First Industrial Realty Trust Reports Second Quarter 2014 Results
PR Newswire Association LLC |
"Industrial fundamentals remain robust as demand for industrial space continues to well outpace the levels of new supply," said
Portfolio Performance – Second Quarter 2014
- In-service occupancy was 93.0% at the end of the second quarter, compared to 92.4% at the end of the first quarter of 2014, and 91.2% at the end of the second quarter of 2013.
- Tenants were retained in 69.5% of square footage up for renewal.
- Same property cash basis net operating income (NOI) increased 2.4%. Including lease termination fees, same store NOI grew 2.7%. Both measures exclude the impact of the
$0.8 million portion of a one-time restoration fee recognized during the second quarter. - Rental rates increased 0.9% on a cash basis and increased 8.1% on a GAAP basis; leasing costs were
$2.69 per square foot.
Investment and Disposition Activities
- Acquired a leasehold interest in a 100% leased 225,000 square-foot distribution center in the Inland Empire in
Southern California for$10.0 million and a 100% leased 53,000 square-foot facility inChicago for$3.2 million . - Commenced development of the two-building 239,000 square-foot
Interstate North Business Park inMinneapolis on a land site acquired during the quarter; estimated investment of$19.3 million ; includes a 97,000 square-foot build-to-suit for Goodwill-Easter Seals ofMinnesota . - Acquired a 10-acre development site in the
Dallas market and a 5-acre parcel in the Inland Empire for a total of$1.7 million . - Sold two facilities comprised of 18,000 square feet for a total of
$1.3 million .
In the third quarter to date, the Company:
- Sold seven buildings totaling 461,000 square feet for
$33.2 million , comprised of a portfolio of six buildings totaling 370,000 square feet and one land parcel inBaltimore for$28.5 million and a 91,000 square-foot facility inHouston for$4.7 million .
As previously announced, the Company:
- Leased its 708,000 square-foot
First Logistics Center @I-83 inYork, PA to a leading multinational corporation; start date ofSeptember 15, 2014 . - Leased its 43,500 square-foot
First Figueroa Logistics Center in theSouth Bay submarket ofLos Angeles ; start date ofJune 1, 2014 . - Signed two leases for its 509,000 square-foot distribution center in the
Chicago market that resulted in occupancy for the building of approximately 79% as ofJune 30, 2014 ; leases were comprised of a long-term lease with a third party logistics provider for 100,000 square feet initially that will ramp up to a total of 323,795 square feet in the second quarter of 2015 and an eight-month lease for 300,735 square feet.
In the third quarter to date, the Company signed a long-term 142,000 square-foot lease for the 222,000 square-foot facility at its two-building, 598,000 square-foot First Pinnacle Industrial Center development in process in
"Our platform enables us to add value through our active investment approach and leasing capabilities," said
Capital Market Activities and Financial Position
In the second quarter, the Company:
- Retired
$82 million of its 6.42% senior notes dueJune 2014 . - Paid off two secured loans totaling
$40 million at a weighted average interest rate of 5.8%.
Outlook for 2014
|
High End of |
||||||
Guidance for 2014 |
Guidance for 2014 |
||||||
(Per share/unit) |
(Per share/unit) |
||||||
Net Income Available to Common Stockholders |
0.15 |
0.25 |
|||||
Add: Real Estate Depreciation/Amortization |
1.00 |
1.00 |
|||||
Less: Non-NAREIT Compliant Gain Through 2Q14 |
(0.04) |
(0.04) |
|||||
FFO (NAREIT Definition)* |
|
|
|||||
FFO Before One-Time Restoration Fee, Loss from Retirement of Debt, Loss from Redemption of Preferred Stock and Acquisition Costs* |
|
|
|||||
*NAREIT FFO guidance reflects the one-time restoration fee, offset by loss from retirement of debt related to mortgage payoffs, loss from redemption of preferred stock and acquisition costs. The net impact of these items is less than one-half cent per share. |
|||||||
As a result, the guidance range for these two metrics is the same. |
The following assumptions were used:
- 2014 FFO guidance was increased from the Company's previous guidance in its 1Q14 results press release primarily due to leasing at the 2Q13
Chicago acquisition as well as itsFirst Logistics Center @I-83 andFirst Figueroa Logistics Center developments. - Average quarter-end in-service occupancy of 92.5% to 93.5%, an increase of 0.5% at both ends of the range primarily due to the leasing of the
Chicago asset. - Guidance includes a one-time restoration fee of approximately
$0.02 per share. - Guidance reflects the lease-up of the Company's
First Bandini Logistics Center development in the fourth quarter. - Same-store NOI on a cash basis of positive 3% to 5% for the full year, excluding the aforementioned one-time restoration fee.
