- Cash Rental Rates Up 74.1% in 2Q23
- Cash Rental Rate Increase of 63% on Leases Signed To-Date
Commencing in 2023
- Cash Same Store NOI Growth of 10.8% in 2Q23; Occupancy
of 97.7% at Quarter-End
- Renewed Largest 2024 Lease Rollover of 700,000 Square
Feet
- Signed 673,000 Square Feet of New Leases for Speculative
Developments in the Second Quarter and Third Quarter To-Date
Inclusive of Joint Venture
- 2023 FFO Guidance Increased $0.01 at Midpoint to $2.35 to $2.43 Per
Share/Unit Which Excludes $0.02 Per
Share 1Q23 Accelerated Recognition of Tenant Improvement
Reimbursement
CHICAGO, July 19,
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 second quarter of 2023. First Industrial's diluted net
income available to common stockholders per share (EPS) was
$0.41, compared to $0.88 a year ago and second quarter FFO was
$0.61 per share/unit on a diluted
basis, compared to $0.56 per
share/unit a year ago.
"Our team delivered another quarter of strong financial and
operating results," said Peter E.
Baccile, president and chief executive officer of First
Industrial. "We grew our same store cash net operating income
10.8%. We also achieved cash rental rate growth of 74% on new and
renewal leases commencing in the quarter, establishing a new
company record."
Portfolio Performance
- In service occupancy was 97.7% at the end of the second quarter
of 2023, compared to 98.7% at the end of the first quarter of 2023,
and 98.4% at the end of the second quarter of 2022.
- Cash rental rates increased 74.1% and increased 97.1% on a
straight-line basis.
- The Company has achieved a cash rental rate increase of
approximately 63% on leases signed to date commencing in 2023
reflecting 81% of 2023 rollovers.
- The Company renewed its largest 2024 lease expiration at its
700,000 square-foot facility in Nashville.
- Same store cash basis net operating income before termination
fees ("SS NOI") increased 10.8% reflecting increases in rental
rates on new and renewal leasing and contractual rent escalations,
offset by slightly lower average occupancy, higher free rent and an
increase in real estate taxes.
Development Leasing
During the second quarter, the Company:
- Leased 50% of the 129,000 square-foot First Steele in
Seattle.
- Leased 100% of the 56,000 square-foot First Park Miami Building
13 in South Florida.
In the third quarter to-date, the Company:
- Leased 100% of the 132,000 square-foot FirstGate Commerce
Center in South Florida. The lease
is expected to commence in the third quarter.
- Leased 100% of the 421,000 square-foot Building B at its
Camelback 303 business park joint venture in Phoenix. The lease is expected to commence in
the first quarter of 2024.
Investment and Disposition Highlights
In the second quarter, the Company:
- Commenced development of two projects totaling 294,000 square
feet with an estimated total investment of $65 million comprised of:
-
- First Park Miami Building 12 in South
Florida - 136,000 square feet; $34
million estimated investment.
- First Harley Knox Logistics Center in the Inland Empire -
159,000 square feet; $31 million
estimated investment.
- Acquired three sites in Miami,
the Inland Empire and the Lehigh Valley for $60 million that can support up to 3.1 million
square feet of development. We also added one additional site in
the Inland Empire for $13 million
that, when combined with a site we already own, can accommodate up
to 550,000 square feet of development.
- Acquired a 15,000 square-foot building in the Inland Empire for
$5 million.
- Sold a 183,000 square-foot building in Houston and one land site in Minneapolis for a total of $17 million.
