<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
--------------------------
Commission File Number 333-21873
--------------------------
FIRST INDUSTRIAL, L.P.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 36-3924586
(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)
(312) 344-4300
(Registrant's Telephone Number, Including Area Code)
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, and (2) has been subject to such filing requirements
for the past 90 days. Yes /X/ No / /
<PAGE> 2
FIRST INDUSTRIAL, L.P.
FORM 10-Q
FOR THE PERIOD ENDED MARCH 31, 2000
INDEX
-----
PAGE
----
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 2000 and
December 31, 1999..................................................... 2
Consolidated Statements of Operations for the Three Months Ended
March 31, 2000 and March 31, 1999..................................... 3
Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2000 and March 31, 1999..................................... 4
Notes to Consolidated Financial Statements ........................... 5-12
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ...........................................13-18
Item 3. Quantitative and Qualitative Disclosures About Market Risk....... 18
PART II: OTHER INFORMATION
Item 1. Legal Proceedings .............................................. 19
Item 2. Changes in Securities .......................................... 19
Item 3. Defaults Upon Senior Securities................................. 19
Item 4. Submission of Matters to a Vote of Security Holders ............ 19
Item 5. Other Information .............................................. 19
Item 6. Exhibits and Report on Form 8-K................................. 19
SIGNATURE ................................................................. 20
EXHIBIT INDEX.............................................................. 21
1
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRST INDUSTRIAL, L.P.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------- ------------
ASSETS
<S> <C> <C>
Assets:
Investment in Real Estate:
Land..................................................... $ 312,298 $ 311,149
Buildings and Improvements............................... 1,784,302 1,776,217
Furniture, Fixtures and Equipment........................ 1,353 1,353
Construction in Progress................................. 30,516 42,715
Less: Accumulated Depreciation........................... (191,243) (179,293)
----------- -----------
Net Investment in Real Estate.................... 1,937,226 1,952,141
Investments in and Advances to Other Real Estate
Partnerships.............................................. 406,663 380,774
Cash and Cash Equivalents................................... 826 22
Restricted Cash............................................. 5,423 927
Tenant Accounts Receivable, Net............................. 10,329 8,986
Investments in Joint Ventures............................... 6,202 6,408
Deferred Rent Receivable.................................... 13,795 13,777
Deferred Financing Costs, Net............................... 9,656 9,905
Prepaid Expenses and Other Assets, Net...................... 79,721 71,047
----------- -----------
Total Assets..................................... $2,469,841 $2,443,987
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage Loans Payable, Net................................. $ 62,633 $ 63,059
Senior Unsecured Debt, Net.................................. 948,711 948,688
Acquisition Facility Payable................................ 112,500 94,000
Accounts Payable and Accrued Expenses....................... 84,493 75,397
Rents Received in Advance and Security Deposits............. 20,084 19,329
Distributions Payable....................................... 28,462 28,164
----------- -----------
Total Liabilities................................ 1,256,883 1,228,637
----------- -----------
Commitments and Contingencies.................................. --- ---
Partners' Capital:
General Partner Preferred Units............................ 336,990 336,990
General Partner Units...................................... 701,860 694,899
Unamortized Value of General Partnership Restricted Units.. (13,030) (4,087)
Limited Partners' Units.................................... 187,138 187,548
----------- -----------
Total Partners' Capital........................ 1,212,958 1,215,350
----------- -----------
Total Liabilities and Partners' Capital........ $2,469,841 $2,443,987
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE> 4
FIRST INDUSTRIAL, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER UNIT DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 2000 March 31, 1999
-------------- ---------------
<S> <C> <C>
Revenues:
Rental Income......................................................... $ 62,387 $ 64,251
Tenant Recoveries and Other Income.................................... 17,380 16,707
------------- ------------
Total Revenues......................................................... 79,767 80,958
------------- ------------
Expenses:
Real Estate
Taxes................................................................. 13,347 13,048
Repairs and Maintenance............................................... 3,981 5,069
Property Management................................................... 2,825 2,380
Utilities............................................................. 2,006 2,196
Insurance............................................................. 151 193
Other................................................................. 1,202 895
General and Administrative............................................ 3,554 3,095
Interest Expense...................................................... 19,026 19,318
Amortization of Deferred Financing Costs.............................. 412 248
Depreciation and Other Amortization................................... 14,884 14,592
------------- ------------
Total Expenses.......................................... 61,388 61,034
------------- ------------
Income from Operations Before Equity in Income of Other Real
Estate Partnerships and Equity in Income of Joint Ventures......... 18,379 19,924
Equity in Income of Other Real Estate Partnerships..................... 6,808 6,408
Equity in Income of Joint Ventures..................................... 31 126
------------- ------------
Income from Operations................................................. 25,218 26,458
Gain on Sales of Real Estate........................................... 5,888 1,545
------------- ------------
Net Income............................................................. 31,106 28,003
Less: Preferred Unit Distributions..................................... (7,231) (7,231)
------------- ------------
Net Income Available to Unitholders.................................... $ 23,875 $ 20,772
============= ============
Net Income Available to Unitholders per Weighted Average Unit Outstanding:
Basic............................................................... $ .52 $ .46
============= ============
Diluted............................................................. $ .52 $ .46
============= ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 5
FIRST INDUSTRIAL, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 2000 March 31, 1999
------------------ ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income ............................................................. $ 31,106 $ 28,003
Adjustments to Reconcile Net Income to Net Cash Provided
by Operating Activities:
Depreciation .......................................................... 13,306 13,335
Amortization of Deferred Financing Costs .............................. 412 248
Other Amortization .................................................... 1,825 1,295
Provision for Bad Debts ............................................... 50 --
Equity in Income of Joint Ventures .................................... (31) (126)
Distributions from Joint Ventures ..................................... 31 126
Gain on Sales of Properties ........................................... (5,888) (1,545)
Equity in Income of Other Real Estate Partnerships .................... (6,808) (6,408)
