First Industrial Realty Trust's Q1 net loss narrows to US$4.4M from US$18.8M in year-ago period, primarily due to lower bad debt, landlord expenses, interest costs
April 27, 2011
– First Industrial Realty Trust, Inc. (NYSE: FR), a leading owner and operator of industrial real estate and provider of supply chain solutions, today announced results for first quarter 2011. Diluted net (loss) available to common stockholders per share (EPS) was ($0.12) in the first quarter, compared to ($0.35) a year ago.
First Industrial's first quarter FFO was $0.20 per share/unit on a diluted basis, compared to $0.11 per share/unit a year ago.
FFO per share results for the first quarter of 2011 include a $0.02 restructuring charge related to the sublease of corporate office space and $0.01 loss on early retirement of debt. Excluding these one time items, FFO was $0.23 per share.
"Industrial real estate fundamentals continue to improve as companies invest for growth and require additional space to meet customer demand," said Bruce W. Duncan, First Industrial's president and CEO. "Our first quarter operating results before one time items were better than anticipated as a result of lower bad debt and landlord expenses and lower interest costs, which offset the net dilution from our recent equity offering in our full year FFO guidance."
Portfolio Performance for On Balance Sheet Properties - First Quarter 2011
* In-service occupancy was 84.7% at the end of the quarter, compared to 85.0% at the end of the fourth quarter 2010, and 81.4% at the end of the first quarter of 2010.
* Retained tenants in 78.0% of square footage up for renewal.
* Excluding lease termination fees, same property cash basis net operating income (NOI) declined 1.0%. Including lease termination fees, same property NOI declined 0.9%.
* Rental rates decreased 10.0% on a cash basis; leasing costs were $2.01 per square foot, lower than the prior quarter due to a higher proportion of renewals to new leases.
Capital Markets Activities and Financial Position (Balance Sheet Information)
In the first quarter, the Company:
* Completed the sale of 13 industrial properties on balance sheet totaling approximately 697,000 square feet of gross leaseable area (GLA), for total aggregate gross proceeds of approximately $18.6 million. All first quarter property sales were from the Company's non-strategic property pool.
* Retired a $14.5 million mortgage loan with an interest rate of 6.75% and an $18.7 million mortgage loan with an interest rate of 7.50% prior to their original maturities.
* Completed in March 2011 the issuance of 8.9 million shares of the Company's common stock at a price of $11.30 per share net, generating approximately $100 million in proceeds.
* Obtained a commitment for a secured financing transaction expected to generate gross proceeds in excess of $175 million at an interest rate of approximately 4.45%, with a maturity of seven years. The secured financing transaction is expected to close on May 2, 2011, but remains subject to lender due diligence and documentation. There can be no assurance that it will close or generate the expected proceeds.
* Established a new "at the market" equity offering program in February through which the Company may from time to time sell up to 10 million common shares with an aggregate gross sales price of up to $100 million. The Company did not issue any shares via this program in the first quarter.
In the second quarter of 2011 to date, the Company:
* Completed the sale of three industrial properties totaling approximately 314,000 square feet of GLA for gross proceeds of approximately $11.6 million.
* Retired a $27.4 million mortgage loan on April 1, 2011 with an interest rate of 7.50% prior to its original maturity.
"We continue to execute on our capital markets strategy to reduce overall leverage, manage our upcoming maturities, and position the Company for future investment and growth," said Scott Musil, chief financial officer.
Common Dividend Policy
First Industrial's dividend policy is to distribute the minimum amount required to maintain its REIT status. The Company did not declare any common stock dividends in 2010 and may not pay common stock dividends in 2011, depending on its taxable income. If required to pay common stock dividends in 2011, the Company may elect to satisfy this obligation by distributing a combination of cash and common shares.
Outlook for 2011
Mr. Duncan stated, "We expect our portfolio occupancy to trend positively throughout the year, as tenants' supply chain requirements grow in an expanding economy. Rental rates continue to be impacted by the amount of competing supply in most of our markets."
The following assumptions were used:
* Average in-service occupancy for 2011 of 85.0% to 87.0%
* Same-store NOI of -1% to 1% for the full year
* JV FFO of $1.3 million, an increase of $0.2 million from prior guidance related to additional economics in 1Q11 from joint ventures concluded in 2010
* General and administrative expense of approximately $23 million to $24 million
* Restructuring charges of approximately $1.5 million, or $0.02 per share, primarily related to the partial sublease of corporate office space, the majority of which was incurred in the first quarter of 2011.
* Losses from early retirement of debt of $0.03 per share, $0.01 per share of which was incurred in the first quarter
* Issuance of $175 million of secured debt at an interest rate of approximately 4.45% in the second quarter, with proceeds to be used to paydown or retire other outstanding debt
* Guidance reflects $0.03 per share net dilution from issuance of 8.9 million common shares in March 2011 equity offering.
* The Company plans to sell additional properties in 2011 depending upon market conditions, including previously depreciated assets, the impact of which is not included in our FFO and EPS guidance above.
* FFO and EPS guidance does not include the impact of issuing additional equity for the remainder of 2011, 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 North America, the supply and demand of industrial real estate, the availability and terms of financing to potential acquirers of real estate, the timing and yields for divestment and investment, and numerous other variables. There can be no assurance that First Industrial can achieve such results.
First Industrial reports FFO in accordance with the NAREIT definition to provide a comparative measure to other REITs. NAREIT recommends that REITs define FFO as net income, excluding gains (or losses) from the sale of previously depreciated property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.
About First Industrial Realty Trust, Inc.
First Industrial Realty Trust, Inc. (NYSE: FR) is a leading owner and operator of industrial real estate and provider of supply chain solutions to multinational corporations and regional customers. Across major markets in North America, our local market experts manage, lease, buy, (re)develop, and sell bulk and regional distribution centers, light industrial, and other industrial facility types. We have a track record of industry leading customer service, and in total, we own, manage and have under development 73 million square feet of industrial space. For more information, please visit us at www.firstindustrial.com. We post or otherwise make available on this website from time to time information that may be of interest to investors.
Industry Intelligence Editor's Note: In an omitted table, the company reported a Q1 net loss of US$4.4 million, compared to a loss of US$18.8 million a year ago. Revenues were US$71.9 million, versus US$74.3 million a year ago.