Outlook for 2023
"Industrial market fundamentals are healthy overall. The pace of
leasing decisions within our in-service portfolio continues to be
strong, while the timeframes for prospective tenants evaluating new
space commitments have lengthened," added Mr. Baccile. "We have
adjusted our occupancy guidance by 75 basis points at the midpoint
to reflect extended lease-up assumptions for certain developments
that will enter our in-service pool in the third and fourth
quarters. With the benefit of early leasing at other development
projects and higher capitalized interest, we are raising our
outlook for FFO per share for 2023 by $0.01 per share at the midpoint."
|
|
Low End of
|
|
High End
of
|
|
|
Guidance for
2023
|
|
Guidance for
2023
|
|
|
(Per
share/unit)
|
|
(Per
share/unit)
|
Net Income
|
|
$
1.40
|
|
$
1.48
|
Add: Real Estate
Depreciation/Amortization
|
|
1.20
|
|
1.20
|
Less: Gain on
Sale of Real Estate, Net of Allocable Income Tax Provision
(Including Joint Venture) and Net of Joint Venture Noncontrolling
Interest,
Through July 19, 2023
|
|
(0.23)
|
|
(0.23)
|
|
|
|
|
|
FFO (NAREIT
Definition)
|
|
$
2.37
|
|
$
2.45
|
|
|
|
|
|
Less: Income
Related to Accelerated Recognition of a Tenant Improvement
Reimbursement
|
|
(0.02)
|
|
(0.02)
|
|
|
|
|
|
FFO Before Income
Related to Accelerated Recognition of a Tenant
Improvement Reimbursement
|
|
$
2.35
|
|
$
2.43
|
The following assumptions were used for guidance:
- Average quarter-end in service occupancy of 97.0% to 98.0%, a
decrease of 75 basis points at the midpoint. The guidance reflects
adjustments to lease-up timing assumptions for developments that
will be placed in-service in the third and fourth quarters of
2023.
- SS NOI growth on a cash basis before termination fees of
7.75% to 8.75% for the full year. This range excludes $1.4 million of income related to insurance claim
settlements recognized in 4Q22.
- FFO from Joint Venture of $0.02
per share related to the Company's share of the ground lease rent
from the previously disclosed purchase option agreement.
- Includes the incremental costs expected in 2023 related to the
Company's developments completed and under construction as
June 30, 2023. In total, the Company
expects to capitalize $0.10 per share
of interest in 2023.
- General and administrative expense of $34.0 million to $35.0
million.
- Our guidance does not include the impact of any future
investments, property sales, debt repurchases prior to maturity,
debt issuances, or equity issuances post the date of this press
release.
Conference Call
First Industrial will host its quarterly conference call on
Thursday, July 20, 2023 at
10:00 a.m. CDT (11:00 a.m. EDT). 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 second quarter 2023 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 an unconsolidated joint venture.
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 69.4 million square feet
of industrial space as of June 30,
