<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1998 OR
( ) Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to .
------------------ -------------------
Commission File Number 33-97014-01
FIRST INDUSTRIAL SECURITIES, L.P.
(Exact name of Registrant as specified in its Charter)
DELAWARE 36-4036965
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
311 S. WACKER DRIVE, SUITE 4000, CHICAGO, ILLINOIS 60606
(Address of principal executive offices) (Zip Code)
(312) 344-4300
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
GUARANTEE OF THE 9 1/2% SERIES A CUMULATIVE PREFERRED STOCK
OF FIRST INDUSTRIAL REALTY TRUST, INC.
(Title of class)
NEW YORK STOCK EXCHANGE
(Name of exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
--- ---
<PAGE> 2
FIRST INDUSTRIAL SECURITIES, L.P.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PART I.
<S> <C> <C>
Item 1. Business....................................................................................3
Item 2. The Properties..............................................................................4
Item 3. Legal Proceedings...........................................................................9
Item 4. Submission of Matters to a Vote of Security Holders.........................................9
PART II.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters......................10
Item 6. Selected Financial Data....................................................................10
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations......11
Item 7a. Quantitative and Qualitative Disclosures About Market Risk.................................15
Item 8. Financial Statements and Supplementary Data................................................15
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures......15
PART III.
Item 10. Directors and Executive Officers of the Registrant.........................................16
Item 11. Executive Compensation.....................................................................16
Item 12. Security Ownership of Certain Beneficial Owners and Management.............................16
Item 13. Certain Relationships and Related Transactions.............................................16
PART IV.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K...........................17
SIGNATURES...........................................................................................18
</TABLE>
2
<PAGE> 3
This report contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended. First Industrial Securities,
L.P. (the "Company") intends such forward-looking statements to be covered by
the safe harbor provisions for forward-looking statements contained in the
Private Securities Reform Act of 1995, and is including this statement for
purposes of complying with these safe harbor provisions. Forward-looking
statements, which are based on certain assumptions and describe future plans,
strategies and expectations of the Company, are generally identifiable by use of
the words "believe", "expect", "intend", "anticipate", "estimate", "project" or
similar expressions. The Company's ability to predict results or the actual
effect of future plans or strategies is inherently uncertain. Factors which
could have a material adverse affect on the operations and future prospects of
the Company include, but are not limited to, changes in: economic conditions
generally and the real estate market specifically, legislative/regulatory
changes, availability of capital, interest rates, competition, supply and demand
for industrial properties in the Company's current market areas and general
accounting principles, policies and guidelines. These risks and uncertainties
should be considered in evaluating forward-looking statements and undue reliance
should not be placed on such statements. Further information concerning the
Company and its business, including additional factors that could materially
affect the Company's financial results, is included herein and in the Company's
other filings with the Securities and Exchange Commission.
PART I
ITEM 1. BUSINESS
THE COMPANY
GENERAL
First Industrial Securities, L.P. (the "Company") is a Delaware limited
partnership which owns 19 industrial properties (the "Properties"). The
Properties consist of seven light industrial properties, five bulk warehouse
properties, four manufacturing properties, two regional warehouse properties and
one R&D/Flex property. The markets in which the Properties are located include:
Chicago, IL, Minneapolis/St. Paul, MN, Grand Rapids, MI, Detroit, MI and Central
Pennsylvania. The Properties contain an aggregate of approximately 2.2 million
square feet of gross leasable area ("GLA") which, as of December 31, 1998, was
99.4% leased to 33 tenants. At December 31, 1998, the Company had no employees.
The Company's executive offices are located at 311 South Wacker Drive, Suite
4000, Chicago, Illinois 60606, and its telephone number is (312) 344-4300.
The Company was formed in 1995 in connection with the issuance of
1,650,000 shares of $.01 par value Series A Cumulative Preferred Stock (the
"Series A Preferred Stock") of First Industrial Realty Trust, Inc. ("FR"). The
1% general partner of the Company is First Industrial Securities Corporation
("Securities Corporation"), which is a wholly owned subsidiary of FR. The 99%
limited partner of the Company is First Industrial, L.P. (the "Operating
Partnership"), of which FR is the sole general partner.
In connection with the issuance of the Series A Preferred Stock, FR
contributed to Securities Corporation the gross proceeds from the issuance of
the Series A Preferred Stock in exchange for preferred stock of Securities
Corporation, and Securities Corporation contributed such proceeds to the Company
in exchange for a preferred limited partnership interest in the Company. The
Operating Partnership and First Industrial Pennsylvania, L.P. contributed the
Properties to the Company in exchange for limited partnership interests in the
Company (the "Contribution"). The Pennsylvania Partnership subsequently
distributed its limited partnership interest to the Operating Partnership, which
is the Company's limited partner.
3
<PAGE> 4
THE GUARANTEE AND LIMITED PARTNERSHIP AGREEMENT
The Company has guaranteed the payment of dividends on, and payments
upon liquidation or redemption of, the Series A Preferred Stock under a
guarantee (the "Guarantee") contained in a Guarantee and Payment Agreement (the
"Guarantee Agreement"). The Guarantee Agreement is administered by American
National Bank and Trust Company, as guarantee agent (together with any subagents
which it may appoint, the "Guarantee Agent"). The Guarantee Agent may enforce
the Guarantee directly against the Company only at the direction of the holders
of at least 25% of the outstanding Series A Preferred Stock. No holder of Series
A Preferred Stock may seek directly to enforce the Guarantee. The Guarantee and
the Guarantee Agreement will terminate upon confirmation to the Company from
Fitch Investors Service, L.P. and Standard & Poor's Ratings Group that,
immediately following such a termination, the Series A Preferred Stock would be
rated at least BBB, whether or not the Series A Preferred Stock is so rated
prior to such termination.
The limited partnership agreement of the Company (the "Limited
Partnership Agreement") and the Guarantee Agreement contain covenants generally
restricting the Company's activities to the ownership and operation of the
Properties and, under certain circumstances, other industrial properties. These
covenants shall cease to have any effect upon the termination of the Guarantee.
Under its Articles of Incorporation, Securities Corporation`s sole purpose will
be to act as general partner of the Company and to pay dividends on its common
and preferred stock. These and other restrictions are intended to assure that
even in the event of FR, the Operating Partnership or other affiliates of FR
becoming subject to federal bankruptcy proceedings, neither Securities
Corporation nor the Company nor their assets will be treated as subject to such
bankruptcy proceedings under the doctrine of substantive consolidation or other
doctrines (except to the extent liabilities are imposed by non-insolvency
regulatory statutes on affiliates) and that activities of FR, the Operating
Partnership and other affiliates will not cause Securities Corporation or the
Company to become insolvent or unable to pay their debts as they mature
(including the Guarantee).
ITEM 2. THE PROPERTIES
GENERAL
At December 31, 1998 the Company owned 19 in-service industrial
properties containing approximately 2.2 million square feet of GLA in four
states. The Properties are generally located in business parks which have
convenient access to interstate highways and air transportation. The median age
of the Properties as of December 31, 1998 was approximately eleven years.
The Company classifies its Properties into five industrial categories:
Light Industrial, R&D/Flex, Bulk Warehouse, Regional Warehouse and
Manufacturing. While some Properties may have characteristics which fall under
more than one property type, the Company has used what it feels is the most
dominating characteristic to categorize the property.
4
<PAGE> 5
The following table summarizes certain information as of December 31, 1998 with
respect to the Properties.
PROPERTY SUMMARY
<TABLE>
<CAPTION>
Regional
Light Industrial R&D/ FLEX Bulk Warehouse Warehouse Manufacturing
------------------- ----------------------- --------------------- --------------------- -------------------
Number Number Number Number Number
Metropolitan of of of of of
Area GLA Properties GLA Properties GLA Properties GLA Properties GLA Properties
- ------------ ------- ---------- ------- ---------- ------- ---------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Chicago 41,820 1 49,730 1 225,000 1 -- -- 323,425 1
Minneapolis/
St. Paul -- -- -- -- -- -- 75,939 1 541,193 3
Grand Rapids 80,000 1 -- -- 384,500 3 -- -- -- --
Detroit 290,747 4 -- -- -- -- 66,395 1 -- --
Central
Pennsylvania 49,350 1 -- -- 100,000 1 -- -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total 461,917 7 49,730 1 709,500 5 142,334 2 864,618 4
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
TOTALS
--------------------------------------------------------
AVERAGE GLA AS A %
NUMBER OF OCCUPANCY AT OF TOTAL
METROPOLITAN AREA GLA PROPERTIES 12/31/98 PORTFOLIO
- -------------------- --------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
Chicago 639,975 4 100% 29%
Minneapolis/St. Paul 617,132 4 98% 27%
Grand Rapids 464,500 4 100% 21%
Detroit 357,142 5 100% 16%
Central Pennsylvania 149,350 2 100% 7%
- -------------------- --------- --------- --------- ---------
Total or Average 2,228,099 19 99% 100%
========= ========= ========= =========
</TABLE>
5
<PAGE> 6
DETAIL PROPERTY LISTING
The following table lists all of the Properties as of December 31, 1998,
none of which were subject to mortgage liens as of such date.
