First Industrial Realty Trust Reports First Quarter 2022 Results
First Industrial Realty Trust (NYSE: FR) reported strong first-quarter 2022 results, with cash same-store NOI up by 14.4% and occupancy at 98.0%. Cash rental rates increased by 12.7%. The company signed 72% of 2022 rollovers at a 20% cash rental rate increase and commenced five new developments totaling 1.3 million square feet with an estimated investment of $168 million. The FFO guidance was raised to $2.10 to $2.20 per share. The quarterly dividend increased by 9.3% to $0.295 per share.
- Cash same-store NOI increased 14.4%.
- Occupancy reached 98.0%.
- Cash rental rates rose by 12.7%.
- Secured 72% of 2022 rollovers at a 20% cash rental rate increase.
- Started five developments totaling 1.3 million square feet with a $168 million investment.
- Increased FFO guidance by $0.01 to $2.10 to $2.20 per share.
- Raised quarterly dividend by 9.3% to $0.295 per share.
- Diluted EPS decreased to $0.27 from $0.48 year-over-year.
- Cash Same Store NOI Grew
14.4% ; Occupancy of98.0% ; Cash Rental Rates Up12.7% - Signed
72% of 2022 Rollovers To-Date at a Cash Rental Rate Increase of20% - Started Five Developments in the First Quarter Totaling 1.3 Million Square Feet, Estimated Investment of
$168 Million - Announced a Planned Development Start for Second Quarter of 83,000 Square Feet in the Inland Empire, Estimated Investment of
$21 Million - In-Process Developments Plus Planned 2Q22 Start Total
$751 Million of Estimated Investment and 6.3 Million Square Feet - 2022 FFO Guidance Increased
$0.01 at the Midpoint to$2.10 to$2.20 Per Share/Unit - In 2Q22, Closed New
$425 Million Unsecured Term Loan Which Refinances the$260 Million Term Loan Previously Scheduled to Mature in 2022 - Increased First Quarter 2022 Dividend to
$0.29 5 Per Share, a9.3% Increase
CHICAGO, April 20, 2022 /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 first quarter of 2022. First Industrial's diluted net income available to common stockholders per share (EPS) was
"Our team delivered another quarter of excellent operating results while serving the logistics needs of a broad range of customers," said Peter E. Baccile, First Industrial's president and chief executive officer. "Industrial real estate fundamentals remain strong with low vacancy levels in our markets contributing to a favorable environment for rent growth."
Portfolio Performance
- In service occupancy was
98.0% at the end of the first quarter of 2022, compared to98.1% at the end of the fourth quarter of 2021, and95.7% at the end of the first quarter of 2021. - Rental rates increased
12.7% on a cash basis and increased25.5% on a straight-line basis. - The Company, to-date, has signed approximately
72% of 2022 rollovers by square footage at a cash rental rate increase of20% . - Same property cash basis net operating income before termination fees ("SS NOI") increased
14.4% reflecting higher average occupancy, increases in rental rates on new and renewal leasing, contractual rent escalations and lower free rent. - Tenant retention of square footage up for renewal was
72.3% and leasing costs were$2.45 per square foot.
Development Leasing
During the first quarter, the Company:
- Leased 66,000 square feet at its 133,000 square-foot First Park Miami Building 9 in South Florida.
- Leased 100,000 square feet at its 200,000 square-foot First Park Miami Building 11 in South Florida.
Investment and Disposition Activities
In the first quarter, the Company:
- Commenced development of five projects totaling 1.3 million square feet, with an estimated total investment of
$168 million comprised of: - First Lehigh Logistics Center in the Lehigh Valley - 105,000 square feet;
$16 million estimated investment. - First 76 Logistics Center in Denver - 200,000 square feet;
$34 million estimated investment. - First Park 94 Building D in the Chicago market - 451,000 square feet;
$38 million estimated investment. - First Park Miami Building 10 in South Florida - 198,000 square feet;
$37 million estimated investment. - First Rider Logistics Center in the Inland Empire - 324,000 square feet;
$44 million estimated investment. - Acquired three sites in the Inland Empire and one in Northern California for
$55 million that can support up to 710,000 square feet of development. - Acquired two buildings totaling 41,000 square feet in the Inland Empire and Los Angeles plus a leased land site in Northern California for
$28 million .
In the second quarter, the Company:
- Plans to commence development of one project comprised of:
- First Elm Logistics Center in the Inland Empire - 83,000 square feet;
$21 million estimated investment. - Acquired a 15,000 square-foot building in the Oakland market of Northern California for
$8 million .
