First Industrial Realty Trust(FR) - 2021 Q2 - Quarterly Report

PART I: FINANCIAL INFORMATION Financial Statements This section presents the unaudited consolidated financial statements for the Company and Operating Partnership, detailing financial position and performance First Industrial Realty Trust, Inc. Financial Statements The Company's consolidated financial statements show total assets increased to $3.86 billion and net income rose to $116.7 million, driven by real estate sales Consolidated Balance Sheet Summary (in millions) | Account | June 30, 2021 ($) | December 31, 2020 ($) | | :--- | :--- | :--- | | Net Investment in Real Estate | $3,447.4 million | $3,255.2 million | | Total Assets | $3,863.8 million | $3,791.9 million | | Total Liabilities | $1,861.8 million | $1,844.6 million | | Total Equity | $2,002.0 million | $1,947.3 million | | Total Liabilities and Equity | $3,863.8 million | $3,791.9 million | Consolidated Statement of Operations Summary (in millions, except per share data) | Metric | Six Months Ended June 30, 2021 ($) | Six Months Ended June 30, 2020 ($) | | :--- | :--- | :--- | | Total Revenues | $233.7 million | $219.5 million | | Gain on Sale of Real Estate | $57.5 million | $23.1 million | | Net Income | $116.7 million | $78.0 million | | Diluted EPS | $0.88 | $0.60 | Consolidated Statement of Cash Flows Summary (in millions) | Cash Flow Activity | Six Months Ended June 30, 2021 ($) | Six Months Ended June 30, 2020 ($) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $118.5 million | $117.5 million | | Net Cash Used in Investing Activities | ($161.7 million) | ($245.8 million) | | Net Cash (Used in) Provided by Financing Activities | ($73.9 million) | $76.4 million | | Net Decrease in Cash | ($117.0 million) | ($51.9 million) | First Industrial, L.P. Financial Statements The Operating Partnership's financial statements, similar to the Company's, show total assets grew to $3.87 billion and net income reached $116.7 million Consolidated Balance Sheet Summary (in millions) | Account | June 30, 2021 ($) | December 31, 2020 ($) | | :--- | :--- | :--- | | Total Assets | $3,873.2 million | $3,801.3 million | | Total Liabilities | $1,861.8 million | $1,844.6 million | | Total Partners' Capital | $2,011.4 million | $1,956.7 million | | Total Liabilities and Partners' Capital | $3,873.2 million | $3,801.3 million | Consolidated Statement of Operations Summary (in millions) | Metric | Six Months Ended June 30, 2021 ($) | Six Months Ended June 30, 2020 ($) | | :--- | :--- | :--- | | Total Revenues | $233.7 million | $219.5 million | | Net Income | $116.7 million | $78.0 million | Notes to the Consolidated Financial Statements These notes detail accounting policies and financial items, including real estate transactions, debt management, construction commitments, and post-quarter credit facility refinancing - During the first six months of 2021, the company acquired three industrial properties and five land parcels for an aggregate purchase price of $147.0 million[64] - In the same period, the company sold six industrial properties, three condominium units, and one land parcel for gross proceeds of $104.4 million, recognizing a gain of $57.5 million[66][126] - As of June 30, 2021, the company had 13 industrial properties under construction, totaling 5.0 million square feet, with an estimated $300.5 million remaining to be funded[98] - Subsequent to quarter-end, on July 7, 2021, the company amended and restated its Unsecured Credit Facility, increasing its capacity to $750 million and extending the maturity to 2025, also extending its $200 million unsecured term loan to 2026[100][101] - The company uses interest rate swaps to manage exposure on its Unsecured Term Loans, with $460 million in notional value to fix variable interest rates as of June 30, 2021[91] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's strong financial performance for the first half of 2021, driven by high occupancy, rental rate growth, strategic development, and enhanced liquidity Management's Overview Management's overview outlines the company's objective to maximize stockholder returns through internal and external growth strategies, focusing on target logistics markets and portfolio enhancement - The company's growth strategy is based on both internal growth, through increasing revenues from the existing portfolio, and external growth, via development and acquisition[112] - The market strategy targets the top 15 U.S. industrial real estate markets, focusing on bulk and regional warehouse properties while reducing exposure to light industrial and R&D/flex buildings[112][114] - The financing strategy utilizes proceeds from property sales, unsecured debt, term loans, the revolving credit facility, and equity issuances to fund growth and manage debt maturities[114] Summary of the Six Months Ended June 30, 2021 The first half of 2021 saw strong operational performance, with in-service occupancy at 96.6%, 13.3% cash rental rate growth, 4.1 million square feet of new development, and increased dividends - In-service occupancy rose 90 basis points from year-end 2020 to 96.6%[115] - Cash rental rates on new and renewal leases grew by 13.3% during the six-month