2023. 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, 2022, 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
|
|
Six Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Statements of
Operations and Other Data:
|
|
|
|
|
|
|
|
|
Total Revenues
|
|
$ 152,223
|
|
$ 130,049
|
|
$ 301,646
|
|
$ 255,562
|
|
|
|
|
|
|
|
|
|
Property Expenses
|
|
(39,757)
|
|
(34,860)
|
|
(81,939)
|
|
(70,275)
|
General and Administrative
|
|
(9,520)
|
|
(8,249)
|
|
(18,874)
|
|
(16,990)
|
Joint Venture Development Services Expense
|
|
(1,347)
|
|
—
|
|
(2,131)
|
|
—
|
Depreciation of Corporate FF&E
|
|
(214)
|
|
(226)
|
|
(459)
|
|
(456)
|
Depreciation and Other Amortization of Real Estate
|
|
(40,376)
|
|
(36,244)
|
|
(79,903)
|
|
(69,924)
|
Total
Expenses
|
|
(91,214)
|
|
(79,579)
|
|
(183,306)
|
|
(157,645)
|
Gain
on Sale of Real Estate
|
|
13,053
|
|
297
|
|
13,053
|
|
297
|
Interest Expense
|
|
(17,898)
|
|
(10,374)
|
|
(34,017)
|
|
(20,010)
|
Amortization of Debt Issuance Costs
|
|
(905)
|
|
(730)
|
|
(1,809)
|
|
(1,486)
|
Income from
Operations Before Equity in Income of
Joint Venture and Income Tax
Provision
|
|
$
55,259
|
|
$
39,663
|
|
$
95,567
|
|
$
76,718
|
Equity in Income of Joint Venture
|
|
1,434
|
|
118,211
|
|
29,068
|
|
118,189
|
Income Tax Provision
|
|
(459)
|
|
(24,198)
|
|
(7,626)
|
|
(24,108)
|
Net
Income
|
|
$
56,234
|
|
$ 133,676
|
|
$ 117,009
|
|
$ 170,799
|
Net
Income Attributable to the Noncontrolling Interests
|
|
(1,598)
|
|
(16,685)
|
|
(6,406)
|
|
(17,550)
|
Net Income
Available to First Industrial Realty Trust, Inc.'s
Common Stockholders and
Participating Securities
|
|
$
54,636
|
|
$ 116,991
|
|
$ 110,603
|
|
$ 153,249
|
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
|
|
$
54,636
|
|
$ 116,991
|
|
$ 110,603
|
|
$ 153,249
|
Depreciation and Other
Amortization of Real Estate
|
|
40,376
|
|
36,244
|
|
79,903
|
|
69,924
|
Net Income Attributable to
the Noncontrolling Interests
|
|
1,598
|
|
16,685
|
|
6,406
|
|
17,550
|
Gain on Sale of Real
Estate
|
|
(13,053)
|
|
(297)
|
|
(13,053)
|
|
(297)
|
Gain on Sale of Real Estate
from Joint Venture (a)
|
|
(30)
|
|
(118,244)
|
|
(27,662)
|
|
(118,244)
|
Equity in FFO
from Joint Venture Attributable to the
Noncontrolling Interest (a)
|
|
(169)
|
|
—
|
|
(169)
|
|
—
|
Income Tax Provision -
Allocable to Gain on Sale of Real
Estate, Including
Joint Venture (b)
|
|
—
|
|
24,243
|
|
6,997
|
|
24,243
|
Funds From Operations
("FFO") (NAREIT) (c)
|
|
$
83,358
|
|
$
75,622
|
|
$ 163,025
|
|
$ 146,425
|
Amortization of Equity Based
Compensation
|
|
3,269
|
|
3,892
|
|
9,410
|
|
8,993
|
Amortization of Debt
Discounts and Hedge Costs
|
|
104
|
|
104
|
|
208
|
|
208
|
Amortization of Debt
Issuance Costs
|
|
905
|
|
730
|
|
1,809
|
|
1,486
|
Depreciation of Corporate
FF&E
|
|
214
|
|
226
|
|
459
|
|
456
|
Non-incremental Building
Improvements
|
|
(7,875)
|
|
(4,628)
|
|
(11,052)
|
|
(5,349)
|
Non-incremental Leasing
Costs
|