PROPERTY LISTING
<TABLE>
<CAPTION>
LAND
LOCATION YEAR BUILT/ BUILDING AREA OCCUPANCY
BUILDING ADDRESS (CITY/STATE) RENOVATED TYPE (ACRES) GLA AT 12/31/98
- ----------------------------- ------------------- ----------- --------------- ------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
2101-2125 Gardner Road Broadview, IL 1950/69 Manufacturing 9.98 323,425 100%
365 North Avenue Carol Stream, IL 1969 Bulk Warehouse 28.65 225,000 100%
2942 MacArthur Boulevard Northbrook, IL 1979 R&D/Flex 3.12 49,730 100%
3150-3160 MacArthur Boulevard Northbrook, IL 1978 Light Industrial 2.14 41,820 100%
900 Apollo Road Eagan, MN 1970 Manufacturing 39.00 312,265 100%
7316 Aspen Lane North Brooklyn Park, MN 1978 Manufacturing 6.63 97,640 87%
6707 Shingle Creek Parkway Brooklyn Center, MN 1986 Reg. Warehouse 4.22 75,939 100%
6655 Wedgwood Road Maple Grove, MN 1989 Manufacturing 17.88 131,288 100%
425 Gordon Industrial Court Grand Rapids, MI 1990 Bulk Warehouse 8.77 173,875 (a) 100%
2851 Prairie Street Grandville, MI 1989 Bulk Warehouse 5.45 117,251 100%
2945 Walkent Court Grand Rapids, MI 1993 Bulk Warehouse 4.45 93,374 100%
537 76th Street Grand Rapids, MI 1987 Light Industrial 5.26 80,000 100%
2965 Technology Drive Rochester Hills, MI 1995 Reg. Warehouse 4.92 66,395 100%
4177A Varsity Drive Ann Arbor, MI 1993 Light Industrial 2.48 11,050 100%
6515 Cobb Drive Sterling Heights, MI 1984 Light Industrial 2.91 47,597 100%
1451 Lincoln Avenue Madison Heights, MI 1967 Light Industrial 3.92 75,000 100%
4400 Purks Drive Auburn Hills, MI 1987 Light Industrial 13.04 157,100 (b) 100%
7195 Grayson Road Harrisburg, PA 1994 Bulk Warehouse 6.02 100,000 100%
5020 Louise Drive Mechanicsburg, PA 1995 Light Industrial 5.06 49,350 100%
--------- ------------
TOTAL 2,228,099 99%
========= ============
</TABLE>
(a) On April 1, 1997, the Company completed a 17,000 square foot expansion of
this property.
(b) On February 1, 1998, the Company completed a 70,000 square foot expansion of
this property.
TENANT AND LEASE INFORMATION
Many of the Company's leases have an initial term of between three and
five years and provide for periodic rental increases that are either fixed or
based on changes in the Consumer Price Index. Industrial tenants typically have
net or semi-net leases and pay as additional rent their percentage of the
property's operating costs, including the costs of common area maintenance,
property taxes and insurance. As of December 31, 1998, 99.4% of the GLA of the
Properties was leased.
6
<PAGE> 7
The following table sets forth, as of December 31, 1998, the annualized
December 1998 base rent, and the total GLA leased, by tenants responsible for
more than one percent of the aggregate annualized December 1998 base rent.
<TABLE>
<CAPTION>
ANNUALIZED BASE RENT
(IN THOUSANDS) GLA
------------------------ ------------------------
TENANT AMOUNT % OF TOTAL OCCUPIED % OF TOTAL
- ------------------------------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Sci-Med Life Systems, Inc. $ 1,129 13.0% 131,288 5.9%
Meyercord Company 834 9.6% 225,000 10.1%
Prestige Plastics 765 8.8% 312,265 14.0%
MSX International Engineering 697 8.0% 157,100 7.1%
B.L. Downey Company, Inc. 480 5.5% 162,306 7.3%
Underwriters Laboratories 423 4.9% 49,730 2.2%
American Axle & Manufacturing 383 4.4% 66,395 3.0%
Alabama Metals Industries Corp. 366 4.2% 100,000 4.5%
Nelson Metal Products Corp. 358 4.1% 117,251 5.3%
Universal Trim, Inc. 315 3.6% 75,000 3.4%
International Paper Company 278 3.2% 93,374 4.2%
NWS Michigan 242 2.8% 113,875 5.1%
Transpak, Inc. 223 2.6% 47,597 2.1%
Auer Steel & Heating Supply Co. 220 2.5% 47,861 2.1%
ITT Educational Services, Inc. 206 2.4% 21,000 0.9%
Independent Metals Corp. 205 2.4% 61,119 2.7%
Espec Corp. 194 2.2% 60,000 2.7%
Crest Engineering Company 185 2.1% 40,040 1.8%
St. Thomas Creations 150 1.7% 28,350 1.3%
Blevins, Inc. 140 1.6% 40,000 1.8%
Spartan Stores, Inc. 120 1.4% 40,000 1.8%
J.C. Penny Co., Inc. 107 1.2% 28,078 1.3%
Phaidon Press 94 1.1% 24,800 1.1%
--------- --------- --------- ---------
TOTAL $ 8,114 93.3% 2,042,429 91.7%
========= ========= ========= =========
</TABLE>
The following table shows scheduled lease expirations for all leases for
the Company's Properties as of December 31, 1998.
<TABLE>
<CAPTION>
PERCENTAGE OF
ANNUALIZED TOTAL
NUMBER PERCENTAGE OF BASE RENT UNDER ANNUALIZED
YEAR OF OF LEASES GLA GLA EXPIRING LEASES BASE RENT
EXPIRATION (1) EXPIRING EXPIRING (2) EXPIRING (IN THOUSANDS) EXPIRING
- -------------- --------- ------------ ------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
1999 5 105,628 4.8% $ 380 4.4%
2000 8 408,160 18.4% 2,227 25.6%
2001 3 145,601 6.6% 508 5.8%
2002 3 250,500 11.3% 943 10.8%
2003 6 452,749 20.4% 1,979 22.7%
2004 4 469,085 21.2% 1,288 14.8%
2005 2 66,395 3.0% 383 4.4%
2006 1 21,000 0.9% 206 2.4%
2007 3 296,181 13.4% 791 9.1%
Thereafter -- -- -- -- --
--------- --------- --------- --------- ---------
Total 35 2,215,299 100% $ 8,705 100%
========= ========= ========= ========= =========
</TABLE>
- --------------
(1) Lease expirations as of December 31, assuming tenants do not exercise
existing renewal, termination, or purchase options.
(2) Does not include existing vacancies of 12,800 aggregate square feet.
7
<PAGE> 8
MATERIAL PROPERTIES
At December 31, 1998, three of the Company's Properties (the "Material
Properties") represent ten percent or more of the aggregate book value of the
Properties as of December 31, 1998, or ten percent or more of the aggregate
annualized rental revenues as of December 31, 1998.
The following table shows the occupancy rate and average annual base
rent per square foot for each of the Material Properties for the periods
indicated:
<TABLE>
<CAPTION>
6655 WEDGEWOOD ROAD 365 NORTH AVENUE 2101-2125 GARDNER ROAD
MAPLE GROVE, MN CAROL STREAM, IL BROADVIEW, IL
--------------------------------------------------------------------------------------
AVERAGE AVERAGE AVERAGE
ANNUAL ANNUAL ANNUAL
OCCUPANCY BASE RENT OCCUPANCY BASE RENT OCCUPANCY BASE RENT
YEAR RATE (1) PER SQ. FT. RATE (1) PER SQ. FT. RATE (1) PER SQ. FT.
- ------------------------- --------- ----------- ---------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
1998 .................... 100% $8.60 100% $3.71 100% $3.25
1997 .................... 100% 8.60 100% 3.58 100% 3.05
1996 .................... 100% 8.60 100% 3.79 93% 3.09
1995 .................... 100% 8.60 100% 4.00 100% 2.81
1994 .................... 100% 7.63 100% 4.00 100% 2.67
1993 .................... (2) (2) (3) (3) 100% 2.59
</TABLE>
(1) As of December 31 of the year indicated.
