First Industrial Realty Trust(FR) - 2025 Q2 - Quarterly Report

PART I: FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited consolidated financial statements and accompanying notes for First Industrial Realty Trust, Inc. and First Industrial, L.P. for the period ended June 30, 2025 First Industrial Realty Trust, Inc. Financial Statements This section presents the consolidated balance sheets, statements of operations, comprehensive income, changes in equity, and cash flows for First Industrial Realty Trust, Inc. for the periods ended June 30, 2025, and 2024 First Industrial Realty Trust, Inc. - Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Net Investment in Real Estate | $4,951,399 | $4,760,684 | | Total Assets | $5,452,115 | $5,261,426 | | Total Liabilities | $2,717,722 | $2,515,398 | | Total Equity | $2,734,393 | $2,746,028 | First Industrial Realty Trust, Inc. - Operations Highlights (in thousands, except per share data) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Revenues | $357,237 | $326,408 | | Net Income | $109,763 | $123,374 | | Diluted EPS | $0.78 | $0.90 | First Industrial Realty Trust, Inc. - Cash Flow Highlights (in thousands) | Cash Flow | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $214,620 | $170,234 | | Net Cash used in Investing Activities | ($290,048) | ($71,879) | | Net Cash from (used in) Financing Activities | $58,695 | ($95,651) | First Industrial, L.P. Financial Statements This section presents the consolidated balance sheets, statements of operations, comprehensive income, changes in partners' capital, and cash flows for First Industrial, L.P. for the periods ended June 30, 2025, and 2024 First Industrial, L.P. - Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Net Investment in Real Estate | $4,951,399 | $4,760,684 | | Total Assets | $5,461,303 | $5,270,655 | | Total Liabilities | $2,717,722 | $2,515,398 | | Total Partners' Capital | $2,743,581 | $2,755,257 | First Industrial, L.P. - Operations Highlights (in thousands, except per unit data) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Revenues | $357,237 | $326,408 | | Net Income | $109,763 | $123,374 | | Diluted EPU | $0.78 | $0.91 | Notes to the Consolidated Financial Statements This section provides detailed disclosures supporting the consolidated financial statements, covering organization, accounting policies, real estate investments, indebtedness, and derivative instruments - As of June 30, 2025, the company owned 415 industrial properties totaling approximately 68.2 million square feet of gross leasable area (GLA) across 19 states[56] - During the first six months of 2025, the company acquired two industrial properties and one land parcel for a total purchase price of $135.7 million[64] - In the first six months of 2025, three industrial properties were sold for gross proceeds of $13.7 million, resulting in a gain of $8.0 million[65] - In May 2025, the company issued $450 million of 5.25% senior unsecured notes due 2031, with an effective interest rate of 5.41%[71] - In March 2025, the company amended its revolving credit facility, increasing its capacity by $100 million to $850 million and extending the maturity to March 2029[73] - As of June 30, 2025, the company had nine development projects under construction, with an estimated total investment of $285.2 million, of which approximately $146.6 million remains to be funded[107] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, including business objectives, performance summary, operating results, leasing activity, liquidity, and non-GAAP reconciliations Management's Overview This section outlines the company's business objectives and growth strategies, emphasizing portfolio enhancement, decentralized operations, disciplined financing, and strong operating results for H1 2025 - The company's strategy focuses on internal and external growth, with a portfolio concentration in 15 key logistics markets, primarily in coastal areas[119] - Highlights for the first six months of 2025 include 94.2% quarter-end occupancy, a 9.4% increase in cash-basis same store NOI, and a 34% average increase in cash rental rates on new and renewal leases[122] - Key financing activities in H1 2025 included a credit rating upgrade by Fitch to BBB+, the issuance of $450.0 million in senior notes, and an increase in the unsecured credit facility to $850.0 million[124] Results of Operations This section provides a comparative analysis of operating results for the six months ended June 30, 2025, highlighting a 9.4% increase in total revenues to $357.2 million and a decrease in net income to $109.8 million primarily due to lower gains on real estate sales Comparison of Revenues (Six Months Ended June 30, in thousands) | Category | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Same Store Properties | $327,619 | $308,445 | $19,174 | 6.2% | | Acquired Properties | $4,785 | $11 | $4,774 | 43,400.0% | | (Re)Developments | $18,711 | $3,669 | $15,042 | 410.0% | | Total Revenues | $357,237 | $326,408 | $30,829 | 9.4% | - Net income for H1 2025 was $109.8 million, a decrease from $123.4 million in H1 2024, mainly driven by a lower gain on sale of real estate, which was $8.0 million in 2025 