First Industrial Realty Trust, Inc. — Q1 2021 Form 10-Q
Business context and reporting period. First Industrial owns, operates, acquires, sells and develops U.S. industrial real estate. This unaudited report covers the three months ended March 31, 2021, with comparison to Q1 2020. At quarter-end, the portfolio comprised 428 properties across 20 states, totaling approximately 62.1 million square feet. The Company conducts substantially all operations through First Industrial, L.P., in which it held an approximately 97.7% interest.
Key financial results
| Metric | Q1 2021 | Q1 2020 / comparison |
|---|---|---|
| Total revenue | $116.3 million | $110.3 million; up 5.4% |
| Net income | $63.6 million | $41.5 million |
| Net income available to common stockholders | $62.2 million; $0.48 per share | $40.6 million; $0.32 per share |
| Cash from operating activities | $41.4 million | $40.3 million |
| Funds from operations (FFO), available to common stockholders and participating securities | $59.5 million | $57.0 million |
| Same-store NOI (SS NOI) | $75.0 million | $74.4 million; up 0.7% |
Q1 2021 included a $34.6 million gain on real estate sales, versus $14.0 million in Q1 2020; the gain materially contributed to the increase in GAAP net income. Property expenses rose 14.3% to $33.2 million, faster than revenue. Same-store average daily occupancy was 95.8%, compared with 96.8% a year earlier. Management reported 10.4% cash rental-rate growth on new and renewal leases; SS NOI growth was 2.2% excluding a $1.1 million insurance settlement included in the prior-year comparison.
Balance sheet, debt and liquidity
- Total assets were $3.82 billion and total liabilities were $1.84 billion at March 31, 2021.
- Debt totaled approximately $1.60 billion, compared with $1.60 billion at year-end 2020. The filing states all debt was fixed-rate or effectively fixed through swaps. Reported interest expense was $12.7 million; the weighted-average interest rate was 3.70%, versus 3.80% in Q1 2020.
- Cash and cash equivalents were $97.7 million; restricted cash was $82.0 million. The Company reported $724.6 million available under its $725 million unsecured credit facility.
- Investing activities used $22.1 million, including $23.9 million for real estate acquisitions and $62.1 million for real estate additions and tenant improvements, partly offset by $65.5 million of net sale proceeds. Financing activities used $39.3 million, including $32.8 million of dividends and distributions paid.
- The quarterly dividend was $0.27 per share/unit, an 8% increase from the 2020 quarterly rate.
Material changes, outlook and risks
- The Company acquired one industrial property and three land parcels for an aggregate purchase price of approximately $24.1 million, commenced three speculative development buildings totaling 1.4 million square feet, and sold three properties and two condominium units totaling approximately 1.1 million square feet for $67.2 million gross proceeds.
- Eight properties totaling approximately 2.3 million square feet were under construction at quarter-end, with estimated total investment of $234.9 million and approximately $141.9 million remaining to fund. Management cautioned actual completion costs could exceed estimates.
- Near-term debt maturities include a $200 million term loan in July 2021, the unsecured credit facility in October 2021, and $58.3 million of mortgage loans in October 2021. Management expected to extend, refinance or repay the term loan and facility, and use facility proceeds for the mortgage maturities. It reported covenant compliance and anticipated continued compliance for the next 12 months.
- Management said COVID-19 had had minimal overall impact through Q1 2021 but that future effects could not be predicted. Identified risks include economic and industrial property market conditions, leasing and tenant defaults, financing availability and interest rates, covenant compliance, development costs and delays, and natural disasters and public-health events. No material risk-factor changes were reported from the 2020 Form 10-K.
- No formal earnings guidance was provided in the supplied filing text. A land parcel was sold after quarter-end, from April 1 through April 22, for $11.0 million gross proceeds. Legal proceedings were reported as none; management said any liabilities arising from ordinary-course legal actions were not expected to materially affect financial position, operations or liquidity.
Important facts for investors to verify
- Whether the scheduled 2021 term-loan, credit-facility and mortgage maturities were extended, refinanced or repaid, and on what terms.
- Whether occupancy and leasing spreads remain strong, particularly given lower same-store occupancy and higher property expenses year over year.
- Whether development projects remain within estimated cost and schedule, and how the remaining $141.9 million of construction funding will be financed.
- How much of reported earnings growth reflects recurring property operations versus property-sale gains; also monitor FFO, which declined from Q1 2020 despite higher net income.
- Any subsequent changes to COVID-19 effects, tenant payment and renewal trends, liquidity, debt covenants or access to capital.