(2) The Company acquired this property on September 30, 1994. Information for
periods prior to January 1, 1994, is not available.
(3) The Company acquired this property on November 14, 1994. Information for
periods prior to January 1, 1994, is not available.
The following table sets forth certain information concerning the
tenants and leases in the Material Properties as of December 31, 1998.
<TABLE>
<CAPTION>
ANNUALIZED PRIMARY MAXIMUM
GLA BASE RENT AT LEASE LEASE
NATURE OF OCCUPIED DECEMBER TERM TERM
TENANT BUSINESS (SQ. FT.) 31, 1998 EXPIRATION EXPIRATION
- -------------------------------------------- ------------------- ---------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
6655 WEDGEWOOD ROAD
SciMed Life Systems, Inc. (1) .......... Medical instruments 131,288 $1,129,272 2000 2005
365 NORTH AVENUE
Meyercord Company ...................... Commercial printing 225,000 (2) 833,748 2002 2012
2101-2125 GARDNER ROAD
B.L. Downey ............................ Plastics 162,306 480,425 2007 2012
Rolled steel
Alabama Metals Industries Corp. ........ processor 100,000 366,012 2003 2008
Rolled steel
Independent Metals Corporation ......... processor 61,119 204,774 2003 2008
</TABLE>
- -----------------------
(1) The tenant had the right to terminate the lease on 9 months prior notice
beginning December 31, 1998, without an early termination fee. The tenant
gave notice of early termination in March 1998 and subsequently moved out
in January 1999.
(2) The tenant has subleased 87,571 sq. ft. of this property to CP&P,
Incorporated, which is a fast food paper and plastic supplier.
8
<PAGE> 9
PROPERTY MANAGEMENT
The Company's properties are managed by the Operating Partnership, of
which FR is the sole general partner.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in legal proceedings arising in the ordinary
course of business. All such proceedings, taken together, are not expected to
have a material impact on the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
9
<PAGE> 10
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
None.
ITEM 6. SELECTED FINANCIAL DATA
The following sets forth selected financial and operating data for the
Company and its Predecessor Businesses (hereinafter defined). The following data
should be read in conjunction with the financial statements and notes thereto
and Management's Discussion and Analysis of Financial Condition and Results of
Operations included elsewhere in this Form 10-K. "Predecessor Businesses"
include the historical statements of operations of the Properties from the date
of acquisition (or, if the Property was developed, the date placed in service)
by the Operating Partnership or the Pennsylvania Partnership for the period
January 1, 1995 to December 15, 1995 (or the earlier date of contribution to the
Company) and the year ended December 31, 1994.
<TABLE>
<CAPTION>
FIRST INDUSTRIAL SECURITIES, L.P. PREDECESSOR BUSINESSES
------------------------------------------------------------ ---------------------------
FOR THE PERIOD FOR THE PERIOD
FOR THE FOR THE FOR THE AUGUST 14, JANUARY 1, FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED 1995 TO 1995 TO YEAR ENDED
DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
31, 1998 31, 1997 31, 1996 31, 1995 15, 1995 31, 1994
---------- ---------- ---------- -------------- -------------- -----------
(IN THOUSANDS, EXCEPT PROPERTY DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Total Revenues ....................... $ 11,821 $ 11,355 $ 11,516 $ 1,223 $ 8,048 $ 2,940
Property Expenses .................... 3,112 3,311 3,394 269 2,291 771
Interest Expense ..................... -- -- -- -- 2,376 846
Depreciation and Amortization ........ 1,913 1,820 1,766 271 1,261 491
---------- ---------- ---------- ---------- --------- ----------
Net Income ........................... $ 6,796 $ 6,224 $ 6,356 $ 683 $ 2,120 $ 832
========== ========== ========== ========== ========= ==========
BALANCE SHEET DATA (END OF PERIOD):
Real Estate, Before Accumulated
Depreciation ........................ $ 80,600 $ 79,491 $ 76,255 $ 75,319 $ 52,638
Real Estate, After Accumulated
Depreciation ........................ 73,437 74,106 72,582 73,338 52,149
Total Assets ......................... 77,449 76,822 76,337 75,878 52,404
Acquisition Facility ................. -- -- -- -- 25,175
Total Liabilities .................... 1,322 1,521 1,440 1,110 26,200
Partners' Capital .................... $ 76,127 $ 75,301 $ 74,897 $ 74,768 $ 26,204
OTHER DATA (END OF PERIOD):
Total Properties ..................... 19 19 19 19 12
Total GLA in sq. ft .................. 2,228,099 2,158,099 2,141,099 2,139,459 1,489,094
Occupancy % .......................... 99% 99% 97% 100% 99%
</TABLE>
10
<PAGE> 11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The following discussion should be read in conjunction with "Selected
Financial Data" and the historical Financial Statements and Notes thereto
appearing elsewhere in this Form 10-K.
First Industrial Securities, L.P. (the "Company") is a Delaware limited
partnership formed on August 14, 1995, the 1% general partner of which is First
Industrial Securities Corporation ("Securities Corporation"), a wholly owned
subsidiary of First Industrial Realty Trust, Inc. ("FR"), and the 99% limited
partner of which is First Industrial, L.P. (the "Operating Partnership"), of
which FR is the sole general partner. Securities Corporation also owns a
preferred limited partnership interest in the Company.
RESULTS OF OPERATIONS
At December 31, 1998 and 1997, the Company owned 19 in-service
industrial properties containing approximately 2.2 million square feet. At
December 31, 1996, the Company owned 19 in-service Properties containing
approximately 2.1 million square feet.
On April 1, 1997, the Company completed a 17,000 square foot expansion
of an existing industrial property located in Grand Rapids, Michigan. The cost
of the expansion was approximately $.3 million and was funded with cash flows
from operations.
On February 1, 1998, the Company completed a 70,000 square foot
expansion of an existing industrial property located in Auburn Hills, Michigan.
The cost of the expansion was approximately $2.6 million and was funded with
cash flows from operations and a general and limited partner capital
contribution made in 1997.
COMPARISON OF YEAR ENDED DECEMBER 31, 1998 TO YEAR ENDED DECEMBER 31, 1997
Total revenues increased by approximately $.5 million, or 4.1%, due
primarily to an increase in rental income due to an increase in occupancy,
general rent increases and additional rental income from the expansion of one of
the Company's properties that was completed and placed in service on February 1,
1998. Average occupancy for the twelve months ended December 31, 1998 and 1997
was 99% and 94%, respectively.
Property expenses, which include real estate taxes, repairs and
maintenance, property management, utilities, insurance and other expenses
decreased by $.2 million or 6.0% due primarily to a decrease in snow removal and
related expenses incurred for properties located in certain of the Company's
metropolitan areas during the year ended December 31, 1998 as compared to the
year ended December 31, 1997.
Depreciation and amortization increased by approximately $.1 million,
or 5.1%, due primarily to the additional depreciation related to the expansion
of one of the Company's properties that was completed and placed in service on
February 1, 1998.
COMPARISON OF YEAR ENDED DECEMBER 31, 1997 TO YEAR ENDED DECEMBER 31, 1996
Revenues decreased by approximately $.2 million or 1.4%, due primarily
to a decrease in occupancy. Average occupancy for the years ended December 31,
1997 and 1996 was 94% and 97%, respectively. The lower average occupancy for the
year ended 1997 is due to vacancies in the first and second quarters of 1997. As
of December 31, 1997, 99% of the GLA of the Properties was leased.
11
<PAGE> 12
Property expenses, which include real estate taxes, repairs and
maintenance, property management, utilities, insurance and other expenses
remained relatively unchanged.
Depreciation and amortization remained relatively unchanged.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1998 and 1997, the Company had no outstanding
indebtedness.
YEAR ENDED DECEMBER 31, 1998
Net cash provided by operating activities of approximately $8.5 million
for the year ended December 31, 1998 was primarily comprised of net income of
approximately $6.8 million and adjustments for non-cash items of approximately
$2.0 million, offset by the net change in operating assets and liabilities of
approximately $.3 million. The adjustments for non-cash items are comprised of
depreciation and amortization of approximately $1.9 million and a provision for
bad debts of approximately $.1 million, offset by the effect of straight-lining
of rental income.
Net cash used in investing activities of approximately $1.6 million for
the year ended December 31, 1998 was primarily comprised of capital expenditures
related to an expansion of one of the Company's properties located in Auburn
Hills, Michigan that was completed and placed in service on February 1, 1998 and
various other capital improvements.