- JV FFO of approximately
$0.4 million . - General and administrative expense of approximately
$23 million to$24 million . - Guidance reflects the payoff of approximately
$25 million of secured debt in the third quarter at an interest rate of 6.7%. - Guidance includes the incremental costs related to the Company's developments in process and its completed developments. In total, the Company expects to capitalize
$0.01 per share of interest in 2014 related to its development projects. - Guidance does not include the impact of:
- any other future debt repurchases prior to maturity or future debt issuances,
- any other future property sales or investments,
- any future impairment gains or losses,
- any future NAREIT-compliant gains or losses, or
- issuance of additional equity, which the Company may elect to do, depending on market conditions.
A number of factors could impact our ability to deliver results in line with our assumptions, such as interest rates, the economies of
FFO Definition
About
Forward-Looking Information
This press release and the presentation to which it refers may contain certain 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 and are including this statement for purposes of complying with those safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words "believe," "expect," "intend," "plan," "anticipate," "estimate," "project," "seek," "target," "potential," "focus," "may," "should" or similar expressions. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. 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; 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) to us and to our potential counterparties; the availability and attractiveness of terms of additional debt repurchases; interest rates; our credit agency ratings; our ability to comply with applicable financial covenants; competition; changes in supply and demand for industrial properties (including land, the supply and demand for which is inherently more volatile than other types of industrial property) in the Company's current and proposed market areas; difficulties in identifying and consummating acquisitions and dispositions; our ability to manage the integration of properties we acquire; risks related to our investments in properties through joint ventures; environmental liabilities; slippages in development or lease-up schedules; tenant creditworthiness; higher-than-expected costs; changes in asset valuations and related impairment charges; changes in general accounting principles, policies and guidelines applicable to real estate investment trusts; international business risks; and those additional factors described under the "Risk Factors" and elsewhere in the Company's annual report on Form 10-K for the year ended
A schedule of selected financial information is attached.
The Company's second quarter supplemental information can be viewed at www.firstindustrial.com under the "Investor Relations" tab.
|
||||||||
Selected Financial Data |
||||||||
(Unaudited) |
||||||||
(In thousands except per share/unit data) |
||||||||
Three Months Ended |
Six Months Ended |
|||||||
|
|
|
|
|||||
2014 |
2013 |
2014 |
2013 |
|||||
Statement of Operations and Other Data: |
||||||||
Total Revenues |
|
|
|
|
||||
Property Expenses |
(27,836) |
(26,609) |
(59,143) |
(53,199) |
||||
General & Administrative |
(7,108) |
(5,401) |
(12,664) |
(11,864) |
||||
Depreciation of Corporate FF&E |
(129)</p> |
(164) |
(251) |
(372) |
||||
Depreciation and Other Amortization of Real Estate |
(28,379) |
(27,987) |
(56,961) |
(54,003) |
||||
Total Expenses |
(63,452) |
(60,161) |
(129,019) |
(119,438) |
||||
Interest Income |
671 |
600 |
1,373 |
1,163 |
||||
Interest Expense |
(18,924) |
(18,431) |
(37,970) |
(37,394) |
||||
Amortization of Deferred Financing Costs |
(803) |
(833) |
(1,607) |
(1,687) |
||||
Mark-to-Market Gain on Interest Rate Protection Agreements |
- |
56 |
- |
52 |
||||
