First Industrial Realty Trust, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. The filing combines the Company and First Industrial, L.P.; the Company owns approximately 97.8% of the Operating Partnership. The industrial real estate portfolio comprised 423 properties across 20 states and approximately 62.1 million square feet.
Key financial results
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Total revenue | $121.1 million | $116.2 million | $354.7 million | $335.7 million |
| Net income | $43.4 million | $36.7 million | $160.2 million | $114.7 million |
| Common stock EPS, diluted | $0.33 | $0.28 | $1.21 | $0.88 |
| FFO available to common stockholders and participating securities | $66.3 million | $63.0 million | $188.3 million | $178.2 million |
| Same-store NOI | $79.1 million; up 6.9% | $74.0 million | $229.4 million; up 3.3% | $222.2 million |
Revenue increased 4.2% in Q3 and 5.7% for the nine-month period. Net income rose 18.3% and 39.7%, respectively. The nine-month earnings comparison was significantly boosted by real estate sale gains: $66.4 million in 2021 versus $29.6 million in 2020. The filing does not present a conventional operating margin measure; same-store NOI growth was 6.9% for Q3 and 3.3% year to date. Excluding a $1.1 million insurance settlement included in 2020, year-to-date same-store NOI growth was 3.7%.
Q3 same-store occupancy averaged 97.3%, compared with 96.7% a year earlier; nine-month same-store occupancy averaged 96.4%, versus 96.8%. The company reported 97.1% in-service occupancy at quarter-end, up 140 basis points from December 2020. Cash rental rates on new and renewal leases increased 22.8% in Q3 and 15.9% for the first nine months.
Cash flow, debt and liquidity
- Nine-month operating cash flow was $196.4 million, compared with $190.1 million in 2020. Investing used $291.6 million and financing used $43.5 million; cash, cash equivalents and restricted cash declined by $138.6 million to $61.0 million.
- At September 30, cash and cash equivalents were $52.3 million and restricted cash was $8.8 million. The company reported $670.7 million available under its $750 million revolving credit facility.
- Total debt was approximately $1.616 billion, versus $1.603 billion at year-end 2020. Approximately 95.4% was fixed-rate, including debt hedged with swaps. The reported fair value of debt was $1.706 billion.
- The revolver was amended with maturity extended to July 2025; a $200 million term loan was extended to July 2026. The company paid off $57.9 million of mortgages, and 95.7% of its real estate was unencumbered at quarter-end.
- Management anticipated paying $72.4 million of mortgage loans before September 30, 2022. The debt maturity schedule also lists $332.0 million due in 2022, including the $260 million 2015 term loan due in September 2022.
Material changes, outlook and risks
- During the first nine months, the company acquired four industrial properties and approximately 455.8 acres of development land, commenced 14 buildings totaling 5.0 million square feet, and sold 12 properties, seven condominium units and one land parcel for gross proceeds of $118.6 million.
- At quarter-end, 17 properties totaling approximately 5.6 million square feet were under construction. Estimated total investment was $594.7 million, with approximately $355.6 million remaining to fund; actual costs could exceed estimates.
- The company issued approximately 1.08 million shares through its at-the-market program for $59.0 million net proceeds. Quarterly dividends increased 8% from the 2020 rate to $0.27 per share or unit.
- No quantitative earnings guidance was provided. Management said it expected short-term needs to be funded by operating cash flow, asset dispositions and, as needed, debt or equity issuance or revolver borrowings; longer-term needs may be funded similarly. Management reported covenant compliance and expected to remain compliant over the next 12 months.
- Management described the pandemic’s impact to date as minimal but said future effects remain uncertain. Other risks include leasing and occupancy trends, development cost overruns or delays, financing availability and rates, covenant compliance, property market conditions, and joint-venture risks. LIBOR publication is expected to end after June 30, 2023; the company was assessing transition risks.
- The filing reported no material change in risk factors from the 2020 Form 10-K, no legal proceedings expected to have a material adverse effect, and effective disclosure controls. One joint venture’s land sale generated income and incentive fees that were deferred against the basis of land acquired by the company.
Important facts for investors to verify
- Near-term refinancing and repayment plans for the $332.0 million scheduled 2022 maturities, particularly the $260 million term loan.
- Leasing, occupancy and rent-growth trends, including whether strong Q3 cash rental-rate increases continue.
- Development delivery, lease-up, remaining funding requirements and potential cost overruns on the construction pipeline.
- How much reported earnings growth reflects recurring property operations versus real estate sale gains and other unusual items.
- Available liquidity and covenant headroom as acquisition, development and distribution needs evolve.