Net cash used in financing activities of approximately $6.0 million for
the year ended December 31, 1998 consisted of preferred limited partner
distributions totaling approximately $3.9 million and general and limited
partner distributions totaling approximately $2.1 million.
YEAR ENDED DECEMBER 31, 1997
Net cash provided by operating activities of approximately $7.6 million
for the year ended December 31, 1997 was primarily comprised of net income of
approximately $6.2 million and adjustments for non-cash items of approximately
$1.4 million. The adjustments for non-cash items are comprised of depreciation
and amortization of approximately $1.8 million, offset by the effect of
straight-lining of rental income of approximately $.4 million.
Net cash used in investing activities of approximately $2.8 million for
the year ended December 31, 1997 was primarily comprised of capital expenditures
related to an expansion of one of the Company's properties located in Grand
Rapids, Michigan that was completed and placed in service on April 1, 1997,
capital expenditures related to the expansion of one of the Company's properties
located in Auburn Hills, Michigan that was placed in service on February 1, 1998
and various other capital improvements.
Net cash used in financing activities of approximately $5.8 million for
the year ended December 31, 1997 consisted of preferred limited partner
distributions of approximately $3.9 million and general and limited partner
distributions totaling approximately $2.3 million, offset by a pro rata general
and limited partner capital contribution from Securities Corporation and the
Operating Partnership, respectively, in the amount of approximately $.4 million.
YEAR ENDED DECEMBER 31, 1996
Net cash provided by operating activities of approximately $7.5 million
for the year ended December 31, 1996 was primarily comprised of net income of
approximately $6.4 million and adjustments for non-cash items of approximately
$1.5 million, offset by the net change in operating assets and liabilities of
approximately $.4 million. The adjustments for non-cash items are comprised of
depreciation
12
<PAGE> 13
and amortization of approximately $1.7 million and a provision for bad debts of
approximately $.1 million, offset by the effect of straight-lining of rental
income of approximately $.3 million.
Net cash used in investing activities of approximately $.9 million for
the year ended December 31, 1996 was primarily comprised of capital expenditures
related to an expansion of one of the Company's properties located in Grand
Rapids, Michigan that was completed and placed in service on April 1, 1997 and
various other capital improvements.
Net cash used in financing activities of approximately $6.2 million for
the year ended December 31, 1996 consisted of preferred limited partner
distributions of approximately $3.9 million and general and limited partner
distributions totaling approximately $2.3 million.
DISTRIBUTIONS AND CONTRIBUTIONS
In 1998, the Company paid preferred limited partnership distributions
of approximately $3.9 million to Securities Corporation. In 1998, the Company
paid pro rata general and limited partnership distributions to Securities
Corporation and the Operating Partnership, respectively, in the aggregate amount
of approximately $2.1 million.
In 1997, the Company paid preferred limited partnership distributions
of approximately $3.9 million to Securities Corporation. In 1997, the Company
paid pro rata general and limited partnership distributions to Securities
Corporation and the Operating Partnership, respectively, in the aggregate amount
of approximately $2.3 million that were partially off-set by a pro rata general
and limited partnership capital contribution from Securities Corporation and the
Operating Partnership, respectively, in the amount of approximately $.4 million.
In 1996, the Company paid preferred limited partnership distributions
of approximately $3.9 million to Securities Corporation. In 1996, the Company
paid pro rata general and limited partnership distributions to Securities
Corporation and the Operating Partnership, respectively, in the aggregate amount
of approximately $2.3 million.
SHORT-TERM AND LONG-TERM LIQUIDITY NEEDS
The Company has considered its short-term (one year or less) liquidity
needs and the adequacy of its estimated cash flow from operations and other
expected liquidity sources to meet these needs. The Company believes that its
principal short-term liquidity needs are to fund normal recurring expenses and
to pay the quarterly preferred limited partnership distribution. The Company
anticipates that these needs will be met with cash flows provided by operating
activities.
The Company expects to fund its long-term (greater than one year)
liquidity requirements for non-recurring capital improvements and property
expansions with its cash flow from operations, capital contributions and, in
part, with a deferred maintenance escrow established in connection with the
issuance of 1,650,000 shares of FR's $.01 par value Series A Cumulative
Preferred Stock which is included in restricted cash on the balance sheet.
INFLATION
Inflation has not had a significant impact on the Company because of
the relatively low inflation rates in the Company's markets of operation. Most
of the Company's leases require the tenants to pay their share of operating
expenses, including common area maintenance, real estate taxes and insurance,
thereby reducing the Company's exposure to increases in costs and operating
expenses resulting from inflation. In addition, many of the leases are for terms
less than five years which may enable the Company to replace existing leases
with new leases at higher base rentals if rents of existing leases are below the
then-existing market rate.
13
<PAGE> 14
YEAR 2000 CONCERNS
The Year 2000 compliance issue concerns the inability of computerized
information systems and non-information systems to accurately calculate, store
or use a date after 1999. This could result in computer systems failures or
miscalculations causing disruptions of operations. The Year 2000 issue affects
almost all companies and organizations.
The Company has discussed its software applications and internal
operational programs with its current information systems' vendor and, based on
such discussions, believes that such applications and programs will properly
recognize calendar dates beginning in the year 2000. The Company is discussing
with its material third-party service providers, such as its banks, payroll
processor and telecommunications provider, their Year 2000 compliance and is
assessing what effect their possible non-compliance might have on the Company.
In addition, the Company is discussing with its material vendors the possibility
of any interface difficulties and/or electrical or mechanical problems relating
to the year 2000 which may affect properties owned by the Company. The Company
has also surveyed substantially all of its tenants to determine the status of
their Year 2000 compliance and what effect their possible non-compliance might
have on the Company. The Company is currently processing the information
obtained from such tenant surveys and remains in discussions with its material
vendors and third-party service providers. Of the tenant surveys processed to
date, all have stated that they are Year 2000 compliant or will be Year 2000
compliant by the end of 1999. The Company plans to complete its assessment of
Year 2000 compliance by such parties by June 30, 1999. Until such time the
Company cannot estimate any potential adverse impact resulting from the failure
of tenants, vendors or third-party service providers to address their Year 2000
issues; however, to date, no significant Year 2000-related conditions have been
identified.
Because the Company's evaluation of its Year 2000 issues has been
conducted by its own personnel or by its vendors in connection with their
servicing operations, the Company believes that its expenditures for assessing
its Year 2000 issues, though difficult to quantify, to date have not been
material. In addition, the Company is not aware of any Year 2000-related
conditions that it believes would likely require any material expenditures by
the Company in the future.
Based on its current information, the Company believes that the risk
posed by any foreseeable Year 2000-related problem with its internal systems and
the systems at its properties (including both information and non-information
systems) or with its vendors or tenants is minimal. Year 2000-related problems
with the Company's software applications and internal operational programs or
with the electrical or mechanical systems at its properties are unlikely to
cause more than minor disruptions in the Company's operations. The Company
believes that the risk posed by Year 2000-related problems at certain of its
third-party service providers, such as its banks, payroll processor and
telecommunications provider is marginally greater, though, based on its current
information, the Company does not believe any such problems would have a
material effect on its operations. Any Year 2000 related problems at such
third-party service providers could delay the processing of financial
transactions and the Company's payroll and could disrupt the Company's internal
and external communications. At this time, the Company has not developed and
does not anticipate developing any contingency plans with respect to Year 2000
issues. In addition, the Company has no plans to seek independent verification
or review of its assessment of its Year 2000 issues. The Company does intend to
complete its assessment of, and to continue to monitor, its Year 2000 issues and
will develop contingency plans if, and to the extent, deemed necessary.
While the Company believes that it will be Year 2000 compliant by
December 31, 1999, there can be no assurance that the Company has been or will
be successful in identifying and assessing Year 2000 issues, or that, to the
extent identified, the Company's efforts to remediate such issues will be
effective such that Year 2000 issues will not have a material adverse effect on
the Company's business, financial condition or results of operation.
14
<PAGE> 15
OTHER
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130, "Reporting Comprehensive Income".
This statement, effective for fiscal years beginning after December 15, 1997,
requires the Company to report components of comprehensive income in a financial
statement that is displayed with the same prominence as other financial
statements. Comprehensive income is defined by Concepts Statement No. 6,
"Elements of Financial Statements" as the change in the equity of a business
enterprise during a period from transactions and other events and circumstances
from non-owner sources. It includes all changes in equity during a period except
those resulting from investments by owners and distributions to owners. The
Company's net income approximates its comprehensive income as defined in
Concepts Statement No. 6, "Elements of Financial Statements".
