First Industrial Realty Trust(FR) - 2020 Q4 - Annual Report

PART I Business First Industrial Realty Trust, Inc. is a self-administered REIT focused on owning, managing, acquiring, and developing industrial real estate Portfolio Overview as of December 31, 2020 | Property Type | Number of Properties | GLA (million sq. ft.) | | :--- | :--- | :--- | | Bulk Warehouse | 183 | 49.3 | | Regional Warehouse | 96 | 6.6 | | Light Industrial | 127 | 5.8 | | R&D/Flex | 14 | 0.7 | | Total | 420 | 62.4 | - The company's long-term business growth plans focus on internal growth through rent increases, external growth via development and acquisitions, and portfolio enhancement by selling non-strategic assets[32] - A Corporate Responsibility Committee advises on sustainability and social responsibility, prioritizing tenant engagement and green building techniques[36][37] - As of December 31, 2020, the company had 153 full-time employees, implementing safety protocols and remote work in response to COVID-19[40][45] Risk Factors The company faces a range of risks that could adversely affect its business, including real estate, financial, organizational, and tax-related challenges - Business & Real Estate Risks include fluctuations in real estate values, competition for acquisitions, leasing challenges, property development risks, environmental liabilities, and ADA compliance[47][49][55][56] - Financing & Capital Risks involve limited access to capital due to market disruptions, leverage-related debt obligations, rising interest rates, LIBOR transition, and potential defaults from covenant non-compliance[69][71][73] - Tax & REIT Status Risks highlight the critical importance of maintaining REIT qualification, as failure would result in corporate income tax and a 100% penalty tax on prohibited transactions[93][94][96] - General Risks include the adverse impact of the COVID-19 pandemic on tenant rent payments and development projects, alongside significant cybersecurity attack threats[100][102] Unresolved SEC Comments The company reports no unresolved comments from the Securities and Exchange Commission - There are no unresolved SEC comments[111] Properties As of December 31, 2020, the company's in-service portfolio comprised 420 industrial properties totaling 62.4 million square feet, with strong occupancy and active transaction summary In-Service Property Summary by Market (Top 5) as of 12/31/2020 | Metropolitan Area | Number of Properties | GLA (thousand sq. ft.) | Occupancy | | :--- | :--- | :--- | :--- | | Southern California | 68 | 9,654 | 99.2% | | Dallas/Ft. Worth, TX | 52 | 7,076 | 94.3% | | Central/Eastern PA | 23 | 6,735 | 93.8% | | Chicago, IL | 26 | 5,812 | 97.8% | | Atlanta, GA | 23 | 5,250 | 95.3% | | Total Portfolio | 420 | 62,385 | 95.7% | - 2020 Transaction Summary included acquiring 8 industrial properties and 128.8 acres of land for approximately $224.0 million, placing 10 development properties in-service at a cost of $221.7 million, and selling 29 industrial properties for $153.4 million in gross proceeds[121][122][123][124] 2020 Leasing Activity Summary | Lease Type | Square Feet (thousand sq. ft.) | Straight Line Rent Growth | Weighted Average Lease Term (Years) | Tenant Retention | | :--- | :--- | :--- | :--- | :--- | | New Leases | 2,533 | 32.9% | 5.0 | N/A | | Renewal Leases | 5,673 | 28.0% | 5.9 | 76.8% | | Total / Weighted Avg. | 11,897 | 29.7% | 6.7 | 76.8% | - Scheduled lease expirations for 2021 represent 8.0% of the total in-service portfolio's Gross Leasable Area (GLA)[131] Legal Proceedings The company is involved in ordinary course legal proceedings which are not expected to have a material impact on its financial position or results - Ongoing legal proceedings are not expected to materially impact the company's results of operations, financial position, or liquidity[132] Mine Safety Disclosures The company reports no mine safety disclosures - None[133] PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on the NYSE under "FR", with $1.00 per share dividends in 2020 and outperformance against the FTSE NAREIT Equity REITs index 2020 Quarterly Stock Price and Dividends | Quarter Ended | Closing High | Closing Low | Dividend Declared | | :--- | :--- | :--- | :--- | | Dec 31, 2020 | $44.30 | $39.75 | $0.25 | | Sep 30, 2020 | $44.09 | $37.99 | $0.25 | | Jun 30, 2020 | $40.93 | $30.52 | $0.25 | | Mar 31, 2020 | $46.01 | $27.09 | $0.25 | - A $100 investment in the company's stock on 12/31/15 would be worth $218.23 on 12/31/20, outperforming the S&P 500 ($203.04) and the FTSE NAREIT Equity REITs index ($126.25)[144] Selected Financial Data This section provides a five-year summary of key financial data for both the Company and the Operating Partnership, highlighting trends in revenues, net income, and FFO Selected Financial Data for the Company (2018-2020) | Metric (thousand USD, except per share) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Total Revenues | $448,028 | $425,984 | $403,954 | | Net Income Available to Common Stockholders | $195,989 | $238,775 | $163,239 | | Diluted EPS | $1.53 | $1.88 | $1.31 | | Dividends Per Share | $1.00 | $0.92 | $0.87 | | Total Assets | $3,791,938 | $3,518,828 | $3,142,691 | | Indebtedness | $1,594,641 | $1,483,565 | $1,297,783 | | Funds from Operations (FFO) | $234,964 | $221,136 | $199,391 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strong 2020 operating results, significant acquisition and financing activities, liquidity, cash flow, and reconciles non-GAAP measures like FFO and Same Store NOI Summary of 2020 Despite the COVID-19 pandemic, the