FR

Business Context and Reporting Period

Company: First Industrial Realty Trust, Inc.
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: March 31, 1998
Business Overview: A Maryland-based Real Estate Investment Trust (REIT) owning 834 in-service industrial properties across 22 states, totaling approximately 61.0 million square feet of gross leasable area (GLA). The company operates primarily through First Industrial, L.P., in which it holds an approximate 86% interest.

Key Financial Metrics

Debt Profile: Total debt obligations include Mortgage Loans Payable ($100.7M), Senior Unsecured Debt ($748.8M), and Acquisition Facility Payable ($17.8M). The company recently retired a $300M defeased mortgage loan.

Material Changes vs. Prior Period

• Revenue Growth: Total revenues increased 65.2% to $76.2 million, driven primarily by the acquisition and development of 419 new properties since April 1997.
• Expense Increases: Property expenses rose 56.2% and interest expense increased 77.3% ($6.4M increase) due to higher debt balances supporting acquisitions. General and administrative expenses increased $1.4M due to operational expansion.
• Profitability: Net income available to common stockholders increased 52.5% to $16.6 million. Earnings per share (Basic and Diluted) rose from $0.36 to $0.45.
• Portfolio Activity: Acquired 70 industrial properties for approximately $157.9 million. Sold six properties and a land parcel for gross proceeds of $23.2 million, recognizing a gain of $2.4 million.
• Liquidity Shift: Restricted cash decreased significantly from $313.1M to $18.0M, largely due to the retirement of the 1994 Mortgage Loan and the release of associated reserves.

Guidance, Outlook, and Risks

• Capital Markets Activity: Issued $100 million in 6.50% Dealer Remarketable Securities (2011 Drs.) and raised $200 million through the issuance of Series D and Series E Cumulative Preferred Stock.
• Development Pipeline: Committed to constructing 15 developments totaling 2.5 million square feet with estimated costs of $81.0 million, funded by operating cash flow and the Acquisition Facility.
• Subsequent Events: Between April 1 and May 11, 1998, the company acquired 97 additional properties for $206.9 million and issued 1.1 million shares of common stock for net proceeds of $33.9 million.
• Accounting Changes: Adoption of EITF 97-11 will increase general and administrative expenses by an estimated $2.5M–$3.0M in 1998. SOP 98-5 will require a write-off of approximately $2.0M in organizational costs in Q2 1998.
• Risks: Legal proceedings are ongoing but not expected to be material. The company relies on debt service coverage covenants and the ability to remarket or refinance debt.

Investor Verification Checklist

• Debt Covenants: Verify compliance with debt service coverage ratios and limitations on debt incurrence following the recent $100M issuance of 2011 Drs.
• Acquisition Integration: Assess the occupancy rates and rental yields of the 70 properties acquired in Q1 and the 97 properties acquired in the subsequent period.
• Preferred Stock Obligations: Confirm the impact of new quarterly dividend obligations on Series D and Series E preferred stock on cash flow available for common distributions.
• Accounting Impact: Monitor the Q2 1998 financials for the $2.0M cumulative effect write-off of organizational costs and the increased G&A expenses from EITF 97-11.
• Liquidity Position: Review the utilization of the $300M Acquisition Facility, noting $141.6M remained available as of May 11, 1998.