<PAGE> 1
Form 10-Q/A
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
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 JUNE 30, 1997
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
------------------------------
Commission File Number 1-13102
------------------------------
FIRST INDUSTRIAL REALTY TRUST, INC.
(Exact name of Registrant as specified in its Charter)
MARYLAND 36-3935116
(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
Number of shares of Common Stock, $.01 par value, outstanding as of August 12,
1997: 30,151,117.
<PAGE> 2
FIRST INDUSTRIAL REALTY TRUST, INC.
FORM 10-Q
FOR THE PERIOD ENDED JUNE 30, 1997
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1997 and December 31, 1996.............. 2
Consolidated Statements of Operations for the Six Months Ended June 30, 1997
and June 30, 1996................................................................... 3
Consolidated Statements of Operations for the Three Months Ended June 30,
1997 and June 30, 1996............................................................. 4
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1997
and June 30, 1996.................................................................. 5
Notes to Financial Statements...................................................... 6-12
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations..................................................... 13-18
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 Reports on Form 8-K............................................. 20-22
SIGNATURE................................................................................ 23
EXHIBIT INDEX............................................................................ 24-25
</TABLE>
1
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRST INDUSTRIAL REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---------- ----------
<S> <C> <C>
ASSETS
Assets:
Investment in Real Estate:
Land....................................................................... $ 195,382 $ 153,390
Buildings and Improvements................................................. 1,108,830 880,924
Furniture, Fixtures and Equipment.......................................... 1,423 1,662
Construction in Progress................................................... 3,115 14,803
Less: Accumulated Depreciation............................................. (103,547) (91,457)
---------- ----------
Net Investment in Real Estate.......................................... 1,205,203 959,322
Cash and Cash Equivalents.................................................. 12,459 7,646
Restricted Cash............................................................ 33,157 11,837
U.S. Government Securities, Net............................................ 304,204 ---
Tenant Accounts Receivable, Net............................................ 6,923 4,667
Deferred Rent Receivable................................................... 9,210 8,290
Interest Rate Protection Agreements, Net................................... 129 8,376
Deferred Financing Costs, Net.............................................. 7,385 7,442
Prepaid Expenses and Other Assets, Net..................................... 41,447 15,020
---------- ----------
Total Assets........................................................... $1,620,117 $1,022,600
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage Loans Payable..................................................... $ 96,062 $392,082
Defeased Mortgage Loan Payable............................................. 300,000 ---
Senior Unsecured Debt, Net................................................. 349,157 ---
Acquisition Facility Payable............................................... 55,000 4,400
Promissory Notes Payable................................................... --- 9,919
Accounts Payable and Accrued Expenses...................................... 35,428 18,374
Rents Received in Advance and Security Deposits............................ 8,906 6,122
Dividends/Distributions Payable............................................ 17,510 16,281
---------- ----------
Total Liabilities...................................................... 862,063 447,178
---------- ----------
Minority Interest............................................................ 91,756 42,861
Commitments and Contingencies................................................ --- ---
Stockholders' Equity:
Preferred Stock ($.01 par value, 10,000,000 shares authorized,
1,650,000, 40,000 and 20,000 shares of Series A, B and C
Cumulative Preferred Stock, respectively, issued and
outstanding at June 30, 1997 and 1,650,000 shares of Series
A Cumulative Preferred Stock issued and outstanding at
December 31, 1996)....................................................... 17 17
Common Stock ($.01 par value, 100,000,000 shares authorized,
30,140,617 and 29,939,417 shares issued and outstanding at
June 30, 1997 and December 31, 1996, respectively)....................... 301 299
Additional Paid-in-Capital................................................. 732,322 584,009
Distributions in Excess of Accumulated Earnings............................ (66,342) (51,764)
---------- ----------
Total Stockholders' Equity............................................... 666,298 532,561
---------- ----------
Total Liabilities and Stockholders' Equity............................... $1,620,117 $1,022,600
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE> 4
FIRST INDUSTRIAL REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
Revenues:
Rental Income....................................................... $ 74,709 $49,881
Tenant Recoveries and Other Income.................................. 19,925 15,543
Interest Income on U.S. Government Securities....................... 4,157 ---
-------- -------