Distributions from Investment in Other Real Estate Partnerships ....... 6,808 6,408
Increase in Tenant Accounts Receivable and Prepaid
Expenses and Other Assets, Net ................................... (11,864) (7,220)
Increase in Deferred Rent Receivable .................................. (318) (1,520)
Increase in Accounts Payable and Accrued Expenses and
Rents Received in Advance and Security Deposits ................. 10,445 7,473
-------- --------
Net Cash Provided by Operating Activities ........................ 39,074 40,069
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of and Additions to Investment in Real Estate ............... (44,610) (33,914)
Net Proceeds from Sales of Investment in Real Estate .................. 52,783 23,926
Investments in and Advances to Other Real Estate
Partnerships ..................................................... (26,722) (21,588)
Distributions from Other Real Estate Partnerships ..................... 833 6,847
Contributions to and Investments in Joint Venture...................... -- (750)
Distributions from Joint Venture....................................... 206 54
Repayment of Mortgage Loans Receivable ................................ 216 87
Increase in Restricted Cash ........................................... (4,496) (2,661)
-------- --------
Net Cash Used in Investing Activities ............................ (21,790) (27,999)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Unit Contributions ..................................................... 996 --
Unit Distributions ..................................................... (28,164) (27,074)
Preferred Unit Distributions ........................................... (7,231) (7,231)
Repayments on Mortgage Loans Payable ................................... (418) (406)
Proceeds from Acquisition Facilities Payable ........................... 51,700 29,300
Repayments on Acquisition Facilities Payable ........................... (33,200) (22,500)
Book Overdraft.......................................................... -- 2,125
Debt Issuance Costs and Prepayment Fees ................................ (163) (230)
-------- --------
Net Cash Used in Financing Activities ........................... (16,480) (26,016)
-------- --------
Net Increase (Decrease) in Cash and Cash Equivalents ................... 804 (13,946)
Cash and Cash Equivalents, Beginning of Period ......................... 22 13,946
-------- --------
Cash and Cash Equivalents, End of Period ............................... $ 826 $ --
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 6
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR UNIT AND PER UNIT DATA)
1. ORGANIZATION AND FORMATION OF COMPANY
First Industrial, L.P. (the "Operating Partnership") was organized as a
limited partnership in the state of Delaware on November 23, 1993. The sole
general partner of the Operating Partnership is First Industrial Realty Trust,
Inc. (the "Company") with an approximate 84.1% ownership interest at March 31,
2000. The Company also owns a preferred general partnership interest in the
Operating Partnership with an aggregate liquidation priority of $350,000. The
Company is a real estate investment trust ("REIT") as defined in the Internal
Revenue Code. The Company's operations are conducted primarily through the
Operating Partnership. The limited partners of the Operating Partnership own
approximately a 15.9% aggregate ownership interest at March 31, 2000.
The Operating Partnership is the sole member of several limited
liability companies (the "L.L.C.s"), owns a 95% economic interest in FR
Development Services, Inc. as well as a limited partnership interest (subject in
one case, as described below, to a preferred limited partnership interest) in
each of eight limited partnerships (together, the "Other Real Estate
Partnerships"). The Operating Partnership, through separate wholly-owned limited
liability companies in which it is the sole member, also owns 10% equity
interests in and provides asset and property management services to, two joint
ventures which invest in industrial properties (the "September 1998 Joint
Venture" and the "September 1999 Joint Venture").
The general partners of the Other Real Estate Partnerships are separate
corporations, each with at least a .01% general partnership interest in the
Other Real Estate Partnership for which it acts as a general partner. Each
general partner of the Other Real Estate Partnerships is a wholly-owned
subsidiary of the Company. First Industrial Securities Corporation, the general
partner of one of the Other Real Estate Partnerships (First Industrial
Securities, L.P.), also owns a preferred limited partnership interest in First
Industrial Securities L.P. which entitles it to receive a fixed quarterly
distribution, and results in it being allocated income in the same amount, equal
to the fixed quarterly dividend the Company pays on its 9.5%, $.01 par value,
Series A Cumulative Preferred Stock.
The consolidated financial statements of the Operating Partnership report
the L.L.C.s and FR Development Services, Inc. (hereinafter defined as the
"Consolidated Operating Partnership") on a consolidated basis. The Other Real
Estate Partnerships, the September 1998 Joint Venture and the September 1999
Joint Venture are accounted for under the equity method of accounting. The
minority ownership interest in FR Development Services, Inc. is not reflected in
the consolidated financial statements due to its immateriality. As of March 31,
2000, the Consolidated Operating Partnership owned 872 in-service properties
containing an aggregate of approximately 55.5 million square feet of gross
leasable area ("GLA"). On a combined basis, as of March 31, 2000, the Other Real
Estate Partnerships owned 101 in-service properties containing an aggregate of
approximately 12.5 million square feet of GLA.
Profits, losses and distributions of the Operating Partnership, the
L.L.C.s and the Other Real Estate Partnerships are allocated to the general
partner and the limited partners, or the members, as applicable, in accordance
with the provisions contained within the partnership agreements or ownership
agreements, as applicable, of the Operating Partnership, the L.L.C.s and the
Other Real Estate Partnerships.
5
<PAGE> 7
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR UNIT AND PER UNIT DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited interim financial statements have been
prepared in accordance with the accounting policies described in the financial
statements and related notes included in the Operating Partnership's 1999 Form
10-K and should be read in conjunction with such financial statements and
related notes. The following notes to these interim financial statements
highlight significant changes to the notes included in the December 31, 1999
audited financial statements included in the Operating Partnership's 1999 Form
10-K and present interim disclosures as required by the Securities and Exchange
Commission.
In order to conform with generally accepted accounting principles,
management, in preparation of the Consolidated Operating Partnership'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 March 31, 2000 and December 31, 1999, and the reported
amounts of revenues and expenses for each of the three months ended March 31,
2000 and 1999. Actual results could differ from those estimates.
In the opinion of management, all adjustments consist of normal recurring
adjustments necessary for a fair statement of the financial position of the
Consolidated Operating Partnership as of March 31, 2000 and the results of its
operations and its cash flows for each of the three months ended March 31, 2000
and 1999.
Tenant Accounts Receivable, Net:
The Consolidated Operating Partnership provides an allowance for
doubtful accounts against the portion of tenant accounts receivable which is
estimated to be uncollectible. Tenant accounts receivable in the consolidated
balance sheets are shown net of an allowance for doubtful accounts of $1,707 and
$1,657 as of March 31, 2000 and December 31, 1999, respectively.
Reclassification:
Certain 1999 items have been reclassified to conform to the 2000 presentation.