company achieved strong operating results in 2020, marked by high occupancy and significant transaction activity - Despite the COVID-19 pandemic, 2020 operating results were strong, with year-end occupancy at 95.7% and a 13.5% increase in cash rental rates, while 99% of monthly rental billings were collected from April through December 2020[149] - Key activities in 2020 included acquiring 8 industrial properties for $154.4 million, placing 10 development properties in-service at a cost of $221.7 million, selling 29 industrial properties for $153.4 million, and issuing $300 million in private placement notes while raising $78.7 million through an ATM offering[150][151] Results of Operations Total revenues increased by 5.2% in 2020, primarily from acquisitions and developments, though net income decreased due to lower gains on property sales Comparison of Results of Operations (2020 vs. 2019) | Metric (thousand USD) | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $448,028 | $425,984 | 5.2% | | Total Property Expenses | $119,195 | $116,585 | 2.2% | | General and Administrative | $32,848 | $28,569 | 15.0% | | Gain on Sale of Real Estate | $86,751 | $124,942 | (30.6)% | | Interest Expense | $51,293 | $50,273 | 2.0% | | Net Income | $200,169 | $243,881 | (17.9)% | - The increase in total revenues was primarily driven by acquired properties and developments placed in service, partially offset by property sales, with same store property revenues increasing by $9.6 million (2.6%) due to higher rental rates[158] - The decrease in net income was largely attributable to a $38.2 million reduction in gain on sale of real estate compared to the prior year[152][162] Liquidity and Capital Resources As of December 31, 2020, the company maintained strong liquidity with $162.1 million in cash and $724.6 million available under its credit facility - As of December 31, 2020, the company held $162.1 million in cash and cash equivalents, with $724.6 million available for borrowing under its Unsecured Credit Facility[171] - Short-term liquidity needs include a $200.0 million term loan maturing in July 2021 and an Unsecured Credit Facility maturing in October 2021, both with one-year extension options[172] - The company's senior unsecured notes hold investment-grade credit ratings of BBB/Stable from S&P and Fitch, and Baa2/Stable from Moody's[175] Supplemental Earnings Measure This section provides reconciliations of net income to FFO and details Same Store Net Operating Income, key non-GAAP performance indicators Reconciliation of Net Income to FFO | (thousand USD) | 2020 | 2019 | | :--- | :--- | :--- | | Net Income Available to Common Stockholders | $195,989 | $238,775 | | Depreciation and Amortization of Real Estate | $128,814 | $120,516 | | Gain on Sale of Real Estate | ($86,751) | ($124,942) | | Other Adjustments | ($3,088) | ($13,213) | | FFO Available to Common Stockholders | $234,964 | $221,136 | Same Store Net Operating Income (SS NOI) | (thousand USD) | 2020 | 2019 | | :--- | :--- | :--- | | Same Store Revenues | $376,511 | $366,952 | | Same Store Property Expenses | ($92,588) | ($90,476) | | Adjustments (Straight-line rent, etc.) | ($2,688) | ($7,209) | | Same Store Net Operating Income | $281,235 | $269,267 | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate risk, with 100% of its total debt effectively fixed-rate as of December 31, 2020, through derivative instruments - At December 31, 2020, 100% of the company's $1.6 billion in total debt was fixed rate, including $460.0 million of variable-rate debt effectively swapped to a fixed rate[187] - The company uses interest rate swaps to manage exposure to interest rate volatility on its unsecured term loans, with derivative instruments having a notional amount of $460.0 million outstanding at year-end 2020[191] Financial Statements and Supplementary Data This item refers the reader to the Index to Financial Statements and Financial Statement Schedule, included in Item 15 of the report - This item refers to the Index to Financial Statements and Financial Statement Schedule in Item 15[205] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[206] Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2020, with no material changes during Q4 2020 - Management concluded that disclosure controls and procedures for both the Company and the Operating Partnership were effective as of the end of the reporting period[209][216] - Based on the COSO framework, management concluded that internal control over financial reporting for both entities was effective as of December 31, 2020[211][218] - There were no material changes in internal control over financial reporting during the fourth quarter of 2020[213][220] Other Information The company reports no other information - None[221] PART III Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, and Certain Relationships Information for Items 10 through 14 is incorporated by reference from the company's separately filed definitive proxy statement - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the Company's definitive proxy statement[224] PART IV Exhibits, Financial Statement Schedules This section provides an index to the consolidated financial statements, financial statement schedule, and a list of all exhibits filed as part of the Form 10-K - This item contains the index to the financial statements and the exhibit index, which lists all filed exhibits such as articles of incorporation, bylaws, material contracts, and certifications[226][229] Form 10-K Summary This item is not applicable for this filing - Not applicable[233]