First Industrial Realty Trust(FR) - 2025 Q3 - Quarterly Results

Third Quarter 2025 Results Overview First Industrial Realty Trust reported a decrease in diluted EPS but an increase in diluted FFO per share for Q3 2025, driven by strong leasing and rental rate growth Financial Highlights First Industrial Realty Trust reported diluted net income available to common stockholders per share (EPS) of $0.49 for Q3 2025, a decrease from $0.75 a year ago, while diluted Funds From Operations (FFO) per share/unit increased to $0.76 from $0.68 year-over-year | Metric | Q3 2025 | Q3 2024 | Change (YoY) | | :----------------------------------- | :------ | :------ | :----------- | | Diluted EPS | $0.49 | $0.75 | -34.7% | | Diluted FFO per share/unit | $0.76 | $0.68 | +11.8% | - Third quarter 2025 EPS and FFO per share/unit include approximately $0.01 of income related to an insurance claim recovery[2] CEO Commentary The CEO highlighted a solid quarter driven by key development leasing wins and strong rental rate growth for 2025 and 2026 lease signings, noting increased tenant traffic and firming industrial fundamentals - The company delivered a solid quarter, marked by key development leasing wins and strong rental rate growth on 2025 and 2026 lease signings[3] - Increased tenant traffic is observed as prospective tenants assess long-term space needs and await clarity on tariffs and consumer demand[3] - Industrial fundamentals are showing signs of further firming across markets, with vacancy stabilizing and new starts remaining moderate[8] Operational Performance Highlights The company achieved significant development leasing, strong rental rate increases, and growth in cash basis same store net operating income, while also engaging in strategic investment and capital market activities Portfolio Performance The company achieved significant leasing activity for development projects and strong rental rate increases for leases commencing in 2025 and 2026, with in-service occupancy seeing a slight decline while cash basis same store net operating income (SS NOI) grew, partially aided by an insurance claim recovery Leasing Activity The company signed substantial new leases for development projects across key markets in Q3 and Q4 to-date - Signed 772,000 square feet of new leases for development projects in Q3 and Q4 to-date[5] - Key development leases include 501,000 SF at Camelback 303 JV (Phoenix), 56,000 SF at First Park Miami Building 3 (South Florida), 159,000 SF at First Harley Knox Logistics Center (Inland Empire), and 57,000 SF at First Park Miami Building 12 (South Florida)[5] Rental Rate Growth The company achieved significant cash rental rate increases for new and renewal leases, particularly for those commencing in 2025 and 2026 | Lease Commencement Year | Cash Rental Rate Increase (Signed To-Date) | | :---------------------- | :----------------------------------------- | | 2025 | 32% (37% excluding 1.3 MSF fixed-rate renewal) | | 2026 | 31% | - In the third quarter, cash rental rates on commenced new and renewal leasing increased 26.5% (40.6% on a straight-line basis)[6] Occupancy and Same Store Net Operating Income (SS NOI) In-service occupancy experienced a slight decline, while cash basis same store net operating income (SS NOI) grew, supported by higher rental rates and an insurance claim recovery | Metric | Q3 2025 | Q2 2025 | Q3 2024 | | :----------------- | :------ | :------ | :------ | | In-service occupancy | 94.0% | 94.2% | 95.0% | - Cash basis same store net operating income (SS NOI) before termination fees increased 6.1% in Q3 2025, primarily due to higher rental rates, contractual rent escalations, and an insurance claim recovery[6][7] - Excluding the insurance claim recovery, SS NOI increased 5.4%[6][7] Development, Investment, and Capital Markets Activities The company completed significant development leasing, acquired an income-producing land site, and disposed of a building and land site, additionally entering into forward-starting interest rate swaps to fix rates on unsecured term loans Development Leasing Highlights The company successfully leased significant portions of its development projects in key markets, including Phoenix, South Florida, and the Inland Empire - Leased the remaining 501,000 SF of Building C at Camelback 303 joint venture in Phoenix (commenced Q3)[9] - Leased 56,000 SF at First Park Miami Building 3 in South Florida (commenced Q3)[9] - Leased 100% of 159,000 SF at First Harley Knox Logistics Center in the Inland Empire (commenced Q4)[9] Investment and Disposition Highlights The company strategically acquired an income-producing land site in Northern California and disposed of a building and land site in Denver and Houston - Acquired an income-producing land site in Northern California for $11 million[9] - Sold a 60,000 SF building in Denver and one land site in Houston for a total of $13 million[9] Capital Markets Highlights The company