6
<PAGE> 8
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR UNIT AND PER UNIT DATA)
3. INVESTMENTS IN AND ADVANCES TO OTHER REAL ESTATE PARTNERSHIPS
The Investments in and advances to Other Real Estate Partnerships reflects
the Operating Partnership's limited partnership equity interests in and advances
to the entities referred to in Note 1 to these financial statements.
Summarized condensed financial information as derived from the
financial statements of the Other Real Estate Partnerships is presented below:
Condensed Combined Balance Sheets:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---------- -----------
<S> <C> <C>
ASSETS
Assets:
Investment in Real Estate, Net........................ $ 457,731 $ 433,970
Other Assets, Net..................................... 39,117 38,491
---------- ----------
Total Assets.................................. $ 496,848 $ 472,461
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage Loans Payable................................ $ 41,752 $ 41,891
Other Liabilities..................................... 33,997 35,620
---------- ----------
Total Liabilities............................ 75,749 77,511
---------- ----------
Partners' Capital..................................... 421,099 394,950
---------- ----------
Total Liabilities and Partners' Capital...... $ 496,848 $ 472,461
========== ==========
Condensed Combined Statements of Operations:
Three Months Ended
-------------------------------
March 31, March 31,
2000 1999
---------- -----------
Total Revenues................................................ $ 15,360 $ 14,440
Property Expenses............................................. (3,908) (3,733)
General and Administrative.................................... (69) ---
Interest Expense.............................................. (759) (761)
Amortization of Deferred Financing Costs...................... (16) (17)
Depreciation and Other Amortization........................... (2,737) (2,476)
Loss on Sales of Real Estate.................................. (14) ---
---------- -----------
Net Income.................................................... $ 7,857 $ 7,453
========== ===========
</TABLE>
7
<PAGE> 9
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR UNIT AND PER UNIT DATA)
4. INVESTMENTS IN JOINT VENTURES
During the three months ended March 31, 2000, the Consolidated
Operating Partnership, through wholly-owned limited liability companies in which
the Operating Partnership is the sole member, received, in the aggregate,
approximately $720 (net of the intercompany elimination) in asset management and
property management fees from the September 1998 Joint Venture and the September
1999 Joint Venture. The Operating Partnership, through a wholly-owned limited
liability company in which it is the sole member, received distributions of
approximately $237 from the September 1998 Joint Venture. As of March 31, 2000,
the September 1998 Joint Venture owned 146 industrial properties comprising
approximately 7.5 million square feet of GLA and the September 1999 Joint
Venture owned 39 industrial properties comprising approximately 1.2 million
square feet of GLA.
5. MORTGAGE LOANS, NET, SENIOR UNSECURED DEBT, NET AND ACQUISITION FACILITY
PAYABLE
The following table discloses certain information regarding the
Consolidated Operating Partnership's mortgage loans, senior unsecured debt and
acquisition facility payable:
<TABLE>
<CAPTION>
OUTSTANDING BALANCE AT ACCRUED INTEREST PAYABLE AT INTEREST RATE AT
----------------------------- ---------------------------- ----------------
MARCH 31, DECEMBER 31, MARCH 31, DECEMBER 31, MARCH 31, MATURITY
2000 1999 2000 1999 2000 DATE
----------- ------------- ------------- ------------ ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
MORTGAGE LOANS PAYABLE, NET
CIGNA Loan........................ $ 34,470 $ 34,636 $ 215 $ 216 7.500% 4/01/03
Assumed Loans..................... 8,259 8,343 --- --- 9.250% 1/01/13
LB Mortgage Loan II.............. 705 705 --- --- 8.000% (1)
Acquisition Mortgage Loan I....... 3,519 3,591 --- --- 8.500% 8/01/08
Acquisition Mortgage Loan II...... 7,598 7,630 49 --- 7.750% 4/01/06
Acquisition Mortgage Loan III..... 3,317 3,350 --- --- 8.875% 6/01/03
Acquisition Mortgage Loan IV...... 2,408 2,423 --- --- 8.950% 10/01/06
Acquisition Mortgage Loan VI...... 982 (2) 991 (2) --- --- 8.875% 11/01/06
Acquisition Mortgage Loan VII..... 1,375 (2) 1,390 (2) --- --- 9.750% 3/15/02
--------- --------- ---------- ---------
Total............................. $ 62,633 $ 63,059 $ 264 $ 216
========= ========= ========== =========
SENIOR UNSECURED DEBT, NET
2005 Notes........................ $ 50,000 $ 50,000 $ 1,246 $ 383 6.900% 11/21/05
2006 Notes........................ 150,000 150,000 3,500 875 7.000% 12/01/06
2007 Notes........................ 149,963 (3) 149,961 (3) 4,307 1,457 7.600% 5/15/07
2011 Notes........................ 99,482 (3) 99,470 (3) 2,786 942 7.375% 5/15/11 (4)
2017 Notes........................ 99,830 (3) 99,828 (3) 2,500 625 7.500% 12/01/17
2027 Notes........................ 99,868 (3) 99,867 (3) 2,701 914 7.150% 5/15/27 (5)
2028 Notes........................ 199,777 (3) 199,776 (3) 3,209 7,009 7.600% 7/15/28
2011 Drs.......................... 99,791 (3) 99,786 (3) 3,178 1,553 6.500% (7) 4/05/11 (6)
--------- --------- --------- ---------
Total............................. $ 948,711 $ 948,688 $ 23,427 $ 13,758
========= ========= ========= =========
ACQUISITION FACILITY PAYABLE
1997 Unsecured Acquisition
Facility....................... $ 112,500 94,000 692 663 6.84% 4/30/01
========= ========= ========= =========
</TABLE>
(1) The maturity date of the LB Mortgage Loan II is based on a contingent event
relating to the environmental status of the property collateralizing the
loan.
(2) At March 31, 2000, the Acquisition Mortgage Loan VI and the Acquisition
Mortgage Loan VII are net of unamortized premiums of $55 and $57,
respectively. At December 31, 1999, the Acquisition Mortgage Loan VI and
the Acquisition Mortgage Loan VII are net of unamortized premiums of $57
and $64, respectively.
(3) At March 31, 2000, the 2007 Notes, 2011 Notes, 2017 Notes, 2027 Notes, 2028
Notes and the 2011 Drs. are net of unamortized discounts of $37, $518,
$170, $132, $223 and $209, respectively. At December 31, 1999, the 2007
Notes, 2011 Notes, 2017 Notes, 2027 Notes, 2028 Notes and the 2011 Drs. are
net of unamortized discounts of $39, $530, $172, $133, $224 and $214,
respectively.