compared to $37.0 million in 2024[132][138] - General and administrative expenses for H1 2025 increased by $2.9 million (13.7%) primarily due to accelerated recognition of equity compensation expense for retirement-eligible employees[135] - Interest expense for H1 2025 decreased by $0.8 million (2.0%) due to higher capitalized interest and a lower weighted average interest rate, despite a higher average debt balance[139] Leasing Activity This section details leasing activity for the first half of 2025, with 83 leases commenced totaling 3.9 million square feet, achieving 59.9% straight-line rent growth and a 6.0-year weighted average lease term Leasing Activity Summary (Six Months Ended June 30, 2025) | Lease Type | Leases Commenced | Square Feet (in 000's) | Straight Line Rent Growth | Weighted Avg. Lease Term (Yrs) | | :--- | :--- | :--- | :--- | :--- | | New Leases | 31 | 837 | 64.7% | 5.8 | | Renewal Leases | 50 | 2,863 | 58.6% | 6.0 | | Total / Weighted Avg. | 83 | 3,857 | 59.9% | 6.0 | Liquidity and Capital Resources The company maintains a strong liquidity position with $34.9 million in cash and $823.8 million available under its credit facility, with short-term needs met by operations and asset sales, and long-term needs by dispositions, debt, and equity issuances - As of June 30, 2025, the company had $34.9 million in cash and cash equivalents and $823.8 million available under its Unsecured Credit Facility[159] - The company holds investment-grade credit ratings of BBB/Stable (S&P), Baa2/Stable (Moody's), and BBB+/Stable (Fitch)[163] Cash Flow Activity Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $214,620 | $170,234 | | Net cash used in investing activities | ($290,048) | ($71,879) | | Net cash provided by (used in) financing activities | $58,695 | ($95,651) | - The $154.3 million positive swing in financing cash flow was primarily due to the issuance of $443.8 million in senior unsecured notes in 2025, offset by lower net borrowings on the credit facility and higher dividend payments[165] Supplemental Earnings Measure This section provides reconciliations for non-GAAP financial measures, FFO and Same Store NOI, with FFO available to common stockholders increasing to $190.1 million and cash basis SS NOI growing by 9.4% for the first six months of 2025 Funds From Operations (FFO) Reconciliation (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Income Available to Common Stockholders | $103,288 | $119,770 | | Adjustments (Depreciation, Gain on Sale, etc.) | $86,781 | $47,384 | | FFO Available to Common Stockholders | $190,069 | $167,154 | Same Store Net Operating Income (SS NOI) Reconciliation (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | | Same Store Revenues | $327,619 | $308,445 | | | Same Store Property Expenses | ($78,499) | ($76,364) | | | GAAP Same Store NOI | $249,120 | $232,081 | 7.3% | | Adjustments (Straight-line rent, etc.) | ($5,729) | ($9,634) | | | Cash Basis SS NOI | $243,391 | $222,447 | 9.4% | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate risk, with 99.0% of total debt fixed-rate as of June 30, 2025, and a hypothetical 10% SOFR increase having a minimal $0.6 million impact on interest expense for H1 2025 - As of June 30, 2025, 99.0% ($2.38 billion) of the company's total debt was fixed-rate, including the effect of interest rate swaps, an increase from 87.3% at the end of 2024[169] - The company uses derivative instruments, specifically interest rate swaps with a notional value of $925.0 million, to hedge its exposure to variable interest rates on its unsecured term loans[169] - A sensitivity analysis shows that a 10% increase in the SOFR rate would have increased interest expense by approximately $0.6 million for the six months ended June 30, 2025[171] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures for both First Industrial Realty Trust, Inc. and First Industrial, L.P. were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - The principal executive and financial officers concluded that the disclosure controls and procedures for both the Company and the Operating Partnership were effective as of the end of the reporting period[188][190] - No changes occurred during the fiscal quarter that materially affected, or are reasonably likely to materially affect, the internal control over financial reporting for either entity[189][191] PART II: OTHER INFORMATION Item 1. Legal Proceedings The company reports no material legal proceedings - None[194] Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the company's annual report on Form 10-K for the year ended December 31, 2024, were reported - No material changes to the risk factors disclosed in the 2024 Form 10-K were reported[195] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities or use of proceeds during the period - None[196] Item 5. Other Information No directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the second quarter of 2025 - No directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[197] Item 6. Exhibits This section references the Exhibit Index, listing all exhibits filed with or furnished as part of the Form 10-Q report - The exhibits required by Item 6 are listed in the Exhibit Index[198]