utilized forward-starting interest rate swaps to fix interest rates on significant portions of its unsecured term loans, enhancing financial stability - Entered forward-starting interest rate swaps to fix the all-in interest rate on $150 million of its $300 million unsecured term loan at 4.13% (effective December 1, 2025)[9] - Entered forward-starting interest rate swaps to fix the all-in interest rate on its $200 million unsecured term loan at 4.10% (effective February 2, 2026)[9] 2025 Financial Outlook First Industrial has updated its 2025 NAREIT FFO guidance upwards, reflecting strong leasing performance and providing key assumptions for occupancy and same store NOI growth Updated FFO Guidance First Industrial has increased its 2025 NAREIT FFO guidance by $0.04 at the midpoint, reflecting strong leasing performance, with the updated guidance range for FFO being $2.94 to $2.98 per share/unit - 2025 NAREIT FFO Guidance increased $0.04 at the midpoint to $2.94 to $2.98 per share/unit[5][8] | Metric | Low End of Guidance for 2025 (Per share/unit) | High End of Guidance for 2025 (Per share/unit) | | :---------------------------------------------------- | :-------------------------------------------- | :--------------------------------------------- | | Net Income Available to Common Stockholders and Unitholders | $1.67 | $1.71 | | NAREIT Funds From Operations | $2.94 | $2.98 | Key Guidance Assumptions The 2025 guidance assumes year-end in-service occupancy between 94.0% and 96.0%, implying a full-year average decrease of 85 basis points at the midpoint, with fourth-quarter cash basis SS NOI growth projected at 3.0% to 5.0%, leading to a full-year growth of 7.0% to 7.5% - Year-end fourth quarter in-service occupancy is projected at 94.0% to 96.0%, implying a full-year quarter-end average of 94.4% to 94.9%, an 85 basis point decrease at the midpoint[15] - Fourth quarter cash basis SS NOI growth before termination fees is expected to be 3.0% to 5.0%, leading to a full-year 2025 SS NOI growth of 7.0% to 7.5%, an increase of 75 basis points at the midpoint[15] - The company expects to capitalize $0.09 per share of interest in 2025 and anticipates General and Administrative (G&A) expenses between $40.5 million and $41.5 million[15] Company Information and Non-GAAP Measures This section provides an overview of First Industrial Realty Trust as a leading logistics property owner, details forward-looking statement disclaimers and risk factors, and defines key non-GAAP financial measures used in the real estate industry About First Industrial Realty Trust, Inc. First Industrial Realty Trust, Inc. is a leading U.S.-only owner, operator, developer, and acquirer of logistics properties, with its portfolio and new investments concentrated in 15 target MSAs, focusing on supply-constrained, coastally oriented markets, owning or having under development approximately 70.4 million square feet of industrial space as of September 30, 2025 - First Industrial Realty Trust, Inc. is a leading U.S.-only owner, operator, developer, and acquirer of logistics properties[13] - The company's portfolio and new investments are concentrated in 15 target MSAs, emphasizing supply-constrained, coastally oriented markets[13] - As of September 30, 2025, the company owns and has under development approximately 70.4 million square feet of industrial space[13] Forward-Looking Statements and Risk Factors This section provides a standard disclaimer regarding forward-looking statements, outlining the assumptions and inherent risks, and detailing various factors that could materially affect operations and future prospects - Forward-looking statements are based on certain assumptions and describe future plans, strategies, and expectations, identifiable by words like 'believe,' 'expect,' 'plan,' 'intend,' 'anticipate,' 'estimate,' 'project,' 'seek,' 'target,' 'potential,' 'focus,' 'may,' 'will,' 'should' or similar words[14][16] - Factors that could materially affect operations and future prospects include changes in economic conditions, legislation/regulation, financing availability, competition, supply/demand/valuation of industrial properties, ability to acquire/develop/manage/dispose of properties, environmental matters, tenant defaults, construction costs/delays, public health emergencies, cybersecurity risks, natural disasters, and litigation[16] - The company cautions against undue reliance on forward-looking statements and assumes no obligation to update or supplement them[16] Definitions of Non-GAAP Financial Measures This section defines key non-GAAP financial measures used in the real estate industry, including FFO, NOI, Adjusted EBITDA, AFFO, and SS NOI, clarifying their calculation methodologies and acknowledging their relevance for evaluating performance and financial position while stating they are not substitutes for GAAP measures - FFO (Funds From Operations) is calculated as net income available to common