(4) The 2011 Notes are redeemable at the option of the holder thereof, on
May 15, 2004.
(5) The 2027 Notes are redeemable at the option of the holders thereof, on
May 15, 2002.
(6) The 2011 Drs. are required to be redeemed by the Operating Partnership on
April 5, 2001 if the Remarketing Dealer elects not to remarket the 2011
Drs.
(7) The 2011 Drs. bear interest at an annual rate of 6.50% to the Remarketing
Date. If the holder of the Call Option calls the 2011 Drs. and elects to
remarket the 2011 Drs., then after the Remarketing Date, the interest rate
on the 2011 Drs. will be reset at a fixed rate until April 5, 2011 based on
a predetermined formula as disclosed in the related Prospectus Supplement.
8
<PAGE> 10
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR UNIT AND PER UNIT DATA)
5. MORTGAGE LOANS, NET, SENIOR UNSECURED DEBT, NET AND ACQUISITION
FACILITY PAYABLE, CONTINUED
The following is a schedule of the stated maturities and scheduled
principal payments of the mortgage loans, senior unsecured debt and acquisition
facility payable for the next five years ending December 31, and thereafter:
<TABLE>
<CAPTION>
Amount
-----------
<S> <C>
Remainder of 2000 $ 1,370
2001 114,440
2002 3,325
2003 36,532
2004 1,319
Thereafter 967,330
-----------
Total $ 1,124,316
===========
</TABLE>
The maturity date of the LB Mortgage Loan II is based on a contingent
event. As a result, this loan is not included in the preceding table.
6. PARTNERS' CAPITAL
The Operating Partnership has issued general partnership units, limited
partnership units (together, the "Units") and preferred general partnership
units. The general partnership units resulted from capital contributions from
the Company. The limited partnership units are issued in conjunction with the
acquisition of certain properties. The preferred general partnership units
resulted from preferred capital contributions from the Company. The Operating
Partnership will be required to make all required distributions on the preferred
general partnership units prior to any distribution of cash or assets to the
holders of the general and limited partnership units except for distributions
required to enable the Company to maintain its qualification as a REIT.
Unit Contributions:
During the three months ended March 31, 2000, the Company awarded 353,139
shares of restricted common stock to certain employees and 825 shares of
restricted common stock to certain Directors. Other employees of the Company
converted certain in-the-money employee stock options to 14,903 shares of
restricted common stock. The Operating Partnership issued Units to the Company
in the same amount. These shares of restricted common stock had a fair value of
approximately $9,551 on the date of grant. The restricted common stock vests
over periods from one to ten years. Compensation expense will be charged to
earnings over the respective vesting period.
Distributions:
On January 24, 2000, the Operating Partnership paid a fourth quarter 1999
distribution of $.62 per Unit, totaling approximately $28,164.
On March 31, 2000, the Operating Partnership paid a first quarter 2000
distribution of $54.688 per unit on its Series B Cumulative Preferred Units,
$53.906 per unit on its Series C Cumulative Preferred Units, $49.687 per unit on
its Series D Cumulative Preferred Units and $49.375 per unit on its Series E
Cumulative Preferred Units. The preferred unit distributions paid on March 31,
2000 totaled, in the aggregate, approximately $7,231.
7. ACQUISITION AND DEVELOPMENT OF REAL ESTATE
During the three months ended March 31, 2000, the Consolidated Operating
Partnership acquired eight industrial properties and one land parcel. The
aggregate purchase price for these acquisitions totaled approximately $22,376,
excluding costs incurred in conjunction with the acquisition of the properties
and the land parcel. The Consolidated Operating Partnership also completed the
development of six industrial properties comprising approximately 1.3 million
square feet of GLA at a cost of approximately $43,657.
9
<PAGE> 11
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR UNIT AND PER UNIT DATA)
8. SALES OF REAL ESTATE
During the three months ended March 31, 2000, the Consolidated Operating
Partnership sold 11 industrial properties and several land parcels. Gross
proceeds from these sales were approximately $54,743. The gain on sales of real
estate was approximately $5,888.
9. REAL ESTATE HELD FOR SALE
The Consolidated Operating Partnership has an active sales program through
which it is continually engaged in identifying and evaluating its current
portfolio for potential sales candidates. At March 31, 2000, the Consolidated
Operating Partnership had four industrial properties comprising approximately .9
million square feet of GLA held for sale. Three of four of these industrial
properties were identified as held for sale during the three months ended March
31, 2000. There can be no assurance that such properties held for sale will be
sold.
The following table discloses certain information regarding the four
industrial properties held for sale by the Consolidated Operating Partnership.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------
2000 1999
------------- -------------
<S> <C> <C>
Total Revenues $ 860 $ 976
Operating Expenses (340) (350)
Depreciation and Amortization (87) (153)
------------- -------------
Net Income $ 433 $ 473
============= =============
Net Carrying Value $ 25,426
=============
</TABLE>
10. SUPPLEMENTAL INFORMATION TO STATEMENT OF CASH FLOWS
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------
March 31, March 31,
2000 1999
---------------- ----------------
<S> <C> <C>
Interest paid, net of capitalized interest .................. $ 9,280 $ 9,590
================ ================
Interest capitalized......................................... $ 1,376 1,229
================ ================
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Distribution payable on Units................................ $ 28,462 $ 27,157
================ ================
EXCHANGE OF LIMITED PARTNERSHIP UNITS FOR GENERAL PARTNERSHIP
UNITS:
Limited Partnership Units................................... $ --- (255)
General Partnership Units................................... --- 255
---------------- ----------------
$ --- $ ---
================ ================
ISSUANCE OF UNITS IN EXCHANGE FOR PROPERTY...................... $ 301 $ ---
================ ================
IN CONJUNCTION WITH THE PROPERTY AND LAND ACQUISITIONS, THE
FOLLOWING ASSETS AND LIABILITIES WERE ASSUMED:
Purchase of real estate ..................................... $ 22,376 $ 6,405
(Accrued) Prepaid real estate taxes and security deposits .... (144) 17
---------------- ----------------
$ 22,232 $ 6,422
================ ================
</TABLE>
10
<PAGE> 12
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR UNIT AND PER UNIT DATA)
11. EARNINGS PER UNIT ("EPU")
Net income per weighted average Unit - Basic, is based on the weighted
average Units outstanding. Net Income per weighted average Unit - Diluted, is
based on the weighted average Units outstanding plus the effect of in-the-money
employee stock options that result in the issuance of general partnership units.
