First Industrial Realty Trust(FR) - 2023 Q1 - Quarterly Report

PART I: FINANCIAL INFORMATION This section presents the company's financial information, including statements, management's discussion, market risk disclosures, and controls. Financial Statements This section presents the unaudited consolidated financial statements, detailing the company's financial position, performance, and key activities. First Industrial Realty Trust, Inc. - Selected Financials (Q1 2023 vs Q1 2022) | Metric | Q1 2023 (in thousands) | Q1 2022 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $149,423 | $125,513 | +19.0% | | Net Income | $60,775 | $37,123 | +63.7% | | Net Income to Common Stockholders | $55,967 | $36,258 | +54.4% | | Diluted EPS | $0.42 | $0.27 | +55.6% | | Net Cash from Operating Activities | $70,318 | $59,898 | +17.4% | First Industrial Realty Trust, Inc. - Balance Sheet Summary | Account | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :--- | :--- | :--- | | Net Investment in Real Estate | $4,455,233 | $4,421,559 | | Total Assets | $4,950,852 | $4,954,322 | | Total Liabilities | $2,422,887 | $2,424,023 | | Total Equity | $2,527,965 | $2,530,299 | - As of March 31, 2023, the company owned 431 industrial properties totaling approximately 65.7 million square feet of gross leasable area (GLA) across 18 states[60] - During Q1 2023, the company acquired one industrial property for a total purchase price of $6.0 million, excluding transaction costs[66] - A joint venture in which the company holds a 43% interest sold approximately 31 acres of land, resulting in a gain on sale of $40.0 million for the JV, with the company's economic share of the gain being $19.6 million and an additional incentive fee of $8.0 million earned[74][77] - As of March 31, 2023, the company had 11 development projects under construction, totaling 3.6 million square feet with an estimated remaining funding commitment of approximately $258.9 million[97] - Subsequent to the quarter end, the company acquired one industrial property for $5.2 million and sold one land parcel for $1.1 million[98] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's strong Q1 2023 operating performance, business strategies, financial results, and liquidity position. - Key business strategies include: - Internal Growth: Increasing revenues through higher rental rates on new/renewed leases and controlling expenses - External Growth: Developing and acquiring industrial properties, with a focus on 15 key logistics markets - Portfolio Enhancement: Upgrading the portfolio by selling assets with lower growth prospects and redeploying capital into higher-growth assets[110][112] - Q1 2023 operational highlights include: - In-service occupancy was 98.7% at quarter-end - Increased cash rental rates by 58.3% on new and renewal leases commenced during the quarter - A joint venture sold 31 acres of land for $50 million, generating a $17.3 million pro-rata share of the gain and a $7.1 million incentive fee for the company - The quarterly dividend was increased by 8.5% to $0.32 per share[113][114] Comparison of Revenues by Category (in thousands) | Category | Q1 2023 | Q1 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Same Store Properties | $128,614 | $119,732 | $8,882 | 7.4% | | Acquired Properties | $2,497 | $134 | $2,363 | 1,763.4% | | (Re)Developments | $13,264 | $734 | $12,530 | 1,707.1% | | Total Revenues | $149,423 | $125,513 | $23,910 | 19.0% | - Interest expense increased by $6.5 million (67.3%) year-over-year, driven by a higher average debt balance ($2.07 billion vs $1.69 billion) and a higher weighted average interest rate (3.94% vs 3.29%)[124] Q1 2023 Leasing Activity Summary | Lease Type | Leases Commenced | Square Feet (in 000's) | Straight Line Rent Growth | Weighted Avg. Term (Yrs) | | :--- | :--- | :--- | :--- | :--- | | New Leases | 24 | 1,194 | 121.1% | 5.5 | | Renewal Leases | 35 | 2,441 | 65.5% | 5.5 | | Total / Weighted Avg. | 65 | 3,954 | 85.3% | 5.6 | - As of March 31, 2023, the company had approximately $69.8 million in cash and $590.1 million available for borrowing under its Unsecured Credit Facility, indicating strong liquidity[132] Funds From Operations (FFO) Reconciliation (in thousands) | Line Item | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net Income Available to Common Stockholders | $55,967 | $36,258 | | Depreciation and Other Amortization of Real Estate | $39,527 | $33,680 | | Gain on Sale of Real Estate from JV | ($27,632) | $0 | | Other Adjustments | $9,753 | ($792) | | FFO Available to Common Stockholders | $77,615 | $69,146 | - Cash-basis Same Store Net Operating Income (SS NOI) grew 8.1% in Q1 2023 compared to Q1 2022, increasing from $86.2 million to $93.2 million[158] Quantitative and Qualitative Disclosures About Market Risk This section outlines the company's market risk exposure, primarily from interest rate fluctuations, and its use of derivatives to mitigate such risks. - As of March 31, 2023, 92.5% ($1.93 billion) of the company's total debt was fixed-rate, including variable-rate debt effectively fixed through swaps[145] - The company utilizes interest rate swaps with a total notional value of $925.0 million to manage interest rate risk on its Unsecured Term Loans, effectively converting them to fixed-rate obligations[91][145] - A hypothetical 10% increase in LIBOR and SOFR rates would have increased interest expense by approximately $0.2 million for Q1 2023, demonstrating limited exposure on its variable-rate debt[147] - The company is preparing for the cessation of LIBOR after June 30, 2023, and plans to modify its LIBOR-indexed debt agreements and swaps, not anticipating a material impact from the transition[144] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting. - Management concluded that the disclosure controls and procedures for both the Company (First Industrial Realty Trust, Inc.) and the Operating Partnership (First Industrial, L.P.) were effective as of the end of the period covered by the report[162][164] - There were no changes in internal control over financial reporting during the first quarter of 2023 that have materially affected, or are reasonably likely to materially affect, internal controls for either entity[163][165] PART II: OTHER INFORMATION This section covers other required disclosures, including legal proceedings, risk factors, equity sales, defaults, and exhibits. Legal Proceedings The company reported no legal proceedings during the period. - None reported[167] Risk Factors No material changes were reported to the risk factors previously disclosed in the 2022 Annual Report on Form 10-K. - No material changes were reported to the risk factors disclosed in the 2022 Annual Report on Form 10-K[168] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or specific use of proceeds. - None reported[169] Defaults Upon Senior Securities The company reported no defaults upon senior securities. - None reported[169] Other Information The company reported no other information required to be disclosed under this item. - None reported[169] Exhibits This section lists the exhibits filed with the Form 10-Q, including officer certifications and interactive data files. - The exhibits filed with the report are listed in the Exhibit Index, including certifications by the Principal Executive Officer and Principal Financial Officer[169][171]