First Industrial Realty Trust(FR) - 2022 Q3 - Quarterly Report

Part I: Financial Information Financial Statements This section presents the unaudited consolidated financial statements for the company and its Operating Partnership for the period ended September 30, 2022 First Industrial Realty Trust, Inc. Consolidated Financial Statements Total assets grew to $4.86 billion, and net income increased significantly, driven by gains on real estate sales and joint venture income First Industrial Realty Trust, Inc. - Balance Sheet Summary (in thousands) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Assets | $4,864,392 | $4,179,098 | | Net Investment in Real Estate | $4,324,316 | $3,778,148 | | Cash and Cash Equivalents | $147,255 | $58,591 | | Total Liabilities | $2,377,948 | $1,930,726 | | Total Indebtedness | $1,980,000 | $1,610,020 | | Total Equity | $2,486,444 | $2,248,372 | First Industrial Realty Trust, Inc. - Statement of Operations Summary (in thousands) | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Total Revenues | $395,315 | $354,739 | | Gain on Sale of Real Estate | $84,204 | $66,378 | | Equity in Income of Joint Ventures | $118,182 | $(154) | | Net Income | $297,674 | $160,163 | | Net Income Attributable to Common Stockholders | $277,137 | $156,580 | | Diluted EPS | $2.10 | $1.21 | First Industrial, L.P. Consolidated Financial Statements The Operating Partnership's financial results reflect similar growth, with total assets reaching $4.87 billion and net income at $297.7 million First Industrial, L.P. - Balance Sheet Summary (in thousands) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Assets | $4,873,684 | $4,188,333 | | Net Investment in Real Estate | $4,324,316 | $3,778,148 | | Total Liabilities | $2,377,948 | $1,930,726 | | Total Partners' Capital | $2,495,736 | $2,257,607 | First Industrial, L.P. - Statement of Operations Summary (in thousands) | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Total Revenues | $395,315 | $354,739 | | Net Income | $297,674 | $160,163 | | Net Income Available to Unitholders | $283,313 | $160,104 | | Diluted EPU | $2.10 | $1.21 | Notes to Consolidated Financial Statements This section provides detailed disclosures on accounting policies, real estate activities, indebtedness, and joint venture performance - As of September 30, 2022, the company owned 421 industrial properties totaling approximately 64.8 million square feet of gross leasable area (GLA) across 18 states[65] - During the nine months ended September 30, 2022, the company entered into a new five-year, $425 million unsecured term loan and a new three-year, $300 million unsecured term loan facility, while also paying off $68.0 million in mortgage loans[76][77][78] - The company's Joint Venture sold 391 acres of land, resulting in a $176.3 million gain for the JV, of which the company's economic share was $86.4 million plus a $32.3 million incentive fee[89][91][142] - At September 30, 2022, the company had 18 development projects under construction, totaling approximately 3.7 million square feet of GLA with a remaining funding commitment of approximately $259.4 million[113] Real Estate Activity (Nine Months Ended Sep 30, 2022) | Activity | Details | Value (in thousands) | | :--- | :--- | :--- | | Acquisitions | 10 properties, 11 land parcels | $266,910 (Purchase Price) | | Sales | 8 buildings, 1 land parcel | $124,340 (Gross Proceeds) | | Gain on Sale | - | $84,204 | Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses financial results, business strategies, leasing activity, liquidity, and supplemental non-GAAP performance measures Management's Overview The company's objective is to maximize stockholder return through internal growth, external development, and disciplined financing strategies - The company's long-term growth plans are centered on both internal and external growth strategies[125] - Key business strategies include increasing rental rates, developing properties in 15 target markets, upgrading the portfolio through asset sales, and utilizing a mix of financing sources[126][128] Summary of the Nine Months Ended September 30, 2022 The company reports strong operating results, including high occupancy, significant rent growth, and active acquisition and development pipelines - In-service occupancy was 98.3% at quarter-end, with cash rental rates on new and renewal leases increasing by 22.8% year-to-date[129] - Key activities included $266.9 million in acquisitions, $124.3 million in sales, commencing development of 2.3 million sq. ft., and increasing the quarterly dividend by 9.3%[130] Results of