The computation of basic and diluted EPU is presented below:
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 2000 March 31, 1999
--------------- --------------
<S> <C> <C>
Numerator:
Net Income...................................... $ 31,106 $ 28,003
Less: Preferred Distributions................... (7,231) (7,231)
--------------- --------------
Net Income Available to Unitholders
- For Basic and Diluted EPU................... $ 23,875 20,772
=============== ==============
Denominator:
Weighted Average Units - Basic.................. 45,697,436 45,193,231
Effect of Dilutive Securities:
Employee and Director Common Stock Options of
the Company that result in the issuance of
general partnership units.................... 159,712 84,166
--------------- --------------
Weighted Average Units - Diluted................ 45,857,148 45,277,397
=============== ==============
Basic EPU:
Net Income Available to Unitholders............. $ .52 $ .46
=============== ==============
Diluted EPU:
Net Income Available to Unitholders............. $ .52 $ .46
=============== ==============
</TABLE>
12. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Consolidated Operating Partnership
is involved in legal actions arising from the ownership of its properties. In
management's opinion, the liabilities, if any, that may ultimately result from
such legal actions are not expected to have a materially adverse effect on the
consolidated financial position, operations or liquidity of the Consolidated
Operating Partnership.
The Consolidated Operating Partnership has committed to the
construction of 11 development projects totaling approximately 1.1 million
square feet of GLA for an estimated investment of approximately $67.2 million.
Of this amount, approximately $40.6 million remains to be funded. These
developments are expected to be funded with cash flow from operations,
borrowings under the Operating Partnership's $300,000 unsecured revolving credit
facility and proceeds from the sale of select properties.
11
<PAGE> 13
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR UNIT AND PER UNIT DATA)
13. SUBSEQUENT EVENTS
From April 1, 2000, to May 8, 2000, the Consolidated Operating Partnership
acquired two industrial properties and two land parcels for an aggregate
purchase price of approximately $7,528, excluding costs incurred in conjunction
with the acquisition of these industrial properties and land parcels. The
Consolidated Operating Partnership also sold one industrial property and one
land parcel for approximately $7,550 of gross proceeds.
On April 17, 2000, the Operating Partnership paid a first quarter 2000
distribution of $.62 per Unit, totaling approximately $28,462.
12
<PAGE> 14
FIRST INDUSTRIAL, L.P.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis of First Industrial, L.P.'s (the
"Operating Partnership") financial condition and results of operations should be
read in conjunction with the financial statements and notes thereto appearing
elsewhere in this Form 10-Q.
This report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Operating Partnership intends
such forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation 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 Operating Partnership, are generally identifiable by use of the words
"believe", "expect", "intend", "anticipate", "estimate", "project" or similar
expressions. The Operating Partnership'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 Operating Partnership on a consolidated basis include, but are
not limited to, changes in: economic conditions generally and the real estate
market specifically, legislative/regulatory changes (including changes to laws
governing the taxation of real estate investment trusts), availability of
capital, interest rates, competition, supply and demand for industrial
properties in the Operating Partnership's current and proposed market areas and
general accounting principles, policies and guidelines applicable to real estate
investment trusts. 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 Operating Partnership and
its business, including additional factors that could materially affect the
Operating Partnership's financial results, is included herein and in the
Operating Partnership's other filings with the Securities and Exchange
Commission.
The Operating Partnership was organized as a limited partnership in the
state of Delaware on November 23, 1993. The sole general partner of the
Operating Partnership is First Industrial Realty Trust, Inc. (the "Company")
with an approximate 84.1% ownership interest at March 31, 2000. The Company also
owns a preferred general partnership interest in the Operating Partnership with
an aggregate liquidation priority of $350 million. The Company is a real estate
investment trust ("REIT") as defined in the Internal Revenue Code. The Company's
operations are conducted primarily through the Operating Partnership. The
limited partners of the Operating Partnership own approximately a 15.9%
aggregate ownership interest at March 31, 2000.
The Operating Partnership is the sole member of several limited
liability companies (the "L.L.C.s"), owns a 95% economic interest in FR
Development Services, Inc. as well as a limited partnership interest (subject in
one case, as described below, to a preferred limited partnership interest) in
each of eight limited partnerships (together, the "Other Real Estate
Partnerships"). The Operating Partnership, through separate wholly-owned limited
liability companies in which it is the sole member, also owns 10% equity
interests in and provides asset and property management services to, two joint
ventures which invest in industrial properties (the "September 1998 Joint
Venture" and the "September 1999 Joint Venture"). The financial statements of
the Operating Partnership report the L.L.C.s and FR Development Services, Inc.
(hereinafter defined as the "Consolidated Operating Partnership") on a
consolidated basis. The Other Real Estate Partnerships, the September 1998 Joint
Venture and the September 1999 Joint Venture are accounted for under the equity
method of accounting. The minority ownership interest in FR Development
Services, Inc. is not reflected in the consolidated financial statements due to
its immateriality.
The general partners of the Other Real Estate Partnerships are separate
corporations, each with at least a .01% general partnership interest in the
Other Real Estate Partnership for which it acts as a general partner. Each
general partner of the Other Real Estate Partnerships is a wholly-owned
subsidiary of the Company. First Industrial Securities Corporation, the general
partner of one of the Other Real Estate Partnerships (First Industrial
Securities, L.P.), also owns a preferred limited partnership interest in the
First Industrial Securities L.P. which entitles it to receive a fixed quarterly
distribution, and results in it being allocated income in the same amount, equal
to the fixed quarterly dividend the Company pays on its 9.5%, $.01 par value,
Series A Cumulative Preferred Stock.
13
<PAGE> 15
Profits, losses and distributions of the Operating Partnership, the
L.L.C.s and the Other Real Estate Partnerships are allocated to the general
partner and the limited partners, or members, as applicable, in accordance with
the provisions contained within the partnership agreements or operating
agreements, as applicable, of the Operating Partnership, the L.L.C.s and the
Other Real Estate Partnerships.