In June 1997, the FASB issued Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information". This statement, effective for financial statements for fiscal
years beginning after December 15, 1997, requires that a public business
enterprise report financial and descriptive information about its reportable
operating segments. Generally, financial information is required to be reported
on the basis that it is used internally for evaluating segment performance and
deciding how to allocate resources to segments. The general partner of the
Company views the Company as a single segment.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements and Financial Statement Schedule on
page F-1 of this Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None.
15
<PAGE> 16
PART III
ITEM 10 AND 11. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT AND EXECUTIVE
COMPENSATION
The directors and executive officers of Securities Corporation, the
general partner of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Office
---- --- ------
<S> <C> <C>
Michael W. Brennan 42 President, Chief Executive Officer and Director
Michael J. Havala 39 Chief Financial Officer and Director
Patrick J. Galvin 59 Independent Director
</TABLE>
The independent director receives an annual director's fee of $10,000.
No other director or executive officer of Securities Corporation receives any
separate compensation as such.
The following biographical descriptions set forth certain information
with respect to the directors and executive officers of Securities Corporation:
Michael W. Brennan. Mr. Brennan has been President and Chief Executive
Officer and Director of Securities Corporation since November 1998. Prior to
this, Mr. Brennan was the Chief Operating Officer of Securities Corporation
since its inception. Mr. Brennan has been President, Chief Executive Officer and
Director of FR since November 1998. From December 1995 to November 1998, Mr.
Brennan was the Chief Operating Officer and Director of FR and from April 1994
to December 1995, he was Senior Vice President, Asset Management of FR. Between
1988 and 1994, he was a partner of The Shidler Group and the President of the
Brennan/Tomasz/Shidler Investment Corporation and was in charge of asset
management, leasing, project finance, accounting and treasury functions for The
Shidler Group's Chicago operations.
Michael J. Havala. Mr. Havala has been Chief Financial Officer and
Director of Securities Corporation since its inception and has been the Chief
Financial Officer of FR since April 1994. Between 1989 and 1994 he was Chief
Financial Officer for The Shidler Group's Midwest region with responsibility for
accounting, finance and treasury functions.
Patrick J. Galvin. Mr. Galvin has been Director of Securities
Corporation since 1995. He has been a senior partner in the law firm of Galvin,
Galvin & Leeney in Hammond, Indiana since 1986. He is admitted to the practice
of law in the States of Indiana and Illinois and the District of Columbia and is
a member of the American Bar Association. Mr. Galvin holds a Bachelor of Arts
degree from the University of Notre Dame and received J.D. and L.L.M. in
taxation degrees from the Georgetown University Law Center. He serves on the
Board of Directors of Mercantile National Bank of Indiana.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Securities Corporation owns a 1% general partner interest and the
preferred limited partner interest in the Company. The Operating Partnership
owns a 99% limited partner interest in the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's Properties are managed by the Operating Partnership
pursuant to a property management agreement. Management fees incurred are based
on 3.25% of gross receipts. These fees totaled $.4 million for the year ended
December 31, 1998.
16
<PAGE> 17
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULE AND
REPORTS ON FORM 8-K
(a) FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULE AND EXHIBITS
(1 & 2) See Index to Financial Statements and Financial Statement
Schedule on page F-1 of this Form 10-K
(3) Exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
4.1 The Limited Partnership Agreement of First
Industrial Securities, L.P. (incorporated by
reference to Exhibit 4.1 of the Company's
Annual Report on Form 10-K for the year ended
December 31, 1995, File No. 33-97014-01)
4.2 Amended and Restated Articles of Incorporation
of First Industrial Securities Corporation
(incorporated by reference to Exhibit 4.2 of
the Company's Annual Report on Form 10-K for
the year ended December 31, 1995, File No.
33-97014-01).
4.3 Articles Supplementary of First Industrial
Securities Corporation (incorporated by
reference to Exhibit 4.3 of the Company's
Annual Report on Form 10-K for the year ended
December 31, 1995, File No. 33-97014-01)
4.4 Bylaws of First Industrial Securities
Corporation (incorporated by reference to
Exhibit 4.4 of the Company's Annual Report on
Form 10-K for the year ended December 31, 1995,
File No. 33-97014-01)
10.1 Guarantee and Payment Agreement (incorporated
by reference to Exhibit 10.1 of the Company's
Annual Report on Form 10-K for the year ended
December 31, 1995, File No. 33-97014-01)
10.2 Agency and Advance Agreement (incorporated by
reference to Exhibit 10.2 of the Company's
Annual Report on Form 10-K for the year ended
December 31, 1995, File No. 33-97014-01)
10.3 Guarantee Agency Agreement (incorporated by
reference to Exhibit 10.3 of the Company's
Annual Report on Form 10-K for the year ended
December 31, 1995, File No. 33-97014-01)
10.4 Property Management Agreement (incorporated by
reference to Exhibit 10.4 of the Company's
Annual Report on Form 10-K for the year ended
December 31, 1995, File No. 33-97014-01)
27 * Financial Data Schedule
* Filed herewith.
</TABLE>
(b) REPORTS ON FORM 8-K
None.
17
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FIRST INDUSTRIAL SECURITIES, L.P.
BY: FIRST INDUSTRIAL SECURITIES CORPORATION,
ITS SOLE GENERAL PARTNER
Date: March 16, 1999 By: /s/ Michael W. Brennan
-------------------------------------
Michael W. Brennan
President and Chief Executive Officer
(Principal Executive Officer)
Date: March 16, 1999 By: /s/ Michael J. Havala
-------------------------------------
Michael J. Havala
Chief Financial Officer
(Principal Financial and Accounting
Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Michael W. Brennan President, Chief Executive Officer March 16, 1999
- -------------------------------- and Director
Michael W. Brennan
/s/ Michael J. Havala Chief Financial Officer and Director March 16, 1999
- --------------------------------
Michael J. Havala
/s/ Patrick J. Galvin Director March 16, 1999
- --------------------------------
Patrick J. Galvin
</TABLE>
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
4.1 The Limited Partnership Agreement of First
Industrial Securities, L.P. (incorporated by
reference to Exhibit 4.1 of the Company's
Annual Report on Form 10-K for the year ended
December 31, 1995, File No. 33-97014-01)
4.2 Amended and Restated Articles of Incorporation
of First Industrial Securities Corporation
(incorporated by reference to Exhibit 4.2 of
the Company's Annual Report on Form 10-K for
the year ended December 31, 1995, File No.
33-97014-01).
4.3 Articles Supplementary of First Industrial
Securities Corporation (incorporated by
reference to Exhibit 4.3 of the Company's
Annual Report on Form 10-K for the year ended
December 31, 1995, File No. 33-97014-01)
4.4 Bylaws of First Industrial Securities
Corporation (incorporated by reference to
Exhibit 4.4 of the Company's Annual Report on
Form 10-K for the year ended December 31, 1995,
File No. 33-97014-01)
10.1 Guarantee and Payment Agreement (incorporated
by reference to Exhibit 10.1 of the Company's
Annual Report on Form 10-K for the year ended
December 31, 1995, File No. 33-97014-01)
10.2 Agency and Advance Agreement (incorporated by
reference to Exhibit 10.2 of the Company's
Annual Report on Form 10-K for the year ended
December 31, 1995, File No. 33-97014-01)
10.3 Guarantee Agency Agreement (incorporated by
reference to Exhibit 10.3 of the Company's
Annual Report on Form 10-K for the year ended
December 31, 1995, File No. 33-97014-01)
10.4 Property Management Agreement (incorporated by
reference to Exhibit 10.4 of the Company's
Annual Report on Form 10-K for the year ended
December 31, 1995, File No. 33-97014-01)
27 * Financial Data Schedule
* Filed herewith.
</TABLE>
<PAGE> 20
FIRST INDUSTRIAL SECURITIES, L.P.
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FINANCIAL STATEMENTS
Report of Independent Accountants........................................................ F-2
Balance Sheets of First Industrial Securities, L.P. (the "Company") as of
December 31, 1998 and 1997............................................................... F-3
Statements of Operations of the Company for the Years Ended December 31,
1998, 1997 and 1996..................................................................... F-4
Statements of Changes in Partners' Capital of the Company for the Years Ended December
31, 1998, 1997 and 1996.................................................................. F-5
Statements of Cash Flows of the Company for the Years Ended December 31, 1998, 1997
and 1996................................................................................. F-6
Notes to Financial Statements............................................................ F-7
FINANCIAL STATEMENT SCHEDULE
Report of Independent Accountants.......................................................... S-1
Schedule III: Real Estate and Accumulated Depreciation..................................... S-2
</TABLE>
F-1
<PAGE> 21
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
First Industrial Securities, L.P.