|
(9,364)
|
|
(7,204)
|
|
(18,225)
|
|
(13,533)
|
Capitalized
Interest
|
|
(3,844)
|
|
(4,364)
|
|
(7,825)
|
|
(8,434)
|
Capitalized
Overhead
|
|
(1,944)
|
|
(2,679)
|
|
(5,099)
|
|
(5,292)
|
Straight-Line Rent,
Amortization of Above (Below) Market
Leases and Lease Inducements
|
|
(6,141)
|
|
(5,139)
|
|
(12,223)
|
|
(9,291)
|
Adjusted Funds From
Operations ("AFFO") (c)
|
|
$
58,682
|
|
$
56,560
|
|
$ 120,487
|
|
$ 115,669
|
|
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
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net Income Available
to First Industrial Realty Trust,
Inc.'s
Common Stockholders and
Participating Securities
|
|
$
54,636
|
|
$ 116,991
|
|
$ 110,603
|
|
$ 153,249
|
Interest Expense
|
|
17,898
|
|
10,374
|
|
34,017
|
|
20,010
|
Depreciation and Other
Amortization of Real Estate
|
|
40,376
|
|
36,244
|
|
79,903
|
|
69,924
|
Income Tax Provision
(Benefit) - Not Allocable to Gain on Sale of
Real Estate (b)
|
|
459
|
|
(45)
|
|
629
|
|
(135)
|
Net Income
Attributable to the Noncontrolling Interests
|
|
1,598
|
|
16,685
|
|
6,406
|
|
17,550
|
Equity in FFO from
Joint Venture Attributable to the
Noncontrolling Interest (a)
|
|
(169)
|
|
—
|
|
(169)
|
|
—
|
Amortization of Debt
Issuance Costs
|
|
905
|
|
730
|
|
1,809
|
|
1,486
|
Depreciation of Corporate
FF&E
|
|
214
|
|
226
|
|
459
|
|
456
|
Gain on Sale of Real
Estate
|
|
(13,053)
|
|
(297)
|
|
(13,053)
|
|
(297)
|
Gain on Sale of Real Estate
from Joint Venture (a)
|
|
(30)
|
|
(118,244)
|
|
(27,662)
|
|
(118,244)
|
Income Tax Provision -
Allocable to Gain on Sale of Real
Estate, Including
Joint Venture (b)
|
|
—
|
|
24,243
|
|
6,997
|
|
24,243
|
Adjusted EBITDA
(c)
|
|
$ 102,834
|
|
$
86,907
|
|
$ 199,939
|
|
$ 168,242
|
General and
Administrative
|
|
9,520
|
|
8,249
|
|
18,874
|
|
16,990
|
Equity in FFO
from Joint Venture, Net of Noncontrolling
Interest
(a)
|
|
(1,235)
|
|
33
|
|
(1,237)
|
|
55
|
Net Operating Income
("NOI") (c)
|
|
$ 111,119
|
|
$
95,189
|
|
$ 217,576
|
|
$ 185,287
|
Non-Same Store
NOI
|
|
(11,189)
|
|
(5,155)
|
|
(21,157)
|
|
(5,840)
|
Same Store NOI Before
Same Store Adjustments (c)
|
|
$
99,930
|
|
$
90,034
|
|
$ 196,419
|
|
$ 179,447
|
Straight-line
Rent
|
|
(2,795)
|
|
(2,450)
|
|
(6,048)
|
|
(5,503)
|
Above (Below) Market Lease
Amortization
|
|
(183)
|
|
(258)
|
|
(415)
|
|
(517)
|
Lease Termination
Fees
|
|
(212)
|
|
(25)
|
|
(234)
|
|
(25)
|
Same Store NOI (Cash
Basis without Termination Fees) (c)
|
|
$
96,740
|
|
$
87,301
|
|
$ 189,722
|
|
$ 173,402
|
|
|
|
|
|
|
|
|
|
Weighted Avg. Number of
Shares/Units Outstanding - Basic
|
|
134,702
|
|
134,278
|
|
134,694
|
|
134,176
|
Weighted Avg. Number of
Shares Outstanding - Basic
|
|
132,249
|
|
132,051
|
|
132,230
|
|
131,932
|
|
|
|
|
|
|
|
|
|
Weighted Avg. Number of
Shares/Units Outstanding - Diluted
|
|
135,247
|
|
134,590
|
|
135,239
|
|
134,543
|
Weighted Avg. Number of
Shares Outstanding - Diluted
|
|
132,337
|
|
132,106
|
|
132,318