Loss from Retirement of Debt |
(623) |
(4,436) |
(623) |
(5,586) |
||||
Income (Loss) from Continuing Operations Before Equity in Income of |
||||||||
Joint Ventures and Income Tax (Provision) Benefit |
3,129 |
(1,379) |
4,459 |
(633) |
||||
Equity in Income of Joint Ventures (a) |
556 |
27 |
3,522 |
47 |
||||
Income Tax (Provision) Benefit |
(79) |
(3) |
(89) |
59 |
||||
Income (Loss) from Continuing Operations |
3,606 |
(1,355) |
7,892 |
(527) |
||||
Discontinued Operations: |
||||||||
Income (Loss) Attributable to Discontinued Operations |
278 |
(764) |
324 |
97 |
||||
Gain on Sale of Real Estate |
320 |
13,481 |
1,055 |
10,407 |
||||
Income from Discontinued Operations |
598 |
12,717 |
1,379 |
10,504 |
||||
Income Before Gain on Sale of Real Estate |
4,204 |
11,362 |
9,271 |
9,977 |
||||
Gain on Sale of Real Estate |
- |
- |
- |
262 |
||||
Net Income |
4,204 |
11,362 |
9,271 |
10,239 |
||||
Net Income Attributable to the Noncontrolling Interest |
(165) |
(245) |
(269) |
(25) |
||||
Net Income Attributable to |
4,039 |
11,117 |
9,002 |
10,214 |
||||
Preferred Dividends |
- |
(2,277) |
(1,019) |
(6,114) |
||||
Redemption of Preferred Stock |
- |
(3,546) |
(1,462) |
(3,546) |
||||
Net Income Available to |
||||||||
Common Stockholders and Participating Securities |
$ 4,039 |
$ 5,294 |
$ 6,521 |
$ 554 |
||||
RECONCILIATION OF NET INCOME AVAILABLE TO |
||||||||
|
||||||||
STOCKHOLDERS AND PARTICIPATING SECURITIES TO |
||||||||
FFO (b) AND AFFO (b) |
<br /> | |||||||
Net Income Available to |
||||||||
Common Stockholders and Participating Securities |
$ 4,039 |
$ 5,294 |
$ 6,521 |
$ 554 |
||||
Depreciation and Other Amortization of Real Estate |
28,379 |
27,987 |
56,961 |
54,003 |
||||
Depreciation and Other Amortization of Real Estate Included in Discontinued Operations |
63 |
1,168 |
146 |
2,569 |
||||
Impairment of Depreciated Real Estate Included in Discontinued Operations |
- |
1,605 |
- |
1,605 |
||||
Noncontrolling Interest |
165 |
245 |
269 |
25 |
||||
Equity in Depreciation and Other Amortization of Joint Ventures (a) |
29 |
55 |
66 |
110 |
||||
Non-NAREIT Compliant Gain (b) |
(320) |
(13,481) |
(1,055) |
(10,407) |
||||
Non-NAREIT Compliant Gain from Joint Ventures (a) (b) |
(367) |
- |
(3,346) |
- |
||||
Funds From Operations (NAREIT) ("FFO") (b) |
|
|
$ 59,562 |
$ 48,459 |
||||
Loss from Retirement of Debt |
623 |
4,436 |
623 |
5,586 |
||||
Restricted Stock/Unit Amortization |
3,322 |
841 |
4,897 |
2,667 |
||||
Amortization of Debt Discounts / (Premiums) and Hedge Costs |
742 |
974 |
1,776 |
1,930 |
||||
Amortization of Deferred Financing Costs |
803 |
833 |
1,607 |
1,687 |
||||
Depreciation of Corporate FF&E |
129 |
164 |
251 |
372 |
||||
Redemption of Preferred Stock |
- |
3,546 |
1,462 |
3,546 |
||||
Mark-to-Market Gain on Interest Rate Protection Agreements |
- |
(56) |
- |
(52) |
||||
NAREIT Compliant Economic Gain (b) |
- |
- |
- |
(262) |
||||
One-Time Restoration Fee (d) |
(833) |
- |
(1,222) |
- |
||||
Non-Incremental Capital Expenditures (d) |
(12,495) |
(11,965) |
(19,864) |
(23,562) |
||||
Capitalized Interest and Overhead |
(421) |
(1,104) |
(869) |
(2,111) |
||||
Straight-Line Rent and Amortization of Above (Below) Market Leases |
||||||||
and Lease Inducements |
(728) |
(925) |
(602) |
(2,134) |
||||
Adjusted Funds From Operations ("AFFO") (b) |
|
|
$ 47,621 |
$ 36,126 |
|
||||||||
Selected Financial Data |
||||||||
(Unaudited) |
||||||||
(In thousands except per share/unit data) |
||||||||
Three Months Ended |
Six Months Ended |
|||||||
|
|
|
|
|||||
2014 |
2013 |
2014 |
2013 |
|||||
RECONCILIATION OF NET INCOME AVAILABLE TO |
||||||||
|
||||||||
STOCKHOLDERS AND PARTICIPATING SECURITIES TO |
||||||||
EBITDA (b) AND NOI (b) |
||||||||
Net Income Available to |
||||||||
Common Stockholders and Participating Securities |
$ 4,039 |
$ 5,294 |
$ 6,521 |
$ 554 |
||||
Interest Expense |
18,924 |
18,431 |
37,970 |
37,394 |
||||