stockholders, unitholders and participating securities, plus depreciation and other amortization of real estate, plus impairment of real estate, minus gain (or plus loss) on sale of real estate, adjusted for any associated income tax provisions or benefits, and similar adjustments for joint ventures[12][23] - NOI (Net Operating Income) is calculated as total property revenues minus property expenses[23] - Adjusted EBITDA, AFFO (Adjusted Funds From Operations), and SS NOI (Same Store Net Operating Income) are also defined with their specific adjustments, emphasizing their use as supplemental measures for evaluating performance, debt service ability, and dividend funding, but not as GAAP substitutes[24][25][27][28] Selected Financial Data (Unaudited) This section presents unaudited selected financial data, including statements of operations, reconciliations of GAAP net income to non-GAAP measures like FFO, AFFO, Adjusted EBITDA, and NOI, along with balance sheet and per share/unit data Statements of Operations and Other Data The Statements of Operations show an increase in total revenues for both the three and nine months ended September 30, 2025, compared to the prior year, however, Net Income and Net Income Available to Common Stockholders decreased significantly year-over-year for both periods, largely due to a lower gain on sale of real estate | Metric (in thousands) | Three Months Ended Sep 30, 2025 | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :-------------------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total Revenues | $181,430 | $167,645 | $538,667 | $494,053 | | Total Expenses | $(100,675) | $(97,837) | $(310,066) | $(294,968) | | Gain on Sale of Real Estate | $9,538 | $56,814 | $17,503 | $93,801 | | Net Income | $67,364 | $102,173 | $177,127 | $225,547 | | Net Income Available to Common Stockholders and Participating Securities | $65,306 | $99,363 | $168,594 | $219,133 | Reconciliation of Net Income to FFO and AFFO This section reconciles GAAP Net Income to non-GAAP measures FFO (NAREIT) and AFFO, both of which showed significant increases for the three and nine months ended September 30, 2025, compared to the prior year, indicating improved operational cash flow performance despite lower GAAP net income | Metric (in thousands) | Three Months Ended Sep 30, 2025 | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | FFO (NAREIT) | $103,514 | $92,479 | $299,434 | $264,228 | | AFFO | $86,612 | $74,155 | $259,854 | $223,841 | Reconciliation of Net Income to Adjusted EBITDA and NOI The reconciliation shows an increase in Adjusted EBITDA and Net Operating Income (NOI) for both the three and nine months ended September 30, 2025, compared to the previous year, indicating stronger core property-level and overall operational performance before accounting for non-property specific expenses and financing costs | Metric (in thousands) | Three Months Ended Sep 30, 2025 | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Adjusted EBITDA | $127,234 | $114,761 | $367,280 | $331,451 | | Net Operating Income ("NOI") | $135,055 | $122,553 | $398,193 | $358,099 | Same Store NOI Reconciliation and Details Cash basis Same Store NOI (without termination fees) increased for both the three and nine months ended September 30, 2025, with Q3 SS NOI growth at 5.4% and year-to-date growth at 8.0% excluding an insurance settlement gain | Metric (in thousands) | Three Months Ended Sep 30, 2025 | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :-------------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Same Store NOI (Cash Basis without Termination Fees) | $122,763 | $115,683 | $365,868 | $337,872 | - Excluding an insurance settlement gain, Q3 SS NOI growth was 5.4%, and year-to-date SS NOI growth was 8.0%[29] Balance Sheet Data As of September 30, 2025, First Industrial's gross real estate investment and total assets increased compared to December 31, 2024, reflecting continued investment, while total debt also increased and total equity saw a slight decrease | Metric (in thousands) | September 30, 2025 | December 31, 2024 | | :-------------------------- | :----------------- | :---------------- | | Gross Real Estate Investment | $6,169,216 | $5,846,392 | | Total Assets | $5,507,547 | $5,261,426 | | Debt | $2,402,601 | $2,209,303 | | Total Liabilities | $2,766,759 | $2,515,398 | | Total Equity | $2,740,788 | $2,746,028 | Per Share/Unit Data Diluted FFO per share/unit increased significantly for both the three and nine months ended September 30, 2025, while basic and diluted EPS decreased, and common dividends/distributions per share/unit also increased year-over-year | Metric | Three Months Ended Sep 30, 2025 | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Basic and Diluted Per Share | $0.49 | $0.75 | $1.27 | $1.65 | | Diluted FFO Per Share/Unit | $0.76 | $0.68 | $2.20 | $1.95 | | Common Dividends/Distributions Per Share/Unit | $0.445 | $0.370 | $1.335 | $1.110 |