First Industrial Realty Trust Reports Fourth Quarter and Full Year 2018 Results

Low End of 

High End of 

Guidance for 2019

Guidance for 2019

(Per share/unit)

(Per share/unit)

Net Income

0.71

0.81

Add:   Real Estate Depreciation/Amortization

0.93

0.93

FFO (NAREIT Definition)

$1.64

$1.74

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,

2018

2017

2018

2017

Statement of Operations and Other Data:

    Total Revenues

$       105,082

$       102,130

$       403,954

$       396,402

    Property Expenses

(30,424)

(29,659)

(116,854)

(113,494)

    General and Administrative (a) 

(6,279)

(6,769)

(27,749)

(28,079)

    Impairment of Real Estate 

-

-

(2,756)

-

    Depreciation of Corporate FF&E 

(223)

(246)

(800)

(747)

    Depreciation and Other Amortization of Real Estate 

(30,640)

(28,888)

(115,659)

(115,617)

        Total Expenses

(67,566)

(65,562)

(263,818)

(257,937)

    Gain on Sale of Real Estate 

28,309

79,129

81,600

131,269

    Interest Expense 

(12,957)

(13,539)

(50,775)

(57,199)

    Amortization of Debt Issuance Costs 

(854)

(826)

(3,404)

(3,162)

    Mark-to-Market and Settlement Gain on Derivative Instruments 

-

48

-

1,896

    Loss from Retirement of Debt 

-

(122)

(39)

(1,775)

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

52,014

101,258

167,518

209,494

    Equity in Loss of Joint Venture 

(77)

-

(276)

-

    Income Tax (Provision) Benefit 

(1)

43

92

(1,193)

         Net Income 

51,936

101,301

167,334

208,301

    Net Income Attributable to the Noncontrolling Interest 

(1,109)

(3,314)

(4,095)

(6,845)

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

$         50,827

$         97,987

$       163,239

$       201,456

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 

$         50,827

$         97,987

$       163,239

$       201,456

     Depreciation and Other Amortization of Real Estate 

30,640

28,888

115,659

115,617

     Impairment of Depreciable Real Estate 

-

-

2,285

-

     Noncontrolling Interest 

1,109

3,314

4,095

6,845

     Gain on Sale of Depreciable Real Estate 

(28,249)

(78,918)

(80,909)

(131,058)

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

$         54,327

$         51,271

$       204,369

$       192,860

     Loss from Retirement of Debt 

-

122

39

1,775

     Restricted Stock/Unit Amortization 

1,897

1,844

7,586

8,611

     Amortization of Debt (Premiums)/Discounts and Hedge Costs 

(10)

(15)

(44)

59

     Amortization of Debt Issuance Costs 

854

826

3,404

3,162

     Depreciation of Corporate FF&E 

223

246

800

747

     Impairment of Non-Depreciable Real Estate 

-

-

471

-

     Mark-to-Market and Settlement Gain on Derivative Instruments 

-

(48)

-

(1,896)

     Gain on Sale of Non-Depreciable Real Estate 

(60)

(211)

(691)

(211)

     Non-incremental Building Improvements 

(5,410)

(4,561)

(14,065)

(14,982)

     Non-incremental Leasing Costs 

(6,990)

(7,526)

(24,297)

(23,505)

     Capitalized Interest 

(1,002)

(1,339)

(5,869)

(4,353)

     Capitalized Overhead 

(727)

(121)

(1,714)

(355)

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

(901)

(1,276)

(2,479)

(5,632)

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

$         42,201

$         39,212

$       167,510

$       156,280

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

Twelve Months Ended

December 31,

December 31,

December 31,

December 31,

2018

2017

2018

2017

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

$         50,827

$         97,987

$       163,239

$       201,456

     Interest Expense 

12,957

13,539

50,775

57,199

     Depreciation and Other Amortization of Real Estate 

30,640

28,888

115,659

115,617

     Impairment of Real Estate 

-

-

2,756

-

     Severance Expense (a) 

-

-

1,298

-

     Income Tax Provision (Benefit) 

1

(43)

(92)

1,193

     Noncontrolling Interest 

1,109

3,314

4,095

6,845

     Loss from Retirement of Debt 

-

122

39

1,775

     Mark-to-Market and Settlement Gain on Derivative Instruments 

-

(48)

