
|
|
(5,075)
|
|
(16,614)
|
|
(15,440)
|
Non-incremental Leasing
Costs
|
|
(9,692)
|
|
(10,471)
|
|
(30,899)
|
|
(30,558)
|
Capitalized
Interest
|
|
(3,747)
|
|
(3,990)
|
|
(16,298)
|
|
(12,140)
|
Capitalized
Overhead
|
|
(1,787)
|
|
(1,905)
|
|
(9,409)
|
|
(6,642)
|
Straight-Line Rent,
Amortization of Above (Below) Market
Leases and Lease Inducements
|
|
(9,704)
|
|
(3,171)
|
|
(26,914)
|
|
(15,768)
|
Adjusted Funds From
Operations ("AFFO") (c)
|
|
$
54,518
|
|
$
48,827
|
|
$ 228,590
|
|
$ 199,678
|
RECONCILIATION OF
NET INCOME AVAILABLE TO
FIRST INDUSTRIAL
REALTY TRUST, INC.'S COMMON
STOCKHOLDERS AND
PARTICIPATING SECURITIES TO ADJUSTED EBITDA (c) AND NOI
(c)
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net Income Available
to First Industrial Realty Trust, Inc.'s
Common Stockholders and Participating Securities
|
|
$
81,997
|
|
$ 114,417
|
|
$ 359,134
|
|
$ 270,997
|
Interest Expense
|
|
15,909
|
|
9,729
|
|
49,013
|
|
44,103
|
Depreciation and Other
Amortization of Real Estate
|
|
38,447
|
|
33,155
|
|
146,448
|
|
130,062
|
Income Tax (Benefit)
Provision - Not Allocable to Gain on Sale
of Real Estate
(b)
|
|
(286)
|
|
(265)
|
|
(295)
|
|
26
|
Noncontrolling
Interests
|
|
1,941
|
|
2,591
|
|
22,478
|
|
6,174
|
Amortization of Debt
Issuance Costs
|
|
900
|
|
757
|
|
3,187
|
|
3,423
|
Depreciation of Corporate
FF&E
|
|
261
|
|
234
|
|
972
|
|
891
|
Gain on Sale of Real
Estate
|
|
(44,064)
|
|
(83,932)
|
|
(128,268)
|
|
(150,310)
|
Loss (Gain) on Sale of Real
Estate from Joint Ventures (a)
|
|
3,220
|
|
—
|
|
(115,024)
|
|
—
|
Income Tax (Benefit)
Provision - Allocable to Gain on Sale of
Real Estate, Including Joint
Ventures (b)
|
|
(690)
|
|
2,965
|
|
23,658
|
|
4,853
|
Adjusted EBITDA
(c)
|
|
$
97,635
|
|
$
79,651
|
|
$ 361,303
|
|
$ 310,219
|
General and
Administrative
|
|
8,755
|
|
8,979
|
|
33,972
|
|
34,610
|
FFO from Joint Ventures
(a)
|
|
20
|
|
7
|
|
82
|
|
161
|
Net Operating Income
("NOI") (c)
|
|
$ 106,410
|
|
$
88,637
|
|
$ 395,357
|
|
$ 344,990
|
Non-Same Store
NOI
|
|
(14,720)
|
|
(4,975)
|
|
(39,587)
|
|
(20,304)
|
Same Store NOI Before
Same Store Adjustments (c)
|
|
$
91,690
|
|
$
83,662
|
|
$ 355,770
|
|
$ 324,686
|
Straight-line
Rent
|
|
(3,662)
|
|
(1,733)
|
|
(11,468)
|
|
(11,330)
|
Above (Below) Market Lease
Amortization
|
|
(232)
|
|
(233)
|
|
(927)
|
|
(1,016)
|
Lease Termination
Fees
|
|
(42)
|
|
(152)
|
|
(119)
|
|
(560)
|
Same Store NOI (Cash
Basis without Termination Fees) (c)
|
|
$
87,754
|
|
$
81,544
|
|
$ 343,256
|
|
$ 311,780
|
|
|
|
|
|
|
|
|
|
Weighted Avg. Number of
Shares/Units Outstanding - Basic
|
|
134,282
|
|
132,914
|
|
134,229
|
|
131,740
|
Weighted Avg. Number of
Shares Outstanding - Basic
|
|
132,137
|
|
130,914
|
|
132,024
|
|
129,688
|
|
|
|
|
|
|
|
|
|
Weighted Avg. Number of
Shares/Units Outstanding - Diluted
|
|
134,875
|
|
133,415
|
|
134,681
|
|
132,237
|
Weighted Avg. Number of
Shares Outstanding - Diluted
|
|
132,241
|
|
131,002
|
|
132,103
|
|
129,775
|
|
|
|
|
|
|
|
|
|
Per Share/Unit
Data:
|
|
|
|
|
|
|
|
|
Net Income Available to
First Industrial Realty Trust, Inc.'s
Common Stockholders and
Participating Securities
|
|
$
81,997
|
|
$ 114,417
|
|
$ 359,134
|
|
$ 270,997
|
Less: Allocation to
Participating Securities
|
|
(90)
|
|
(129)
|
|
(348)
|
|
(299)
|
Net Income Available to
First Industrial Realty Trust, Inc.'s
Common
Stockholders
|
|
$
81,907
|
|
$ 114,288
|
|
$ 358,786
|
|
$ 270,698
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Per
Share
|
|
$
0.62
|
|
$
0.87
|
|
$
2.72
|
|
$
2.09
|
|
|
|
|
|
|
|
|
|
FFO (NAREIT)
(c)
|
|
$
80,851
|
|
$
69,196
|
|
$ 308,426
|
|
$ 261,776
|
Less: Allocation to
Participating Securities
|
|
(203)
|
|
(196)
|
|
(736)
|
|
(727)
|
FFO (NAREIT) Allocable
to Common Stockholders and
Unitholders
|