Capital
On April 18, 2022, the Company:
- Closed a new
$425 million unsecured term loan facility that refinances its$260 million unsecured term loan facility previously scheduled to mature in September of this year. The additional proceeds will be used to pay off a maturing mortgage loan this year and pay down the line of credit. The new term loan matures on October 18, 2027 and provides for interest-only payments currently at an interest rate of SOFR plus a SOFR adjustment of 10 basis points plus a credit spread of 85 basis points based on the Company's current credit ratings and consolidated leverage ratio. This is a 25 basis point reduction in the credit spread compared to the prior term loan.
"We are pleased to close on this new
Common Stock Dividend
In the first quarter, the Company:
- Paid a common dividend of
$0.29 5 per share/unit for the quarter ending March 31, 2022 on April 18, 2022 to stockholders of record on March 31, 2022. The new dividend rate represented an9.3% increase from the prior rate of$0.27 per share/unit.
Outlook for 2022
"Given our first quarter performance and our outlook for the remainder of the year, we are increasing our midpoint FFO guidance by
Low End of | High End of | |||
Guidance for 2022 | Guidance for 2022 | |||
(Per share/unit) | (Per share/unit) | |||
Net Income | $ 1.04 | $ 1.14 | ||
Add: Real Estate Depreciation/Amortization | 1.06 | 1.06 | ||
FFO (NAREIT Definition) | $ 2.10 | $ 2.20 |
The following assumptions were used for guidance:
- Average quarter-end in service occupancy of
97.5% to98.5% , an increase of 25 basis points at the midpoint. This reflects anticipated incremental leasing in the overall portfolio expected to more than offset a revised lease-up assumption for the 644,000 square-foot facility in Baltimore from 2Q22 to 4Q22. - Same store NOI growth on a cash basis before termination fees of
7.75% to8.75% for the full year, an increase of 50 basis points at the midpoint. - General and administrative expense of approximately
$33.5 million to$34.5 million . - Includes the incremental costs expected in 2022 related to the Company's developments completed and under construction as of March 31, 2022 and the aforementioned planned second quarter start of First Elm Logistics Center. In total, the Company expects to capitalize
$0.09 per share of interest in 2022. - Reflects the aforementioned
$425 million term loan transaction that refinances the$260 million term loan and the expected payoff of a$67 million mortgage loan coming due in 3Q22. - Other than the transactions discussed in this release, guidance does not include the impact of:
- any future debt repurchases prior to maturity or future debt issuances,
- any future investments or property sales, or
- any future equity issuances.
Conference Call
First Industrial will host its quarterly conference call on Thursday, April 21, 2022 at 10:00 a.m. CDT (11:00 a.m. EDT). The conference call may be accessed by dialing (866) 542-2938 and entering the conference ID 9392409. 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 first quarter 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 68.6 million square feet of industrial space as of March 31, 2022. For more information, please visit us at www.firstindustrial.com.
Forward-Looking Information
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) 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; 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 | ||||
March 31, | March 31, | |||
2022 | 2021 | |||
Statements of Operations and Other Data: | ||||
Total Revenues | $ 125,513 | $ 116,259 | ||
Property Expenses | (35,415) | (33,242) | ||
General and Administrative | (8,741) | (8,564) | ||
Depreciation of Corporate FF&E | (230) | (188) | ||
Depreciation and Other Amortization of Real Estate | (33,680) | (31,787) | ||
Total Expenses | (78,066) | (73,781) | ||
Gain on Sale of Real Estate | — | 34,645 | ||
Interest Expense | (9,636) | (12,673) | ||
Amortization of Debt Issuance Costs | (756) | (949) | ||
Income from Operations Before Equity in Loss of Joint Ventures and Income Tax Benefit | $ 37,055 | $ 63,501 | ||
Equity in Loss of Joint Ventures | (22) | (73) | ||
Income Tax Benefit | 90 | 155 | ||
Net Income | $ 37,123 | $ 63,583 | ||
Net Income Attributable to the Noncontrolling Interests | (865) | (1,385) | ||
Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders and Participating Securities | $ 36,258 | $ 62,198 | ||