|
|
131,997
|
|
|
|
|
|
|
|
|
|
Per Share/Unit
Data:
|
|
|
|
|
|
|
|
|
Net Income Available to
First Industrial Realty Trust, Inc.'s
Common Stockholders and
Participating Securities
|
|
$
54,636
|
|
$ 116,991
|
|
$ 110,603
|
|
$ 153,249
|
Less: Allocation to
Participating Securities
|
|
(53)
|
|
(103)
|
|
(100)
|
|
(134)
|
Net Income Available to
First Industrial Realty Trust, Inc.'s
Common
Stockholders
|
|
$
54,583
|
|
$ 116,888
|
|
$ 110,503
|
|
$ 153,115
|
|
|
|
|
|
|
|
|
|
Basic Per
Share
|
|
$
0.41
|
|
$
0.89
|
|
$
0.84
|
|
$
1.16
|
Diluted Per
Share
|
|
$
0.41
|
|
$
0.88
|
|
$
0.84
|
|
$
1.16
|
|
|
|
|
|
|
|
|
|
FFO (NAREIT)
(c)
|
|
$
83,358
|
|
$
75,622
|
|
$ 163,025
|
|
$ 146,425
|
Less: Allocation to
Participating Securities
|
|
(216)
|
|
(178)
|
|
(401)
|
|
(334)
|
FFO (NAREIT) Allocable
to Common Stockholders and
Unitholders
|
|
$
83,142
|
|
$
75,444
|
|
$ 162,624
|
|
$ 146,091
|
|
|
|
|
|
|
|
|
|
Basic Per
Share/Unit
|
|
$
0.62
|
|
$
0.56
|
|
$
1.21
|
|
$
1.09
|
Diluted Per
Share/Unit
|
|
$
0.61
|
|
$
0.56
|
|
$
1.20
|
|
$
1.09
|
|
|
|
|
|
|
|
|
|
Common
Dividends/Distributions Per Share/Unit
|
|
$
0.320
|
|
$
0.295
|
|
$
0.640
|
|
$
0.590
|
Balance Sheet Data
(end of period):
|
|
June 30,
2023
|
|
December 31,
2022
|
Gross Real Estate
Investment
|
|
$
5,566,488
|
|
$
5,343,039
|
Total
Assets
|
|
5,089,379
|
|
4,954,322
|
Debt
|
|
2,182,304
|
|
2,066,301
|
Total
Liabilities
|
|
2,527,540
|
|
2,424,023
|
Total
Equity
|
|
2,561,839
|
|
2,530,299
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
(a)
|
Equity in Income of
Joint Venture
|
|
|
|
|
|
|
|
|
|
Equity in Income of
Joint Venture per GAAP
Statements of
Operations
|
|
$
1,434
|
|
$ 118,211
|
|
$
29,068
|
|
$ 118,189
|
|
Gain on Sale of Real
Estate from Joint Venture
|
|
(30)
|
|
(118,244)
|
|
(27,662)
|
|
(118,244)
|
|
Equity in FFO from
Joint Venture Attributable to the
Noncontrolling Interest
|
|
(169)
|
|
—
|
|
(169)
|
|
—
|
|
Equity in FFO from
Joint Venture, Net of Noncontrolling
Interest
|
|
$
1,235
|
|
$
(33)
|
|
$
1,237
|
|
$
(55)
|
|
|
|
|
|
|
|
|
|
|
(b)
|
Income Tax
(Provision) Benefit
|
|
|
|
|
|
|
|
|
|
Income Tax Provision
per GAAP Statements of Operations
|
|
$
(459)
|
|
$ (24,198)
|
|
$
(7,626)
|
|
$ (24,108)
|
|
Income Tax Provision -
Allocable to Gain on Sale
of Real Estate, Including
Joint Venture
|
|
—
|
|
24,243
|
|
6,997
|
|
24,243
|
|
Income Tax (Provision)
Benefit - Not Allocable to Gain on
Sale of Real
Estate
|
|
$
(459)
|
|
$
45
|
|
$
(629)
|
|
$
135
|
(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 an unconsolidated joint venture.
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 venture.
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, 2022 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, 2022 (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. 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 joint
venture, 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.