First Industrial Realty Trust, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. First Industrial Realty Trust is a REIT whose operations are conducted primarily through First Industrial, L.P.; the Company owned approximately 97.3% of the Operating Partnership at quarter-end. The portfolio comprised 421 industrial properties across 19 states, totaling approximately 66.7 million square feet.
Financial and operating performance
| Metric | Q1 2024 | Q1 2023 | Change / context |
|---|---|---|---|
| Total revenue | $162.3 million | $149.4 million | Up 8.6%; lease revenue was $159.7 million, up from $146.6 million. |
| Net income | $70.5 million | $60.8 million | Up 16.0%; Q1 2024 included a $30.9 million property-sale gain. |
| Net income per common share | $0.52 | $0.42 | Company-reported diluted and basic EPS. |
| FFO available to common stockholders and participating securities | $79.7 million | $77.6 million | Up approximately 2.7%; non-GAAP measure. |
| Same-store NOI | $108.9 million | $102.0 million | Up 6.8%; non-GAAP measure. |
| Cash provided by operating activities | $62.5 million | $70.3 million | Down $7.8 million. |
| Cash and cash equivalents | $48.9 million on balance sheet | $43.8 million at year-end 2023 | Management cited $48.3 million after excluding the joint-venture partner’s share. |
Property expenses rose 11.5% to $47.0 million, faster than revenue growth. Same-store revenue increased 4.7%, while same-store property expenses increased 8.4%. Same-store average daily occupancy was 96.8%, compared with 98.6% a year earlier; quarter-end in-service occupancy was 95.5%.
For new and renewal leases commencing in the quarter, management reported cash rental-rate increases of 44.8%. The leasing table separately reported 67.2% weighted-average straight-line rent growth for applicable new and renewal leases; these measures use different presentations and should not be conflated.
Debt, liquidity and capital allocation
Total debt was approximately $2.24 billion at March 31, 2024, compared with $2.23 billion at December 31, 2023. The weighted-average debt balance during the quarter was $2.26 billion, at a 4.18% weighted-average interest rate, versus $2.07 billion and 3.94% in Q1 2023. Interest expense increased 29.6% to $20.9 million.
Approximately 86.3% of debt was fixed-rate, including $925 million of variable-rate term loans effectively fixed with swaps; 13.7% was variable-rate. The company reported $442.9 million available under its $750 million unsecured credit facility at quarter-end and $398.9 million available as of April 19, 2024. Management said the next debt maturity is not until 2026, assuming exercise of extension options on two bank loans. The company reported compliance with debt covenants.
Operating cash flow was $62.5 million; investing activities used $19.0 million, including $68.4 million of real-estate additions and $47.8 million of net sale proceeds; financing activities used $38.4 million. The quarterly dividend was $0.37 per share or unit, a 15.6% increase from the 2023 quarterly rate. Management expects near-term needs to be funded primarily from operating cash flow and selected asset sales, with debt or equity financing and credit-facility borrowings also available subject to market conditions.
Material changes, outlook and notable items
- Q1 net income included $30.9 million of gains from selling nine properties totaling approximately 0.4 million square feet, for gross proceeds of $48.5 million.
- Joint-venture income fell to $1.4 million from $27.6 million. Q1 2023 included the company’s share of a land-sale gain and an $8.0 million incentive fee; Q1 2024 joint-venture income was primarily rental income.
- Same-store occupancy declined year over year, while same-store NOI increased, supported by rental rates and tenant recoveries. Management attributed higher property expenses mainly to real-estate taxes and snow removal.
- Four development projects totaling approximately 1.4 million square feet were under construction, with estimated total investment of $203 million and approximately $62.9 million remaining to fund. Separately, the joint venture had three buildings totaling 1.8 million square feet under development, with a completion guarantee from the company. Management did not expect significant payments under the guarantees, but actual development costs could exceed estimates.
- Management provided no specific numerical earnings or operating guidance in the supplied filing text. It described ongoing priorities including lease renewals and re-leasing, development and selective acquisitions, and disposing of assets to redeploy capital.
- Interest-rate, refinancing, covenant, tenant default or non-renewal, occupancy, rent, construction-cost, development, environmental, and joint-venture risks remain relevant. A 10% increase in the SOFR component was estimated to increase quarterly interest expense by approximately $0.5 million based on average floating-rate debt.
- The filing reported no material change to previously disclosed risk factors, no legal proceedings expected to materially affect the company, and no subsequent events through issuance. Disclosure controls were reported effective.
Key investor verification points
- Assess recurring earnings apart from property-sale gains and the unusually large Q1 2023 joint-venture gain and incentive fee; compare GAAP net income with FFO and cash flow.
- Track occupancy, lease commencements, renewal spreads, tenant recoveries, and whether rent growth offsets same-store expense increases.
- Review debt maturities, extension-option conditions, variable-rate exposure, credit-facility availability, interest costs, and covenant headroom.
- Monitor remaining development funding, construction budgets and lease-up, including the joint-venture completion guarantee and other contingent obligations.
- Confirm liquidity and dividend coverage against operating cash flow, planned capital spending, asset-sale proceeds, and financing needs.