In our opinion, the accompanying balance sheets and the related statements of
operations, of changes in partners' capital and of cash flows present fairly, in
all material respects, the financial position of First Industrial Securities,
L.P. (the "Company") at December 31, 1998 and 1997, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Chicago, Illinois
February 16, 1999
F-2
<PAGE> 22
FIRST INDUSTRIAL SECURITIES, L.P.
BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
December 31, December 31,
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
Assets:
Investment in Real Estate:
Land........................................................... $ 11,580 $ 11,626
Buildings and Improvements..................................... 69,020 65,767
Construction in Progress....................................... -- 2,098
Less: Accumulated Depreciation................................. (7,163) (5,385)
----------- -----------
Net Investment in Real Estate.................................. 73,437 74,106
Cash and Cash Equivalents....................................... 1,391 458
Restricted Cash................................................. 410 411
Tenant Accounts Receivable, Net................................. 38 99
Deferred Rent Receivable........................................ 1,104 1,102
Prepaid Expenses and Other Assets, Net.......................... 1,069 646
----------- -----------
Total Assets.............................................. $ 77,449 $ 76,822
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts Payable and Accrued Expenses............................ $ 794 $ 1,053
Rents Received in Advance and Security Deposits.................. 528 468
----------- -----------
Total Liabilities......................................... 1,322 1,521
----------- -----------
Commitments and Contingencies..................................... -- --
Partners' Capital:
General Partner and Preferred Limited Partner..................... 41,266 41,258
Limited Partner................................................... 34,861 34,043
----------- -----------
Total Partners' Capital................................... 76,127 75,301
----------- -----------
Total Liabilities and Partners' Capital................... 77,449 76,822
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE> 23
FIRST INDUSTRIAL SECURITIES, L.P.
STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
For the Year For the Year For the Year
Ended Ended Ended
December 31, December 31, December 31,
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Rental Income............................ $ 9,057 $ 8,544 $ 8,644
Tenant Recoveries and Other Income....... 2,764 2,811 2,872
---------- ---------- ----------
Total Revenues......................... 11,821 11,355 11,516
---------- ---------- ----------
Expenses:
Real Estate Taxes........................ 2,149 2,213 2,328
Repairs and Maintenance.................. 304 444 390
Property Management...................... 407 380 386
Utilities................................ 107 158 106
Insurance................................ 32 32 70
Other.................................... 113 84 114
Depreciation and Other Amortization...... 1,913 1,820 1,766
---------- ---------- ----------
Total Expenses......................... 5,025 5,131 5,160
---------- ---------- ----------
Net Income................................ $ 6,796 $ 6,224 $ 6,356
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE> 24
FIRST INDUSTRIAL SECURITIES, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
General
Partner and
Limited Preferred Limited
Total Partner Partner
----------- ----------- -----------------
<S> <C> <C> <C>
Balance at December 31, 1995.......... $ 74,768 $ 33,515 $ 41,253
Distributions....................... (6,227) (2,284) (3,943)
Net Income.......................... 6,356 2,412 3,944
----------- ----------- ----------
Balance at December 31, 1996.......... $ 74,897 $ 33,643 $ 41,254
Contributions........................ 400 396 4
Distributions........................ (6,220) (2,277) (3,943)
Net Income........................... 6,224 2,281 3,943
----------- ----------- ----------
Balance at December 31, 1997.......... $ 75,301 $ 34,043 $ 41,258
Distributions........................ (5,970) (2,029) (3,941)
Net Income........................... 6,796 2,847 3,949
----------- ----------- ----------
Balance at December 31, 1998.......... $ 76,127 $ 34,861 $ 41,266
=========== =========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE> 25
FIRST INDUSTRIAL SECURITIES, L.P.
STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
For the Year For the Year For the Year
Ended Ended Ended
December 31, December 31, December 31,
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income................................................ $ 6,796 $ 6,224 $ 6,356
Adjustments to Reconcile Net Income to Net Cash Provided by
Operating Activities:
Depreciation and Amortization......................... 1,913 1,820 1,766
Provision for Bad Debts............................... 50 -- 50
Increase in Deferred Rent Receivable.................. (2) (385) (291)
Decrease (Increase) in Tenant Accounts Receivable..... 11 469 (455)
Increase in Prepaid Expenses and Other Assets......... (558) (123) (277)
Decrease in Restricted Cash........................... 1 -- --
Increase (Decrease) in Accounts Payable and Accrued
Expenses and Rents Received in Advance and Security
Deposits............................................ 246 (368) 330
--------- --------- ---------
Net Cash Provided by Operating Activities......... 8,457 7,637 7,479
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of and Additions to Investment in Real Estate
and Construction in Progress......................... (1,554) (2,787) (936)
--------- --------- ---------
Net Cash Used In Investing Activities................. (1,554) (2,787) (936)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions......................................... (5,970) (6,220) (6,227)
Capital Contributions................................. -- 400 --
--------- --------- ---------
Net Cash Used In Financing Activities............. (5,970) (5,820) (6,227)
--------- --------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents...... 933 (970) 316
Cash and Cash Equivalents, Beginning of Period............ 458 1,428 1,112
--------- --------- ---------
Cash and Cash Equivalents, End of Period.................. $ 1,391 $ 458 $ 1,428
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE> 26
FIRST INDUSTRIAL SECURITIES, L.P.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA )
1. ORGANIZATION
First Industrial Securities, L.P. ("the Company") is a Delaware limited
partnership formed on August 14, 1995, the 1% general partner of which is First
Industrial Securities Corporation ("Securities Corporation"), a wholly owned
subsidiary of First Industrial Realty Trust, Inc. ("FR"), and the 99% limited
partner of which is First Industrial, L.P. (the "Operating Partnership"), of
which FR is the sole general partner. Securities Corporation also owns a
preferred limited partnership interest in the Company.
The limited partnership agreement of the Company (the "Limited
Partnership Agreement") and the Guarantee Agreement (herein after defined)
contain covenants generally restricting the Company's activities to the
ownership and operation of the properties and, under certain circumstances,
other industrial properties. These covenants shall cease to have any effect upon
the termination of the Guarantee. Under its Articles of Incorporation,
Securities Corporation's sole purpose will be to act as general partner of the
Company and to pay dividends on its common and preferred stock. These and other
restrictions are intended to assure that even in the event of FR, the Operating
Partnership or other affiliates of FR becoming subject to federal bankruptcy
proceedings, neither Securities Corporation nor the Company nor their assets
will be treated as subject to such bankruptcy proceedings under the doctrine of
substantive consolidation or other doctrines (except to the extent liabilities
are imposed by non-insolvency regulatory statutes on affiliates) and that
activities of FR, the Operating Partnership and other affiliates will not cause
Securities Corporation or the Company to become insolvent or unable to pay their
debts as they mature (including the Guarantee).
2. FORMATION TRANSACTIONS
THE INITIAL CAPITALIZATION
The Company was capitalized with a capital contribution of $1 on August
28, 1995 by Securities Corporation.
THE CONTRIBUTION TRANSACTIONS
On November 17, 1995, FR completed a public offering of 1,500,000
shares of $.01 par value 9 1/2% Series A Cumulative Preferred Stock at $25.00
per share, and on December 14, 1995, FR issued 150,000 shares of $.01 par value
9 1/2% Series A Cumulative Preferred Stock for $25.00 per share pursuant to the
underwriters' exercise of their over-allotment option (together the "Series A
Preferred Shares"). The issuance of 1,650,000 Series A Preferred Shares is thus
referred to as the "Offering". Gross proceeds to FR from the Offering were
$41,250. FR contributed to Securities Corporation the gross proceeds from the
Offering in exchange for preferred stock of Securities Corporation, and
Securities Corporation contributed such proceeds to the Company in exchange for
a preferred limited partnership interest in the Company. The Operating
Partnership and First Industrial Pennsylvania, L.P. (the "Pennsylvania
Partnership"), a Delaware limited partnership and a subsidiary of the Operating
Partnership, contributed to the Company, in return for limited partnership
interests, 14 properties and 5 properties (described below) on November 17, 1995
and December 14, 1995, respectively, encumbered by liens collateralizing debt
under the 1994 Acquisition Facility (herein after defined). An amount of such
debt equal to the gross proceeds of the Offering was repaid by the Company and
such liens on the properties described below have been
F-7
<PAGE> 27
FIRST INDUSTRIAL SECURITIES, L.P.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA )
2. FORMATION TRANSACTIONS, CONTINUED
released. The Pennsylvania Partnership contributed its limited partnership
interest in the Company to the Operating Partnership. The foregoing is herein
collectively referred to as the "Contribution Transactions". The Company
commenced operations on November 17, 1995.