Depreciation and Other Amortization of Real Estate |
28,379 |
27,987 |
56,961 |
54,003 |
||||
Depreciation and Other Amortization of Real Estate Included in Discontinued Operations |
63 |
1,168 </td> |
146 |
2,569 |
||||
Impairment of Depreciated Real Estate Included in Discontinued Operations |
- |
1,605 |
- |
1,605 |
||||
Preferred Dividends |
- |
2,277 |
1,019 |
6,114 |
||||
Redemption of Preferred Stock |
- |
3,546 |
1,462 |
3,546 |
||||
Income Tax Provision (Benefit) |
79 |
3 |
89 |
(59) |
||||
Noncontrolling Interest |
165 |
245 |
269 |
25 |
||||
Loss from Retirement of Debt |
623 |
4,436 |
623 |
5,586 |
||||
Amortization of Deferred Financing Costs |
803 |
833 |
1,607 |
1,687 |
||||
Depreciation of Corporate FF&E |
129 |
164 |
251 |
372 |
||||
Equity in Depreciation and Other Amortization of Joint Ventures (a) |
29 |
55 |
66 |
110 |
||||
NAREIT Compliant Economic Gain (b) |
- |
- |
- |
(262) |
||||
Non-NAREIT Compliant Gain (b) |
(320) |
(13,481) |
(1,055) |
(10,407) |
||||
Non-NAREIT Compliant Gain from Joint Ventures (a) (b) |
(367) |
- |
(3,346) |
- |
||||
EBITDA (b) |
$ 52,546 |
$ 52,563 |
|
|
||||
General and Administrative |
7,032 |
5,401 |
12,553 |
11,864 |
||||
Acquisition Costs |
76 |
- |
111 |
- |
||||
Mark-to-Market Gain on Interest Rate Protection Agreements |
- |
(56) |
- |
(52) |
||||
FFO from Joint Ventures (b) |
(242) |
(145) |
(358) |
(278) |
||||
Net Operating Income ("NOI") (b) |
$ 59,412 |
$ 57,763 |
|
|
||||
RECONCILIATION OF GAIN ON SALE OF REAL ESTATE |
||||||||
TO NAREIT COMPLIANT ECONOMIC GAIN (b) |
||||||||
Gain on Sale of Real Estate |
$ - |
$ - |
$ - |
$ 262 |
||||
Gain on Sale of Real Estate from Discontinued Operations |
320 |
13,481 |
1,055 |
10,407 |
||||
Non-NAREIT Compliant Gain (b) |
(320) |
(13,481) |
(1,055) |
(10,407) |
||||
NAREIT Compliant Economic Gain (b) |
$ - |
$ - |
$ - |
$ 262 |
||||
Weighted Avg. Number of Shares/Units Outstanding - Basic (c) |
114,278 |
112,808 |
114,262 |
109,163 |
||||
Weighted Avg. Number of Shares Outstanding - Basic (c) |
109,815 |
108,117 |
109,746 |
104,466 |
||||
Weighted Avg. Number of Shares/Units Outstanding - Diluted (c) |
114,867 |
112,808 |
114,826 |
109,163 |
||||
Weighted Avg. Number of Shares Outstanding - Diluted (c) |
110,404 |
108,117 |
110,310 |
104,466 |
||||
Per Share/Unit Data: |
||||||||
FFO (NAREIT) |
$ 31,988 |
$ 22,873 |
$ 59,562 |
$ 48,459 |
||||
Less: Allocation to Participating Securities |
(117) |
(99) |
(188) |
(197) |
||||
FFO (NAREIT) Allocable to Common Stockholders and Unitholders |
$ 31,871 |
$ 22,774 |
$ 59,374 |
$ 48,262 |
||||
Basic/Diluted Per Share/Unit (c) |
$ 0.28 |
$ 0.20 |
$ 0.52 |
$ 0.44 |
||||
Income (Loss) from Continuing Operations, including Gain on Sale of Real Estate |
$ 3,606 |
$ (1,355) |
$ 7,892 |
$ (265) |
||||
Add: Noncontrolling Interest Allocable to Continuing Operations and Gain on Sale of Real Estate |
(142) |
281 |
(215) |
425 |
||||
Less: Preferred Dividends |
- |
(2,277) |
(1,019) |
(6,114) |
||||
Less: Redemption of Preferred Stock |
- |
(3,546) |
(1,462) |
(3,546) |
||||
Less: Allocation to Participating Securities |
(37) |
- |
(60) |
- |
||||
Income (Loss) from Continuing Operations Available to |
||||||||
Common Stockholders |
$ 3,427 |
$ (6,897) |
$ 5,136 |
$ (9,500) |
||||
Basic/Diluted Per Share (c) |
$ 0.03 |
$ (0.06) |
$ 0.05 |
$ (0.09) |
||||
Net Income Available |
$ 4,039 |
$ 5,294 |
$ 6,521 |
$ 554 |
||||
Less: Allocation to Participating Securities |
(43) |
(42) |
(75) |
(78) |
||||
Net Income Available to |
$ 3,996 |
$ 5,252 |
$ 6,446 |
$ 476 |
||||
Basic/Diluted Per Share (c) |
$ 0.04 |
$ 0.05 |
$ 0.06 |
$ 0.01 |
||||
Common Dividends/Distributions |
$ 0.1025 |
$ 0.0850 |
$ 0.2050 |
$ 0.1700 |
||||
Balance Sheet Data (end of period): |
||||||||
|
|
|
||||||
Real Estate and Other Assets Held For Sale, Net |
4,058 |
2,085 |
||||||
Total Assets |
2,590,890 |
2,611,718 |
||||||
Debt |
1,382,951 |
1,284,346 |
||||||