RECONCILIATION OF NET INCOME AVAILABLE TO FIRST INDUSTRIAL REALTY TRUST, INC.'S COMMON STOCKHOLDERS AND PARTICIPATING SECURITIES TO FFO (a) AND AFFO (a) | ||||
Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders and Participating Securities | $ 36,258 | $ 62,198 | ||
Depreciation and Other Amortization of Real Estate | 33,680 | 31,787 | ||
Noncontrolling Interests | 865 | 1,385 | ||
Gain on Sale of Real Estate | — | (34,645) | ||
Income Tax Provision - Allocable to Gain on Sale of Real Estate | — | 79 | ||
Funds From Operations ("FFO") (NAREIT) (a) | $ 70,803 | $ 60,804 | ||
Amortization of Equity Based Compensation | 5,101 | 3,613 | ||
Amortization of Debt Discounts and Hedge Costs | 104 | 104 | ||
Amortization of Debt Issuance Costs | 756 | 949 | ||
Depreciation of Corporate FF&E | 230 | 188 | ||
Non-incremental Building Improvements | (721) | (2,350) | ||
Non-incremental Leasing Costs | (6,329) | (4,619) | ||
Capitalized Interest | (4,070) | (1,923) | ||
Capitalized Overhead | (2,613) | (1,623) | ||
Straight-Line Rent, Amortization of Above (Below) Market Leases and Lease Inducements | (4,152) | (5,428) | ||
Adjusted Funds From Operations ("AFFO") (a) | $ 59,109 | $ 49,715 | ||
RECONCILIATION OF NET INCOME AVAILABLE TO FIRST INDUSTRIAL REALTY TRUST, INC.'S COMMON STOCKHOLDERS AND PARTICIPATING SECURITIES TO ADJUSTED EBITDA (a) AND NOI (a) | Three Months Ended | |||
March 31, | March 31, | |||
2022 | 2021 | |||
Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders and Participating Securities | $ 36,258 | $ 62,198 | ||
Interest Expense | 9,636 | 12,673 | ||
Depreciation and Other Amortization of Real Estate | 33,680 | 31,787 | ||
Income Tax Benefit - Not Allocable to Gain on Sale of Real Estate | (90) | (234) | ||
Income Tax Provision - Allocable to Gain on Sale of Real Estate | — | 79 | ||
Noncontrolling Interests | 865 | 1,385 | ||
Amortization of Debt Issuance Costs | 756 | 949 | ||
Depreciation of Corporate FF&E | 230 | 188 | ||
Gain on Sale of Real Estate | — | (34,645) | ||
Adjusted EBITDA (a) | $ 81,335 | $ 74,380 | ||
General and Administrative | 8,741 | 8,564 | ||
FFO from Joint Ventures | 22 | 73 | ||
Net Operating Income ("NOI") (a) | $ 90,098 | $ 83,017 | ||
Non-Same Store NOI | (871) | (2,400) | ||
Same Store NOI Before Same Store Adjustments (a) | $ 89,227 | $ 80,617 | ||
Straight-line Rent | (2,792) | (4,875) | ||
Above (Below) Market Lease Amortization | (231) | (287) | ||
Lease Termination Fees | — | (119) | ||
Same Store NOI (Cash Basis without Termination Fees) (a) | $ 86,204 | $ 75,336 | ||
Weighted Avg. Number of Shares/Units Outstanding - Basic | 134,073 | 131,172 | ||
Weighted Avg. Number of Shares Outstanding - Basic | 131,811 | 129,088 | ||
Weighted Avg. Number of Shares/Units Outstanding - Diluted | 134,495 | 131,634 | ||
Weighted Avg. Number of Shares Outstanding - Diluted | 131,885 | 129,172 | ||
Per Share/Unit Data: | ||||
Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders and Participating Securities | $ 36,258 | $ 62,198 | ||
Less: Allocation to Participating Securities | (31) | (61) | ||
Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders | $ 36,227 | $ 62,137 | ||
Basic and Diluted Per Share | $ 0.27 | $ 0.48 | ||
FFO (NAREIT) (a) | $ 70,803 | $ 60,804 | ||
Less: Allocation to Participating Securities | (156) | (153) | ||
FFO (NAREIT) Allocable to Common Stockholders and Unitholders | $ 70,647 | $ 60,651 | ||
Basic & Diluted Per Share/Unit | $ 0.53 | $ 0.46 | ||
Common Dividends/Distributions Per Share/Unit | $ 0.295 | $ 0.270 | ||
Balance Sheet Data (end of period): | March 31, 2022 | December 31, 2021 | ||
Gross Real Estate Investment | $ 4,857,645 | $ 4,646,444 | ||
Total Assets | 4,378,873 | 4,179,098 | ||
Debt | 1,765,672 | 1,610,020 | ||
Total Liabilities | 2,106,498 | 1,930,726 | ||
Total Equity | 2,272,375 | 2,248,372 | ||
(a) 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.
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, 2021 and held as an in service property through the end of the current reporting period (including certain land parcels that are leased under ground lease arrangements where we are the lessor), and developments and redevelopments that were placed in service prior to January 1, 2021 (the "Same Store Pool"). Properties which are at least
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 our joint ventures, 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.
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