-

(1,896)

     Amortization of Debt Issuance Costs 

854

826

3,404

3,162

     Depreciation of Corporate FF&E 

223

246

800

747

     Gain on Sale of Real Estate 

(28,309)

(79,129)

(81,600)

(131,269)

     Adjusted EBITDA (b) 

$         68,302

$         65,702

$       260,373

$       254,829

     General and Administrative (a) 

6,279

6,769

26,451

28,079

     FFO from Joint Venture 

77

-

276

-

     Net Operating Income ("NOI") (b) 

$         74,658

$         72,471

$       287,100

$       282,908

     Non-Same Store NOI 

(5,368)

(6,428)

(18,280)

(25,129)

     Same Store NOI Before Same Store Adjustments (b) 

$         69,290

$         66,043

$       268,820

$       257,779

     Straight-line Rent 

756

(711)

1,020

(2,971)

     Above (Below) Market Lease Amortization 

(211)

(222)

(817)

(988)

     Lease Termination Fees 

(952)

(138)

(1,213)

(773)

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

$         68,883

$         64,972

$       267,810

$       253,047

Weighted Avg. Number of Shares/Units Outstanding - Basic

128,526

123,483

126,921

122,306

Weighted Avg. Number of Shares Outstanding - Basic

125,897

119,462

123,804

118,272

Weighted Avg. Number of Shares/Units Outstanding - Diluted

128,878

124,097

127,308

122,821

Weighted Avg. Number of Shares Outstanding - Diluted

126,249

120,076

124,191

118,787

Per Share/Unit Data:

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

$         50,827

$         97,987

$       163,239

$       201,456

 Less: Allocation to Participating Securities 

(164)

(331)

(513)

(646)

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

$         50,663

$         97,656

$       162,726

$       200,810

 Basic Per Share 

$             0.40

$             0.82

$             1.31

$             1.70

 Diluted Per Share 

$             0.40

$             0.81

$             1.31

$             1.69

 FFO (NAREIT) (b) 

$         54,327

$         51,271

$       204,369

$       192,860

 Less: Allocation to Participating Securities 

(172)

(168)

(625)

(600)

 FFO (NAREIT) Allocable to Common Stockholders and Unitholders 

$         54,155

$         51,103

$       203,744

$       192,260

 Basic Per Share/Unit 

$             0.42

$             0.41

$             1.61

$             1.57

 Diluted Per Share/Unit 

$             0.42

$             0.41

$             1.60

$             1.57

 Common Dividends/Distributions Per Share/Unit 

$         0.2175

$         0.2100

$         0.8700

$         0.8400

Balance Sheet Data (end of period):

      Gross Real Estate Investment

$    3,673,644

$    3,495,745

      Total Assets

3,142,691

2,941,062

      Debt

1,297,783

1,296,997

      Total Liabilities

1,462,780

1,465,185

      Total Equity

$    1,679,911

$    1,475,877

Twelve Months Ended

December 31, 2018

     General and Administrative per the Form 10-Q

27,749

     Severance Expense

(1,298)

     General and Administrative per Reconciliation within the Selected Financial Data

b) 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 twelve months ended December 31, 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 (including nine land parcels that are leased under ground lease arrangements), 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, gains and losses on the sale of real estate, equity in income or loss from our joint venture, mark-to-market and settlement gains and losses on derivative instruments, 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.

In December 2018, NAREIT issued a white paper restating the definition of FFO. The purpose of the restatement was not to change the fundamental definition of FFO, but to clarify existing NAREIT guidance.  The restated definition of FFO is a follows:  Net Income (calculated in accordance with GAAP), excluding: (i) Depreciation and amortization related to real estate, (ii) Gains and losses from the sale of certain real estate assets, (iii) Gain and losses from change in control, and (iv) Impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. This restated definition provides an option to include or exclude gains and losses as well as impairment on non-depreciable real estate if the sales are deemed incidental. We currently include gains and losses as well as impairment related to our non-depreciable real estate that we deem incidental in our calculation of NAREIT FFO.  Commencing on January 1, 2019 we will adopt the restated definition of NAREIT FFO on a prospective basis and will exclude gains and losses as well as impairment on our non-depreciable real estate that we deem incidental.