Business Context and Reporting Period
Company: First Industrial Realty Trust, Inc. (REIT)
Reporting Period: Quarter and Six Months ended June 30, 1999
Portfolio Overview: As of June 30, 1999, the Company owned 968 in-service industrial properties across 25 states, totaling approximately 67.5 million square feet of gross leasable area (GLA). The Company also held two properties for redevelopment and five properties held for sale.
Key Financial Metrics (Six Months Ended June 30, 1999)
| Metric | Value (in thousands) |
|---|---|
| Total Revenues | $189,421 |
| Net Income | $55,902 |
| Net Income Available to Common Stockholders | $39,480 |
| Diluted EPS (Common) | $1.04 |
| Funds From Operations (FFO) | $72,979 |
| Net Cash Provided by Operating Activities | $73,834 |
| Total Debt (Mortgage + Senior Unsecured + Acquisition Facility) | $1,214,096 |
| Cash and Cash Equivalents | $6,538 |
| Restricted Cash | $39,507 |
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased 15.8% to $189.4 million from $163.5 million in the prior year period, driven primarily by properties acquired or developed after December 31, 1997.
- Profitability: Net income available to common stockholders rose 37.8% to $39.5 million from $28.6 million. This increase was significantly aided by a $8.3 million gain on sales of real estate (compared to $2.4 million in 1998).
- Expense Increases: Interest expense increased by $8.3 million due to a higher average debt balance ($1.2 billion vs. $1.0 billion). Property expenses rose 11.5% due to new acquisitions and higher real estate taxes.
- Portfolio Activity: The Company acquired four industrial properties and several land parcels for approximately $30.6 million. Conversely, it sold 24 industrial properties and one land parcel for gross proceeds of approximately $84.0 million.
Outlook, Risks, and Management Commentary
- Liquidity and Capital Resources: The Company maintains a $300 million unsecured revolving credit facility (Acquisition Facility), with approximately $115.2 million available for borrowing as of July 29, 1999. Management expects to fund future developments and acquisitions through operating cash flow, debt, and asset sales.
- Development Pipeline: The Company is committed to 28 development projects totaling 4.6 million square feet with an estimated investment of $168.0 million. Approximately $93.3 million remains to be funded.
- Dividends: The Company paid a quarterly distribution of $0.60 per common share/Unit for the second quarter of 1999.
- Market Risk: Approximately 13% of total debt is variable rate. A 10% increase in interest rates on variable debt would decrease future net income by approximately $0.9 million annually.
- Year 2000 Compliance: Management believes the risk of material adverse effects from Year 2000 issues is minimal, though they are still seeking confirmation from non-responding tenants.
Investor Verification Checklist
- Debt Maturities: Verify the $160.8 million in debt principal payments due in 2001, including the $158.1 million Acquisition Facility maturing April 30, 2001.
- Asset Sales Program: Confirm the status of the five properties currently held for sale (net carrying value ~$23.9 million) and the timeline for their disposition.
- Development Funding: Assess the sufficiency of the $115.2 million credit facility availability and operating cash flow to fund the remaining $93.3 million in committed development costs.
- Joint Venture Exposure: Review the performance and capital requirements of the September 1998 Joint Venture, in which the Company holds a 10% interest.