|
$
80,648
|
|
$
69,000
|
|
$ 307,690
|
|
$ 261,049
|
|
|
|
|
|
|
|
|
|
Basic Per
Share/Unit
|
|
$
0.60
|
|
$
0.52
|
|
$
2.29
|
|
$
1.98
|
Diluted Per
Share/Unit
|
|
$
0.60
|
|
$
0.52
|
|
$
2.28
|
|
$
1.97
|
|
|
|
|
|
|
|
|
|
Common
Dividends/Distributions Per Share/Unit
|
|
$
0.295
|
|
$
0.270
|
|
$
1.180
|
|
$
1.080
|
Balance Sheet Data
(end of period):
|
|
December 31,
2022
|
|
December 31,
2021
|
Gross Real Estate
Investment
|
|
$
5,343,039
|
|
$
4,646,444
|
Total
Assets
|
|
4,954,322
|
|
4,179,098
|
Debt
|
|
2,066,301
|
|
1,610,020
|
Total
Liabilities
|
|
2,424,023
|
|
1,930,726
|
Total
Equity
|
|
2,530,299
|
|
2,248,372
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
(a)
|
Equity in (Loss)
Income of Joint Ventures
|
|
|
|
|
|
|
|
|
|
Equity in (Loss)
Income of Joint Ventures per GAAP
|
|
$
(3,240)
|
|
$
(7)
|
|
$ 114,942
|
|
$
(161)
|
|
Loss (Gain) on Sale of
Real Estate from Joint Ventures
|
|
3,220
|
|
—
|
|
(115,024)
|
|
—
|
|
FFO from Joint
Ventures
|
|
$
(20)
|
|
$
(7)
|
|
$
(82)
|
|
$
(161)
|
|
|
|
|
|
|
|
|
|
|
(b)
|
Income Tax Benefit
(Provision)
|
|
|
|
|
|
|
|
|
|
Income Tax Benefit
(Provision) per GAAP
|
|
$
976
|
|
$
(2,700)
|
|
$ (23,363)
|
|
$
(4,879)
|
|
Income Tax (Benefit)
Provision - Allocable to Gain on Sale
of Real Estate, Including
Joint Ventures
|
|
(690)
|
|
2,965
|
|
23,658
|
|
4,853
|
|
Income Tax Benefit
(Provision) - Not Allocable to Gain on
Sale of Real
Estate
|
|
$
286
|
|
$
265
|
|
$
295
|
|
$
(26)
|
(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 NAREIT definition of FFO, 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 unconsolidated joint ventures.
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 from our investment
in joint ventures.
AFFO is defined as adjusted EBITDA minus interest expense, minus
capitalized interest and overhead, (minus)/plus amortization of
debt discounts and hedge costs, minus straight-line rent,
amortization of above (below) market leases and lease inducements,
minus provision for income taxes or plus benefit for income taxes
not allocable to gain on sale of real estate, plus amortization of
equity based compensation 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, cash
flows (calculated in accordance with GAAP) or 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.
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, 2021 and held as an in service
property through the end of the current reporting period (including
certain income-producing land parcels), and developments and
redevelopments that were placed in service prior to January 1, 2021 (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%. Properties
acquired 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. Properties acquired
that are less than 75% occupied at the date of acquisition are
placed in service as they reach the earlier of reaching 90%
occupancy or one year subsequent to acquisition. Developments,
redevelopments and acquired income-producing land parcels for which
our ultimate intent is to redevelop or develop on the land parcel
are placed in service as they reach the earlier of 90% occupancy
or one year subsequent to 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. Same Store revenues for the three and twelve months ended
December 31, 2022 exclude
$1,438 of one-time insurance
settlement gain recognized on multiple properties within the Same
Store Pool. We exclude lease termination fees, 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 the sale of real estate, equity in
income or loss from our joint ventures, joint venture fees, joint
venture development services expense, 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.
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SOURCE First Industrial Realty Trust, Inc.