RESULTS OF OPERATIONS
At March 31, 2000, the Consolidated Operating Partnership owned 872
in-service properties with approximately 55.5 million square feet of gross
leasable area ("GLA"), compared to 877 in-service properties with approximately
57.0 million square feet of GLA at March 31, 1999. During the period between
April 1, 1999 and March 31, 2000, the Consolidated Operating Partnership
acquired 24 properties containing approximately 1.9 million square feet of GLA,
completed development of 20 properties and expansion of one property totaling
approximately 3.3 million square feet of GLA and sold 44 in-service properties
totaling approximately 6.1 million square feet of GLA and several land parcels.
The Consolidated Operating Partnership also took one property out of service
which was subsequently sold comprising approximately .4 million square feet of
GLA. In addition, during the period between April 1, 1999 and March 31, 2000,
the Operating Partnership contributed four industrial properties comprising .2
million square feet of GLA to First Industrial Securities, L.P.
COMPARISON OF THREE MONTHS ENDED MARCH 31, 2000 TO THREE MONTHS ENDED
MARCH 31, 1999
Rental income and tenant recoveries and other income decreased by
approximately $1.2 million or 1.5% due primarily to a decrease in average GLA
for the three months ended March 31, 2000, compared to the three months ended
March 31, 1999, offset by an increase in same store revenue. Rental income and
tenant recoveries and other income from properties owned prior to January 1,
1999, increased by approximately $2.4 million or 3.5% due primarily to general
rent increases.
Property expenses, which include real estate taxes, repairs and
maintenance, property management, utilities, insurance and other expenses,
decreased by approximately $.3 million or 1.1% due primarily to a decrease in
average GLA for the three months ended March 31, 2000 compared to the three
months ended March 31, 1999. Property expenses from properties owned prior to
January 1, 1999 remained relatively unchanged.
General and administrative expense increased by approximately $.5 million
due primarily to general pay increases and additional employees.
Interest expense decreased by approximately $.3 million for the three
months ended March 31, 2000 compared to the three months ended March 31, 1999
due primarily to a lower average debt balance outstanding and an increase in
capitalized interest for the three months ended March 31, 2000 due to an
increase in development activities. This was slightly offset by an increase in
the weighted average interest rate for the three months ended March 31, 2000
(7.28%) compared to the three months ended March 31, 1999 (7.15%). The average
debt balance outstanding for the three months ended March 31, 2000 and 1999 was
approximately $1.14 billion and $1.16 billion, respectively.
Amortization of deferred financing costs increased by approximately $.2
million due primarily to amortization of additional deferred financing costs
relating to the Operating Partnership's $300 million unsecured line of credit
(the "1997 Unsecured Acquisition Facility").
Depreciation and other amortization increased by approximately $.3
million due primarily to the additional depreciation related to tenant
improvements incurred subsequent to December 31, 1998.
Equity in income of Other Real Estate Partnerships increased by
approximately $.4 million due primarily due to general rent increases for
properties owned prior to January 1, 1999.
Equity in income of joint ventures remained relatively unchanged.
The $5.9 million gain on sales of properties for the three months ended
March 31, 2000 resulted from the sale of 11 industrial properties and several
land parcels. Gross proceeds from these sales were approximately $54.7 million.
14
<PAGE> 16
The $1.5 million gain on sales of properties for the three months ended
March 31, 1999 resulted from the sale of ten industrial properties and one land
parcel. Gross proceeds from these sales were approximately $23.9 million.
LIQUIDITY AND CAPITAL RESOURCES
On March 31, 2000, the Consolidated Operating Partnership's cash
and cash equivalents was approximately $.8 million and restricted cash totaled
approximately $5.4 million. Restricted cash was comprised of gross proceeds from
the sales of certain properties. These sales proceeds will be disbursed as the
Consolidated Operating Partnership exchanges into properties under Section 1031
of the Internal Revenue Code.
THREE MONTHS ENDED MARCH 31, 2000
Net cash provided by operating activities of approximately $39.1 million
for the three months ended March 31, 2000 was comprised primarily of net income
of approximately $31.1 million and adjustments for non-cash items of
approximately $9.4 million, offset by the net change in operating assets and
liabilities of approximately $1.4 million. The adjustments for the non-cash
items of approximately $9.4 million are primarily comprised of depreciation and
amortization of approximately $15.5 million and a provision for bad debts of
approximately $.1 million, offset by the gain on sales of real estate of
approximately $5.9 million and the effect of the straight-lining of rental
income of approximately $.3 million.
Net cash used in investing activities of approximately $21.8 million
for the three months ended March 31, 2000 was comprised primarily of the
acquisition of real estate, development of real estate, capital expenditures
related to the expansion and improvement of existing real estate, contributions
to and investments in the Other Real Estate Partnerships and an increase in
restricted cash from sales proceeds deposited with an intermediary for Section
1031 exchange purposes, offset by distributions from investment in Other Real
Estate Partnerships, distributions from investment in the September 1998 Joint
Venture, net proceeds from the sales of real estate and the repayment of
mortgage loans receivable.
Net cash used in financing activities of approximately $16.5 million
for the three months ended March 31, 2000 was comprised primarily of Unit
(defined below) and preferred general partnership unit distributions, repayments
on mortgage loans payable and debt issuance costs, offset by net borrowings
under the Operating Partnership's 1997 Unsecured Acquisition Facility and Unit
contributions.
THREE MONTHS ENDED MARCH 31, 1999
Net cash provided by operating activities of approximately $40.1 million
for the three months ended March 31, 1999 was comprised primarily of net income
of approximately $28.0 million, adjustments for non-cash items of approximately
$11.8 million and the net change in operating assets and liabilities of
approximately $.3 million. The adjustments for the non-cash items of
approximately $11.8 million are primarily comprised of depreciation and
amortization of approximately $14.9 million, offset by the gain on sales of real
estate of approximately $1.6 million and the effect of the straight-lining of
rental income of approximately $1.5 million.
Net cash used in investing activities of approximately $28.0 million
for the three months ended March 31, 1999 was comprised primarily of the
acquisition of real estate, development of real estate, capital expenditures
related to the expansion and improvement of existing real estate, contributions
to and investments in the Other Real Estate Partnerships, contributions to and
investments in the September 1998 Joint Venture and an increase in restricted
cash from sales proceeds deposited with an intermediary for Section 1031
exchange purposes, offset by distributions from investment in Other Real Estate
Partnerships, distributions from investment in the September 1998 Joint Venture,
net proceeds from the sales of real estate and the repayment of mortgage loans
receivable.