period[115] - Acquired 3 industrial properties (0.2 million sq. ft.) and land (320.6 acres) for a total of $147.2 million[116] - Commenced development of eight buildings totaling 4.1 million square feet[116] - Sold properties and land for gross proceeds of $104.4 million[116] Results of Operations Total revenues increased 6.4% to $233.7 million and net income rose to $116.7 million, driven by higher same-store revenue and increased gains on real estate sales Revenue Comparison (Six Months Ended June 30, in millions) | Category | 2021 ($) | 2020 ($) | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Same Store Properties | $211.3 million | $201.1 million | $10.2 million | 5.1% | | Acquired Properties | $6.6 million | $0.5 million | $6.1 million | 1,230.2% | | Sold Properties | $2.4 million | $12.2 million | ($9.8 million) | (80.7)% | | (Re)Developments | $11.0 million | $3.3 million | $7.7 million | 230.7% | | Total Revenues | $233.7 million | $219.5 million | $14.1 million | 6.4% | Property Expense Comparison (Six Months Ended June 30, in millions) | Category | 2021 ($) | 2020 ($) | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Same Store Properties | $55.4 million | $48.2 million | $7.2 million | 14.9% | | Acquired Properties | $1.3 million | $0.1 million | $1.2 million | 985.0% | | Sold Properties | $0.2 million | $2.7 million | ($2.5 million) | (92.0)% | | (Re)Developments | $3.2 million | $1.6 million | $1.7 million | 105.1% | | Total Property Expenses | $65.0 million | $57.1 million | $7.9 million | 13.8% | - Gain on sale of real estate increased by $34.4 million to $57.5 million for the six months ended June 30, 2021, compared to the same period in 2020[126] Leasing Activity In the first half of 2021, the company commenced 129 leases totaling 6.9 million square feet, with strong rent growth across new and renewal leases Leasing Summary (Six Months Ended June 30, 2021) | Lease Type | Square Feet (millions) | Straight Line Rent Growth | Weighted Avg. Lease Term (Yrs) | | :--- | :--- | :--- | :--- | | New Leases | 1.7 | 34.8% | 6.2 | | Renewal Leases | 4.3 | 22.2% | 4.1 | | Total / Weighted Avg. | 6.9 | 25.8% | 5.1 | Liquidity and Capital Resources As of June 30, 2021, the company maintained strong liquidity with $55.6 million in cash and $660.9 million available credit, further enhanced by post-quarter credit facility amendments - At June 30, 2021, liquidity consisted of $55.6 million in cash and $660.9 million available on the Unsecured Credit Facility[146] - The company believes it was in compliance with all financial covenants as of June 30, 2021[149] - Cash used in investing activities decreased by $84.1 million, primarily due to a $60.6 million increase in net proceeds from real estate dispositions and a $24.0 million increase in distributions from joint ventures[153][154] - Cash used in financing activities increased by $150.3 million, driven by a $102.0 million decrease in net borrowings on the credit facility and a $42.8 million increase in mortgage repayments[153][154] Supplemental Earnings Measure The company uses FFO and Same Store NOI as supplemental measures, with FFO increasing to $122.0 million and cash-basis Same Store NOI growing by 1.5% FFO Reconciliation (in millions) | Metric | Six Months Ended June 30, 2021 ($) | Six Months Ended June 30, 2020 ($) | | :--- | :--- | :--- | | Net Income Available to Common Stockholders | $114.1 million | $76.3 million | | Depreciation and Other Amortization of Real Estate | $64.0 million | $62.8 million | | Gain on Sale of Real Estate | ($57.5 million) | ($23.1 million) | | FFO Available to Common Stockholders | $122.0 million | $115.2 million | Same Store NOI (Cash Basis) (in millions) | Metric | Six Months Ended June 30, 2021 ($) | Six Months Ended June 30, 2020 ($) | % Change | | :--- | :--- | :--- | :--- | | Same Store NOI (Cash Basis) | $150.7 million | $148.6 million | 1.5% | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate risk, with 96.3% of total debt fixed-rate, and it is actively monitoring the transition from LIBOR to alternative reference rates - As of June 30, 2021, $1.54 billion, or 96.3% of total debt, was fixed-rate, including variable-rate debt swapped to a fixed rate[158] - The company is monitoring the planned cessation of USD-LIBOR after June 30, 2023, with new debt agreements including provisions for an alternative benchmark rate[162][163] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of the reporting period, with no material changes to internal control over financial reporting during the quarter - The principal executive and financial officers concluded that disclosure controls and procedures for both the Company and Operating Partnership were effective as of the end of the reporting period[178][180] - No material changes occurred in internal control over financial reporting during the quarter[179][181] PART II: OTHER INFORMATION Legal Proceedings The company reports no material legal proceedings - None[184] Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's 2020 Annual Report on Form 10-K - No material changes have occurred to the risk factors disclosed in the 2020 Form 10-K[185] 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[186]