Total Liabilities |
1,513,273 |
1,403,971 |
||||||
Total Equity |
|
|
a) Represents the Company's pro rata share of net income (loss), depreciation and amortization on real estate and non-NAREIT compliant gain (loss), if applicable.
b) Investors in, and analysts following, the real estate industry utilize funds from operations ("FFO"), net operating income ("NOI"), EBITDA and adjusted funds from operations ("AFFO"), variously defined below, as supplemental performance measures. While the Company believes net income (loss) available to
As used herein, the Company calculates FFO to be equal to net income (loss) available to
NOI is defined as revenues of the Company, minus property expenses such as real estate taxes, repairs and maintenance, property management, utilities, insurance and other expenses. NOI includes NOI from discontinued operations.
EBITDA is defined as NOI plus the equity in FFO of the Company's joint ventures, which are accounted for under the equity method of accounting, minus mark-to-market gain on interest rate protection agreements, minus general and administrative expenses and acquisition costs. EBITDA includes EBITDA from discontinued operations.
AFFO is defined as EBITDA minus GAAP interest expense, minus capitalized interest and overhead, plus amortization of debt discounts / (premiums) and hedge costs, minus preferred stock dividends, plus or minus straight-line rental income and amortization of above (below) market leases and lease inducements, minus provision for income taxes or plus benefit for income taxes, minus mark-to-market gain on interest rate protection agreements, plus restricted stock amortization, minus non-incremental capital expenditures. Non-incremental capital expenditures are building improvements and leasing costs required to maintain current revenues.
FFO, NOI, 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, EBITDA and AFFO should not be considered as substitutes for net income (loss) 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, EBITDA and AFFO as currently calculated by the Company may not be comparable to similarly titled, but variously calculated, measures of other REITs.
In addition, the Company considers cash-basis same store NOI ("SS NOI") to be a useful supplemental measure of its operating performance. Same store properties, for the period beginning
c) In accordance with GAAP, the diluted weighted average number of shares/units outstanding and the diluted weighted average number of shares outstanding are the same as the basic weighted average number of shares/units outstanding and the basic weighted average number of shares outstanding, respectively, for periods in which continuing operations is a loss, as the dilutive effect of awards that have forfeitable rights to dividends or dividend equivalents (LTIP Unit Awards) would be antidilutive to the loss from continuing operations per share. The Company has conformed with the GAAP computation of diluted common shares in calculating per share amounts for items included on the Statement of Operations, including FFO and AFFO.
GAAP requires unvested equity based compensation awards that have nonforfeitable rights to dividends or dividend equivalents (restricted stock) ("participating securities") to be included in the two class method of the computation of EPS. Under the two class method, participating security holders are allocated income, in proportion to total weighted average shares outstanding, based upon the greater of net income (after reduction for preferred dividends and redemption of preferred stock) or common dividends declared. The Company conforms the calculation of FFO and AFFO with the calculation of EPS during periods in which common dividends are declared.
d) A one-time restoration fee is excluded from the calculation of AFFO. The adjustment also reduces building improvements by
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