Net cash used in financing activities of approximately $26.0 million
for the three months ended March 31, 1999 was comprised primarily of Unit
(defined below) and preferred general partnership unit distributions, repayments
on mortgage loans payable and debt issuance costs, offset by net borrowings
under the Operating Partnership's 1997 Unsecured Acquisition Facility and a book
overdraft.
15
<PAGE> 17
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges and preferred unit distributions
was 1.59 for the three months ended March 31, 2000 compared to 1.64 for the
three months ended March 31, 1999. The decrease is primarily due to a decrease
in income from operations due to a decrease in net operating income and an
increase in general and administrative expense and depreciation and amortization
as discussed in "Results of Operations" above.
MARKET RISK
The following discussion about the Consolidated Operating Partnership's
risk-management activities includes "forward-looking statements" that involve
risk and uncertainties. Actual results could differ materially from those
projected in the forward-looking statements.
This analysis presents the hypothetical gain or loss in earnings, cash
flows or fair value of the financial instruments and derivative instruments
which are held by the Consolidated Operating Partnership at March 31, 2000 that
are sensitive to changes in the interest rates. While this analysis may have
some use as a benchmark, it should not be viewed as a forecast.
In the normal course of business, the Consolidated Operating Partnership
also faces risks that are either non-financial or non-quantifiable. Such risks
principally include credit risk and legal risk and are not represented in the
following analysis.
At March 31, 2000, $112.5 million (approximately 10.0% of total debt at
March 31, 2000) of the Consolidated Operating Partnership's debt was variable
rate debt (all of the variable rate debt relates to the Operating Partnership's
1997 Unsecured Acquisition Facility) and $1,011.3 million (approximately 90.0%
of total debt at March 31, 2000) was fixed rate debt. The Consolidated Operating
Partnership also had outstanding a written put and a written call option
(collectively, the "Written Options") which were issued in conjunction with the
initial offering of two tranches of senior unsecured debt. The Consolidated
Operating Partnership's past practice has been to lock into fixed interest rates
at issuance or fix the rate of variable rate debt through the use of interest
rate protection agreements when interest rate market conditions dictate it is
advantageous to do so. Currently, the Consolidated Operating Partnership does
not enter into financial instruments for trading or other speculative purposes.
For fixed rate debt, changes in interest rates generally affect the fair
value of the debt, but not earnings or cash flows of the Consolidated Operating
Partnership. Conversely, for variable rate debt, changes in the interest rate
generally do not impact the fair value of the debt, but would affect the
Consolidated Operating Partnership's future earnings and cash flows. The
interest rate risk and changes in fair market value of fixed rate debt generally
do not have a significant impact on the Consolidated Operating Partnership until
the Consolidated Operating Partnership is required to refinance such debt. See
Note 5 to the consolidated financial statements for a discussion of the maturity
dates of the Consolidated Operating Partnership's various fixed rate debt.
Based upon the amount of variable rate debt outstanding at March 31, 2000,
a 10% increase or decrease in the interest rate on the Consolidated Operating
Partnership's variable rate debt would decrease or increase, respectively,
future net income and cash flows by approximately $.8 million per year. A 10%
increase in interest rates would decrease the fair value of the fixed rate debt
at March 31, 2000 by approximately $48.9 million to $885.0 million. A 10%
decrease in interest rates would increase the fair value of the fixed rate debt
at March 31, 2000 by approximately $55.0 million to $988.9 million. A 10%
increase in interest rates would decrease the fair value of the Written Options
at March 31, 2000 by approximately $2.1 million to $3.5 million. A 10% decrease
in interest rates would increase the fair value of the Written Options at March
31, 2000 by approximately $3.3 million to $8.9 million.
16
<PAGE> 18
INVESTMENT IN REAL ESTATE, DEVELOPMENT OF REAL ESTATE AND SALES OF REAL ESTATE
During the three months ended March 31, 2000, the Consolidated Operating
Partnership acquired eight industrial properties and one land parcel. The
aggregate purchase price for these acquisitions totaled approximately $22.4
million, excluding costs incurred in conjunction with the acquisition of the
properties and the land parcel. The Consolidated Operating Partnership also
completed the development of six industrial properties comprising approximately
1.3 million square feet of GLA at a cost of approximately $43.7 million.
During the three months ended March 31, 2000, the Consolidated Operating
Partnership sold 11 industrial properties and several land parcels. Gross
proceeds from these sales were approximately $54.7 million.
The Consolidated Operating Partnership has committed to the construction
of 11 development projects totaling approximately 1.1 million square feet of GLA
for an estimated investment of approximately $67.2 million. Of this amount,
approximately $40.6 million remains to be funded. These developments are
expected to be funded with cash flow from operations, borrowings under the
Operating Partnership's 1997 Unsecured Acquisition Facility and proceeds from
the sale of select properties.
REAL ESTATE HELD FOR SALE
The Consolidated Operating Partnership has an active sales program through
which it is continually engaged in identifying and evaluating its current
portfolio for potential sales candidates. At March 31, 2000, the Consolidated
Operating Partnership had four industrial properties comprising approximately .9
million square feet of GLA held for sale. Income from operations of the four
industrial properties held for sale for the three months ended March 31, 2000
and 1999 is approximately $.4 million and $.5 million, respectively. Net
carrying value of the four industrial properties held for sale at March 31, 2000
is approximately $25.4 million. Three of four of these properties were
identified as held for sale during the three months ended March 31, 2000. There
can be no assurance that such properties held for sale will be sold.
INVESTMENTS IN JOINT VENTURES
During the three months ended March 31, 2000, the Consolidated Operating
Partnership, through wholly-owned limited liability companies in which the
Operating Partnership is the sole member, received, in the aggregate,
approximately $.7 million (net of the intercompany elimination) in asset
management and property management fees from the September 1998 Joint Venture
and the September 1999 Joint Venture. The Operating Partnership, through a
wholly-owned limited liability company in which it is the sole member, received
distributions of approximately $.2 million from the September 1998 Joint
Venture. As of March 31, 2000, the September 1998 Joint Venture owned 146
industrial properties comprising approximately 7.5 million square feet of GLA
and the September 1999 Joint Venture owned 39 industrial properties comprising
approximately 1.2 million square feet of GLA.
