Business Context and Reporting Period
Company: First Industrial Realty Trust, Inc. (REIT)
Reporting Period: Quarter ended March 31, 1999
Portfolio Overview: As of March 31, 1999, the Company owned 978 in-service industrial properties across 25 states, totaling approximately 68.8 million square feet of gross leasable area (GLA). The Company operates primarily through First Industrial, L.P., in which it holds an approximate 84.0% interest.
Key Financial Metrics
| Metric | Q1 1999 | Q1 1998 |
|---|---|---|
| Total Revenues | $95.4 million | $76.2 million |
| Net Income | $25.6 million | $22.5 million |
| Net Income Available to Common Stockholders | $17.4 million | $16.6 million |
| Funds From Operations (FFO) | $36.3 million | $30.4 million |
| Diluted EPS (Common) | $0.46 | $0.45 |
| Cash and Cash Equivalents | $1.3 million | $8.4 million (End of Q1 1998) |
| Total Debt Outstanding | $1.198 billion | N/A |
| Dividends Paid (Common) | $0.60 per share | $0.60 per share |
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased by $19.2 million (25.2%) year-over-year, driven primarily by properties acquired or developed after December 31, 1997. Rental income from legacy properties increased by 5.5% due to rent increases and higher tenant recoveries.
- Expense Increases: Property expenses rose by $5.4 million (24.5%) due to portfolio expansion. Interest expense increased by $5.3 million, reflecting a higher average debt balance ($1.2 billion in 1999 vs. $0.9 billion in 1998).
- Portfolio Activity: The Company added 190 properties (177 acquisitions, 13 developments) and sold 45 properties during the trailing twelve months. In Q1 1999 specifically, the Company acquired two properties for $18.9 million and sold ten properties for $23.9 million, realizing a gain of $1.5 million.
- Liquidity: Cash and cash equivalents decreased significantly from $21.8 million at year-end 1998 to $1.3 million at March 31, 1999, due to investing activities and dividend payments.
Guidance, Outlook, and Risks
- Development Pipeline: The Company is committed to constructing 22 development projects totaling 2.5 million square feet, expected to be funded by operating cash flows and borrowings under its $300 million unsecured revolving credit facility.
- Debt Structure: Approximately 88% of total debt is fixed-rate, while 12% ($141.6 million) is variable-rate. A 10% increase in interest rates on variable debt would reduce future net income by approximately $0.8 million annually.
- Year 2000 Compliance: Management believes the risk of material adverse effects from Year 2000 issues is minimal. Tenant surveys indicate compliance, though the Company cannot estimate potential impacts from third-party service providers until assessments are complete by June 30, 1999.
- Legal Proceedings: No material legal proceedings were reported that are expected to have a materially adverse effect.
Investor Verification Checklist
- Debt Maturities: Verify the schedule of debt maturities, noting $144.3 million due in 2001 and the contingent maturity of the LB Mortgage Loan II.
- Properties Held for Sale: Confirm the status of the 26 properties (4.3 million sq. ft.) held for sale, which have a net carrying value of $103.1 million.
- Joint Venture Exposure: Review the 10% equity interest in the September 1998 Joint Venture, which owns 146 properties (7.5 million sq. ft.).
- Capital Expenditures: Assess the funding requirements for the 22 committed development projects against current cash flow and credit facility availability ($139.4 million available as of April 30, 1999).
- Dividend Coverage: Monitor the ratio of earnings to fixed charges (1.66x in Q1 1999) to ensure continued ability to meet REIT distribution requirements.