Operations Net income increased by 85.9% year-over-year, driven by higher same-store revenue, gains on property sales, and joint venture income - The increase in net income for the nine months of 2022 was primarily driven by a $26.0 million increase in same-store property revenue, a $17.8 million increase in gain on sale of real estate, and a $118.3 million increase in equity in income of joint ventures[135][139][142] - Average daily occupancy for same-store properties increased to 97.9% for the nine months ended Sep 30, 2022, compared to 95.9% in the prior year period[134] Comparison of Nine Months Ended Sep 30, 2022 vs 2021 (in thousands) | Metric | 2022 | 2021 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $395,315 | $354,739 | $40,576 | 11.4% | | Same Store Revenues | $353,625 | $327,583 | $26,042 | 7.9% | | Total Property Expenses | $106,050 | $98,386 | $7,664 | 7.8% | | Net Income | $297,674 | $160,163 | $137,511 | 85.9% | Leasing Activity The company commenced leases on 11.1 million square feet year-to-date, achieving strong straight-line rent growth of 38.4% Leasing Summary (Nine Months Ended Sep 30, 2022) | Lease Type | Square Feet (000's) | Straight Line Rent Growth | Weighted Avg. Term (Yrs) | Tenant Retention | | :--- | :--- | :--- | :--- | :--- | | New Leases | 2,253 | 39.1% | 6.1 | N/A | | Renewal Leases | 4,742 | 38.1% | 5.0 | 69.2% | | Total / Weighted Avg. | 11,139 | 38.4% | 7.1 | 69.2% | Liquidity and Capital Resources The company maintained a strong liquidity position of $826.2 million and saw a significant increase in cash flow from operations - As of September 30, 2022, total liquidity was approximately $826.2 million, consisting of $138.6 million in cash and $687.6 million available on credit facilities[157] - The $149.6 million increase in operating cash flow was primarily due to a $118.0 million increase in distributions from joint ventures and improved Net Operating Income (NOI)[164][165] Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $346,022 | $196,437 | | Net cash used in investing activities | ($511,467) | ($291,602) | | Net cash provided by (used in) financing activities | $258,500 | ($43,473) | Supplemental Earnings Measure This section reconciles non-GAAP measures, showing growth in Funds From Operations (FFO) and Same Store Net Operating Income (SS NOI) Funds From Operations (FFO) Reconciliation (in thousands) | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net Income Available to Common Stockholders | $277,137 | $156,580 | | Adjustments (Depreciation, Gain on Sale, etc.) | ($54,589) | $31,705 | | FFO Available to Common Stockholders | $222,548 | $188,285 | Same Store Net Operating Income (SS NOI) (in thousands) | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | % Change | | :--- | :--- | :--- | :--- | | Same Store Revenues | $353,625 | $327,583 | - | | Same Store Property Expenses | ($87,439) | ($84,714) | - | | SS NOI (Cash Basis) | $257,437 | $232,163 | 10.9% | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate fluctuations on its variable-rate debt, which is partially mitigated by derivative instruments - At September 30, 2022, 60.7% of total debt was fixed rate, while 39.3% was variable rate, including debt fixed through interest rate swaps[170] - A hypothetical 10% increase in the relevant LIBOR and SOFR rates would have increased interest expense by approximately $0.5 million for the nine months ended September 30, 2022[173] - The company is preparing for the cessation of LIBOR after June 30, 2023, and does not expect the transition to have a material impact[169] Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - Management concluded that the disclosure controls and procedures for both the Company and the Operating Partnership were effective as of the end of the period covered by the report[187][189] - No changes in internal control over financial reporting occurred during the fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls[188][190] Part II: Other Information Legal Proceedings The company reported no material legal proceedings during the period - None[193] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's 2021 Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the annual report on Form 10-K for the year ended December 31, 2021[194] Other Items (Items 2, 3, 4, 5, 6) This section confirms no reportable events regarding equity sales, defaults, mine safety, or other material information - The company reports "None" for Item 2 (Unregistered Sales of Equity Securities), Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), and Item 5 (Other Information)[195]