GENERAL PARTNERSHIP, LIMITED PARTNERSHIP AND PREFERRED GENERAL PARTNERSHIP UNIT
CONTRIBUTIONS
The Operating Partnership has issued general partnership units, limited
partnership units (together, the "Units") and preferred general partnership
units. The general partnership units resulted from capital contributions from
the Company. The limited partnership units are issued in conjunction with the
acquisition of certain properties. The preferred general partnership units
resulted from preferred capital contributions from the Company. The Operating
Partnership will be required to make all required distributions on the preferred
general partnership units prior to any distribution of cash or assets to the
holders of the general and limited partnership units except for distributions
required to enable the Company to maintain its qualification as a REIT.
Unit Contributions:
During the three months ended March 31, 2000, the Company awarded 353,139
shares of restricted common stock to certain employees and 825 shares of
restricted common stock to certain Directors. Other employees of the Company
converted certain in-the-money employee stock options to 14,903 shares of
restricted common stock. The Operating Partnership issued Units to the Company
in the same amount. These shares of restricted common stock had a fair value of
approximately $9.6 million on the date of grant. The restricted common stock
vests over periods from one to ten years. Compensation expense will be charged
to earnings over the respective vesting period.
17
<PAGE> 19
DISTRIBUTIONS
On January 24, 2000, the Operating Partnership paid a fourth quarter 1999
distribution of $.62 per Unit, totaling approximately $28.2 million.
On March 31, 2000, the Operating Partnership paid a first quarter 2000
distribution of $54.688 per unit on its Series B Cumulative Preferred Units,
$53.906 per unit on its Series C Cumulative Preferred Units, $49.687 per unit on
its Series D Cumulative Preferred Units and $49.375 per unit on its Series E
Cumulative Preferred Units. The preferred unit distributions paid on March 31,
2000 totaled, in the aggregate, approximately $7.2 million.
SUBSEQUENT EVENTS
From April 1, 2000 to May 8, 2000, the Consolidated Operating Partnership
acquired two industrial properties and two land parcels for an aggregate
purchase price of approximately $7.5 million, excluding costs incurred in
conjunction with the acquisition of these industrial properties and land
parcels. The Consolidated Operating Partnership also sold one industrial
property and one land parcel for approximately $7.6 million of gross proceeds.
On April 17, 2000, the Operating Partnership paid a first quarter 2000
distribution of $.62 per Unit, totaling approximately $28.5 million.
SHORT-TERM AND LONG-TERM LIQUIDITY NEEDS
The Consolidated Operating Partnership 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
Consolidated Operating Partnership believes that its principal short-term
liquidity needs are to fund normal recurring expenses, debt service requirements
and the minimum distribution required by the Company to maintain the Company's
REIT qualification under the Internal Revenue Code. The Consolidated Operating
Partnership anticipates that these needs will be met with cash flows provided by
operating activities.
The Consolidated Operating Partnership expects to meet long-term (greater
than one year) liquidity requirements such as property acquisitions,
developments, scheduled debt maturities, major renovations, expansions and other
nonrecurring capital improvements through the disposition of select assets,
long-term secured and unsecured indebtedness and the issuance of additional
Units and preferred units. As of March 31, 2000 and May 8, 2000, $100.0 million
of debt securities was registered and unissued under the Securities Act of 1933,
as amended. The Consolidated Operating Partnership also may finance the
development or acquisition of additional properties through borrowings under the
Operating Partnership's 1997 Unsecured Acquisition Facility. At March 31, 2000,
borrowings under the Operating Partnership's 1997 Unsecured Acquisition Facility
bore interest at a weighted average interest rate of 6.84%. As of May 8, 2000
the Operating Partnership had approximately $142.7 million available for
additional borrowings under the 1997 Unsecured Acquisition Facility.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Response to this item is included in Item 2. "Management's Discussion and
Analysis of Financial Condition and Results of Operations" above.
18
<PAGE> 20
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
During the three months ended March 31, 2000, the Operating Partnership
issued an aggregate of 12,556 Units having an aggregate market value of
approximately $.3 million in exchange for property.
The above Units were issued in a private placement in reliance on
Section 4 (2) of the Securities Act of 1933, as amended, including
Regulation D promulgated thereunder, to individuals or entities holding
real property or interests therein. No underwriters were used in connection
with such issuance.
Subject to lock-up periods and certain adjustments, Units are generally
convertible into common stock, par value $.01, of the Company on a
one-for-one basis.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORT ON FORM 8-K
Exhibit No. Description
27* Financial Data Schedule
* Filed herewith.
Report on Form 8-K:
None.
19
<PAGE> 21
SIGNATURE
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, L.P.
BY: FIRST INDUSTRIAL REALTY TRUST, INC.
ITS SOLE GENERAL PARTNER
Date: May 11, 2000 By: /s/ Michael J. Havala
---------------------------------------------
Michael J. Havala
Chief Financial Officer
(Principal Financial and Accounting Officer)
20
<PAGE> 22
EXHIBIT INDEX
Exhibit No. Description
27 * Financial Data Schedule
* Filed herewith.
21
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF FIRST INDUSTRIAL, L.P. FOR THE THREE MONTHS ENDED MARCH
31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 826
<SECURITIES> 0
<RECEIVABLES> 12,036
<ALLOWANCES> (1,707)
<INVENTORY> 0
<CURRENT-ASSETS> 11,155
<PP&E> 2,128,469
<DEPRECIATION> (191,243)
<TOTAL-ASSETS> 2,469,841
<CURRENT-LIABILITIES> 112,955
<BONDS> 1,123,844
0
0
<COMMON> 0
<OTHER-SE> 1,212,958
<TOTAL-LIABILITY-AND-EQUITY> 2,469,841
<SALES> 0
<TOTAL-REVENUES> 79,767
<CGS> 0
<TOTAL-COSTS> (23,462)
<OTHER-EXPENSES> (18,850)
<LOSS-PROVISION> (50)
<INTEREST-EXPENSE> (19,026)
<INCOME-PRETAX> 31,106
<INCOME-TAX> 0
<INCOME-CONTINUING> 31,106
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,106
<EPS-BASIC> .52
<EPS-DILUTED> .52
</TABLE>