THE PROPERTIES
Upon consummation of the Offering and the Contribution Transactions
(collectively, the "Formation Transactions"), the Company owned 19 properties
located in four states containing an aggregate of approximately 2.1 million
square feet (unaudited) of gross leasable area ("GLA"). Of the properties:
(a) Four were acquired by the Operating Partnership prior to FR's
initial public offering (the "Initial Offering") in June, 1994;
(b) Two were acquired concurrently with the consummation of the Initial
Offering; and
(c) Thirteen were acquired or developed by either the Operating
Partnership or the Pennsylvania Partnership subsequent to the
Initial Offering.
On April 1, 1997, the Company completed a 17,000 square foot
(unaudited) expansion of an existing industrial property located in Grand
Rapids, Michigan. The cost of the expansion was approximately $252 and was
funded with cash flows from operations.
On February 1, 1998, the Company completed a 70,000 square foot
(unaudited) expansion of an existing industrial property located in Auburn
Hills, Michigan. The cost of the expansion was approximately $2,630 and was
funded with cash flows from operations.
On July 31, 1998, a governmental entity condemned two parcels of land.
The Company received gross proceeds of approximately $108 as consideration for
these parcels of land, and the gain is reflected in total revenues.
THE GUARANTEE
In connection with the Offering, the Company entered into a Guarantee
and Payment Agreement (the "Guarantee Agreement") pursuant to which the Company
guaranteed the payment of dividends on, and payments on liquidation or
redemption of, the Series A Preferred Shares.
The guarantee was created through the execution of the Guarantee
Agreement between the Company and Securities Corporation, for the benefit of a
guarantee agent. The Guarantee Agreement is administered and enforced for the
benefit of the holders of the Series A Preferred Shares by the guarantee agent.
The guarantee agent may enforce the guarantee directly against the Company only
with the approval of the holders of at least 25% of the outstanding Series A
Preferred Shares. No holder may seek directly to enforce the guarantee.
Under the terms of the Guarantee Agreement, the Company was required to
deposit approximately $414 into a restricted cash escrow account with the
guarantee agent (the "Restricted Escrow"). These funds were set aside to pay for
certain repair and maintenance items of the contributed properties. The balance
of the Restricted Escrow at December 31, 1998 and 1997 is $410 and $411,
respectively, and is included in restricted cash.
F-8
<PAGE> 28
FIRST INDUSTRIAL SECURITIES, L.P.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA )
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In order to conform with generally accepted accounting principles,
management, in preparation of the Company's financial statements, is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities as of December
31, 1998 and 1997, and the reported amounts of revenues and expenses for the
years ended December 31, 1998, 1997 and 1996. Actual results could differ from
those estimates.
REVENUE RECOGNITION
Rental income is recognized on a straight-line method under which
contractual rent increases are recognized evenly over the lease term. Tenant
recovery income includes payments from tenants for taxes, insurance and other
property operating expenses and are recognized as revenues in the period the
related expenses are incurred by the Company.
The Company evaluates and, if applicable, provides for an allowance for
doubtful accounts against the portion of accounts receivable which is estimated
to be uncollectible. Accounts receivable in the balance sheets is shown net of
an allowance for doubtful accounts of $100 and $50 as of December 31, 1998 and
1997, respectively.
GENERAL AND ADMINISTRATIVE
Expenses incurred related to the operations of the properties are
reflected in property management expense, therefore, there is no allocation of
FR's general and administrative expense.
INVESTMENT IN REAL ESTATE AND DEPRECIATION
Real estate assets are carried at the lower of depreciated cost or fair
value as determined by the Company. The Company reviews its properties on a
quarterly basis for impairment and provides an allowance if impairments are
determined. First, to determine if impairment may exist, the Company reviews its
properties and identifies those which have had either an event of change or
event of circumstance warranting further assessment of recoverability. Then, the
Company estimates the fair value of those properties on an individual basis by
capitalizing the expected net operating income. Such amounts are then compared
to the property's depreciated cost to determine whether an impairment exists.
F-9
<PAGE> 29
FIRST INDUSTRIAL SECURITIES, L.P.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA )
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Real estate taxes and other directly related expenses incurred during
construction periods are capitalized and depreciated commencing with the date
placed in service, on the same basis as the related assets. Depreciation expense
is computed using the straight-line method based on the following useful lives:
<TABLE>
<CAPTION>
Years
--------
<S> <C>
Buildings and Improvements.................... 38 to 40
Land Improvements............................. 15
</TABLE>
Construction expenditures for tenant improvements, leasehold
improvements and leasing commissions are capitalized and amortized over the
terms of each specific lease, and repairs and maintenance are charged to expense
when incurred. Expenditures for improvements are capitalized.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include all cash and liquid investments with
an initial maturity of three months or less. The carrying amount approximates
fair value due to the short maturity of these investments.
INCOME TAXES
No federal income taxes are payable by the Company and none have been
provided for in the accompanying financial statements. In accordance with
partnership taxation, each of the partners is responsible for reporting their
share of taxable income or loss.
FAIR VALUE OF FINANCIAL INVESTMENTS
The Company's financial instruments include short-term investments,
tenant accounts receivable, accounts payable and other accrued expenses. The
fair value of these financial instruments was not materially different from
their carrying amount or contract values.
F-10
<PAGE> 30
FIRST INDUSTRIAL SECURITIES, L.P.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA )
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130, "Reporting Comprehensive Income".
This statement, effective for fiscal years beginning after December 15, 1997,
requires the Company to report components of comprehensive income in a financial
statement that is displayed with the same prominence as other financial
statements. Comprehensive income is defined by Concepts Statement No. 6,
"Elements of Financial Statements" as the change in the equity of a business
enterprise during a period from transactions and other events and circumstances
from non-owner sources. It includes all changes in equity during a period except
those resulting from investments by owners and distributions to owners. The
Company's net income approximates its comprehensive income as defined in
Concepts Statement No. 6, "Elements of Financial Statements".
In June 1997, the FASB issued Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information". This statement, effective for financial statements for fiscal
years beginning after December 15, 1997, requires that a public business
enterprise report financial and descriptive information about its reportable
operating segments. Generally, financial information is required to be reported
on the basis that it is used internally for evaluating segment performance and
deciding how to allocate resources to segments. The general partner of the
Company views the Company as a single segment.
4. RELATED PARTY TRANSACTIONS
The 19 properties owned by the Company are managed by the Operating
Partnership, of which FR is the sole general partner. Management fees incurred
are based on 3.25% of gross receipts. Such fees totaled $407, $380 and $386 for
the years ended December 31, 1998, 1997 and 1996, respectively. At December 31,
1998 and 1997, there were no accrued management fees due to the Operating
Partnership.
5. PARTNERS' CAPITAL
During 1998, the Company distributed $3,920 to Securities Corporation
in respect of its preferred limited partnership interest in the Company, and
Securities Corporation paid a preferred stock dividend of $3,920 to FR, in each
case, the amount equal to the aggregate dividend payable on FR's Series A
Preferred Stock.
During 1998, the Company paid a pro rata general and limited
partnership distribution to Securities Corporation and the Operating
Partnership, respectively, in the aggregate amount of $2,050.
During 1997, the Company distributed $3,920 to Securities Corporation
in respect of its preferred limited partnership interest in the Company, and
Securities Corporation paid a preferred stock dividend of $3,920 to FR, in each
case, the amount equal to the aggregate dividend payable on FR's Series A
Preferred Stock.
F-11
<PAGE> 31
FIRST INDUSTRIAL SECURITIES, L.P.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA )
5. PARTNERS' CAPITAL, CONTINUED
During 1997, the Company paid a pro rata general and limited
partnership distribution to Securities Corporation and the Operating
Partnership, respectively, in the aggregate amount of $2,300.
During 1997, the Company received a pro rata general and limited
partnership contribution from Securities Corporation and the Operating
Partnership, respectively, in the aggregate amount of $400.
6. FUTURE RENTAL REVENUES
The Company's properties are leased to tenants under net and semi-net
operating leases. Minimum lease payments receivable, excluding tenant
reimbursements of expenses, under noncancelable operating leases in effect as of
December 31, 1998 are approximately as follows:
1999 $ 9,524
2000 9,015
2001 7,137
2002 6,277
2003 4,498
Thereafter 4,767
-------------
Total $ 41,218
=============
Three of the Company's properties represent ten percent or more of the
aggregate book value of the assets as of December 31, 1998, or ten percent or
more of the Company's aggregate rental revenues as of December 31, 1998.
7. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company is involved in legal
actions arising from the ownership of their properties. In management's opinion,
the liabilities, if any, that may ultimately result from such legal actions are
not expected to have a material adverse effect on the financial position,
results of operations or liquidity of the Company.
Two properties have leases granting the tenants options to purchase the
property. Such options are exercisable at various times and at a fixed purchased
price in each case in excess of the property's depreciated cost. The Company has
no notice of any exercise of any tenant purchase option.
F-12
<PAGE> 32
FIRST INDUSTRIAL SECURITIES, L.P.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
8. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
FIRST INDUSTRIAL SECURITIES, L.P.
YEAR ENDED DECEMBER 31, 1998
----------------------------------------------------------------------------
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Revenues ........................ $ 3,030 $ 3,209 $ 3,054 $ 2,528
Property Expenses................ (790) (824) (821) (677)
Depreciation and Amortization.... (462) (469) (482) (500)
----------- ------------ ----------- -------------
Net Income....................... $ 1,778 $ 1,916 $ 1,751 $ 1,351
=========== ============ =========== =============
<CAPTION>
FIRST INDUSTRIAL SECURITIES, L.P.
YEAR ENDED DECEMBER 31, 1997
----------------------------------------------------------------------------
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Revenues ........................ $ 2,879 $ 2,677 $ 2,894 $ 2,905
Property Expenses................ (904) (829) (784) (794)
Depreciation and Amortization.... (447) (443) (462) (468)
------------- -------------- ------------- --------------
Net Income....................... $ 1,528 $ 1,405 $ 1,648 $ 1,643
============= ============== ============= ==============
</TABLE>
F-13
<PAGE> 33
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
First Industrial Securities, L.P.
Our report on the financial statements of First Industrial Securities, L.P. is
included on page F-2 of this Form 10-K. In connection with our audits of such
financial statements, we have also audited the related financial statement
schedule listed in the Index to Financial Statements and Financial Statement
Schedule on page F-1 of this Form 10-K. In our opinion, the financial statement
schedule referred to above, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information required to be included therein.
PricewaterhouseCoopers LLP
Chicago, Illinois
February 16, 1999
S-1
<PAGE> 34
FIRST INDUSTRIAL SECURITIES, L.P.
SCHEDULE III:
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COSTS
CAPITALIZED
INITIAL COST (a) SUBSEQUENT TO
LOCATION ------------------------ ACQUISITION OR
BUILDING ADDRESS (CITY/STATE) LAND BUILDINGS COMPLETION
- ---------------- ------------ --------- ------------- --------------
<S> <C> <C> <C> <C>
5020 Louise Drive Mechanicsburg, PA $ 707 $ -- $ 2,773
7195 Grayson Harrisburg, IL 478 2,771 80
3150-3160 MacArthur Boulevard Northbrook, IL 439 2,518 21
2101-2125 Gardner Road Broadview, IL 1,177 6,818 110
365 North Avenue Carol Stream, IL 1,208 6,961 81
2942 MacArthur Boulevard Northbrook, IL 315 1,803 232
2965 Technology Drive Rochester Hills, MI 964 2,277 123
1451 Lincoln Avenue Madison Heights, MI 299 1,703 435
4400 Purks Drive Auburn Hills, MI 602 3,410 2,687
4177A Varsity Drive Ann Arbor, MI 90 536 78
6515 Cobb Drive Sterling Heights, MI 305 1,753 150
425 Gordon Industrial Court Grand Rapids, MI 611 3,747 1,331
2851 Prairie Street Grandville, MI 377 2,778 240
2945 Walkent Court Grand Rapids, MI 310 2,074 296
537 76th Street Grand Rapids, MI 255 1,456 330
6655 Wedgewood Road Maple Grove, MN 1,466 8,342 143
900 Apollo Road Eagan, MN 1,029 5,855 511
7316 Aspen Lane North Brooklyn Park, MN 368 2,156 180
6707 Shingle Creek Parkway Brooklyn Center, MN 376 2,101 364
-------- -------- --------
$ 11,376 $ 59,059 $ 10,165
======== ======== ========
<CAPTION>
GROSS AMOUNT CARRIED
AT CLOSE OF PERIOD (12/31/98)(c)
--------------------------------------- ACCUMULATED
BUILDING AND DEPRECIATION YEAR BUILT/ DEPRECIABLE
BUILDING ADDRESS LAND IMPROVEMENTS TOTAL 12/31/98 RENOVATED LIVES(YEARS)
- ---------------- --------- ---------------- ---------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
5020 Louise Drive $ 716 $ 2,764 $ 3,480 $ 326 1995 (b)
7195 Grayson 479 2,850 3,329 290 1994 (b)
3150-3160 MacArthur Boulevard 429 2,549 2,978 288 1978 (b)
2101-2125 Gardner Road 1,228 6,877 8,105 744 1950/69 (b)
365 North Avenue 1,208 7,042 8,250 749 1969 (b)
2942 MacArthur Boulevard 311 2,039 2,350 215 1979 (b)
2965 Technology Drive 964 2,400 3,364 231 1995 (b)
1451 Lincoln Avenue 305 2,132 2,437 227 1967 (b)
4400 Purks Drive 612 6,087 6,699 352 1987 (b)
4177A Varsity Drive 90 614 704 114 1993 (b)
6515 Cobb Drive 305 1,903 2,208 193 1984 (b)
425 Gordon Industrial Court 644 5,045 5,689 545 1990 (b)
2851 Prairie Street 445 2,950 3,395 351 1989 (b)
2945 Walkent Court 352 2,328 2,680 277 1993 (b)
537 76th Street 258 1,783 2,041 178 1987 (b)
6655 Wedgewood Road 1,466 8,485 9,951 927 1989 (b)
900 Apollo Road 1,012 6,383 7,395 576 1970 (b)
7316 Aspen Lane North 377 2,327 2,704 231 1978 (b)
6707 Shingle Creek Parkway 379 2,462 2,841 349 1986 (b)
-------- -------- -------- -------
$ 11,580 $ 69,020 $ 80,600 $ 7,163
======== ======== ======== =======
</TABLE>
NOTES:
(a) Initial cost for each respective property is total acquisition
costs associated with its purchase.
(b) Depreciation is computed based upon the following estimated
lives:
Buildings and Improvements 38 to 40 years
Tenant Improvements and Leasehold Improvements Life of lease
Land Improvements 15 years
(c) At December 31, 1998, aggregate cost of land, buildings and
improvements for federal income tax purposes was approximately
$80.6 million.
These properties are owned by the Securities Partnership. The
Securities Partnership guarantees the payment of the Series A
Cumulative Preferred Stock dividends and amounts upon redemption,
liquidation, dissolution or winding - up.
S-2
<PAGE> 35
FIRST INDUSTRIAL SECURITIES, L.P.
SCHEDULE III:
REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
AS OF DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)
The changes in total real estate assets for the years ended December 31, 1998
and 1997 are as follows:
<TABLE>
<CAPTION>
First Industrial Securities, L.P.
---------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Balance, Beginning of Year ........ $ 79,491 $ 76,255
Construction Costs and Improvements 1,155 3,236
Sale of Land ...................... (46) --
------------ ------------
Balance, End of Year .............. 80,600 79,491
============ ============
</TABLE>
The changes in accumulated depreciation for the years ended December 31, 1998
and 1997 are as follows:
<TABLE>
<CAPTION>
First Industrial Securities, L.P.
---------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Balance, Beginning of Year ........ $ 5,385 $ 3,673
Depreciation for Year ............. 1,778 1,712
------------ ------------
Balance, End of Year .............. $ 7,163 $ 5,385
============ ============
</TABLE>
S-3
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF FIRST INDUSTRIAL SECURITIES, L.P. FOR THE YEAR ENDED
DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 1,391
<SECURITIES> 0
<RECEIVABLES> 138
<ALLOWANCES> (100)
<INVENTORY> 0
<CURRENT-ASSETS> 1,429
<PP&E> 80,600
<DEPRECIATION> (7,163)
<TOTAL-ASSETS> 77,449
<CURRENT-LIABILITIES> 794
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 76,127
<TOTAL-LIABILITY-AND-EQUITY> 77,449
<SALES> 0
<TOTAL-REVENUES> 11,821
<CGS> 0
<TOTAL-COSTS> (3,062)
<OTHER-EXPENSES> (1,913)
<LOSS-PROVISION> (50)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,796
<INCOME-TAX> 0
<INCOME-CONTINUING> 6,796
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,796
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