Total Revenues.................................................. 98,791 65,424
-------- -------
Expenses:
Real Estate Taxes................................................... 15,647 10,905
Repairs and Maintenance............................................. 4,286 2,859
Property Management................................................. 3,519 2,327
Utilities........................................................... 2,825 1,818
Insurance........................................................... 276 538
Other............................................................... 854 549
General and Administrative.......................................... 2,690 1,901
Interest............................................................ 21,321 13,997
Amortization of Interest Rate Protection Agreements and
Deferred Financing Costs.......................................... 1,380 1,574
Depreciation and Other Amortization................................. 17,712 13,412
-------- -------
Total Expenses.................................................. 70,510 49,880
-------- -------
Income Before Disposition of Interest Rate Protection Agreements,
Gain on Sales of Properties, Minority Interest and Extraordinary
Loss................................................................ 28,281 15,544
Disposition of Interest Rate Protection Agreements.................... 1,430 ---
Gain on Sales of Properties........................................... 3,999 4,320
-------- -------
Income Before Minority Interest and Extraordinary Loss................ 33,710 19,864
Income Allocated to Minority Interest................................. (1,950) (1,405)
-------- -------
Income Before Extraordinary Loss...................................... 31,760 18,459
Extraordinary Loss.................................................... (12,563) (821)
-------- -------
Net Income............................................................ 19,197 17,638
Less: Preferred Stock Dividends...................................... (3,365) (1,960)
-------- -------
Net Income Available to Common Stockholders.......................... $ 15,832 15,678
======== =======
Net Income Available to Common Stockholders Before
Extraordinary Loss Per Weighted Average Common
Share Outstanding (30,080,434 and 23,221,635 as of
June 30, 1997 and 1996, respectively)............................... $ .94 $ .71
======== =======
Extraordinary Loss Per Weighted Average Common Share
Outstanding (30,080,434 and 23,221,635 as of June 30, 1997
and 1996, respectively)............................................. $ .41 $ .03
======== =======
Net Income Available to Common Stockholders Per Weighted
Average Common Share Outstanding (30,080,434 and
23,221,635 as of June 30, 1997 and 1996, respectively).............. $ .53 $ .68
======== =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 5
FIRST INDUSTRIAL REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
June 30, 1997 June 30, 1996
------------------ ------------------
<S> <C> <C>
Revenues:
Rental Income....................................................... $ 39,291 $ 26,755
Tenant Recoveries and Other Income.................................. 9,200 8,024
Interest Income on U.S. Government Securities....................... 4,157 ---
-------- --------
Total Revenues.................................................. 52,648 34,779
-------- --------
Expenses:
Real Estate Taxes................................................... 8,100 5,759
Repairs and Maintenance............................................. 1,624 1,440
Property Management................................................. 1,841 1,268
Utilities........................................................... 1,215 947
Insurance........................................................... 137 337
Other............................................................... 345 281
General and Administrative.......................................... 1,426 967
Interest............................................................ 12,990 7,359
Amortization of Interest Rate Protection Agreements and
Deferred Financing Costs.......................................... 784 799
Depreciation and Other Amortization................................. 9,095 7,064
-------- --------
Total Expenses.................................................. 37,557 26,221
-------- --------
Income Before Disposition of Interest Rate Protection Agreements,
Gain on Sales of Properties, Minority
Interest and Extraordinary
Loss................................................................. 15,091 8,558
Disposition of Interest Rate Protection Agreements.................... 1,430 ---
Gain on Sales of Properties........................................... 3,999 4,320
-------- --------
Income Before Minority Interest and Extraordinary Loss................ 20,520 12,878
Income Allocated to Minority Interest................................. (594) (1,001)
-------- --------
Income Before Extraordinary Loss...................................... 19,926 11,877
Extraordinary Loss.................................................... (12,563) ---
-------- --------
Net Income............................................................ 7,363 11,877
Less: Preferred Stock Dividends...................................... (2,385) (980)
-------- --------
Net Income Available to Common Stockholders.......................... $ 4,978 10,897
======== ========
Net Income Available to Common Stockholders Before
Extraordinary Loss Per Weighted Average Common Share
Outstanding (30,132,057 and 24,137,615 as of June 30,
1997 and 1996, respectively).......................................... $ .58 $ .45
======== ========
Extraordinary Loss Per Weighted Average Common Share
Outstanding (30,132,057 and 24,137,615 as of June
30, 1997 and 1996,
respectively)......................................................... $ .41 $ ---
======== ========
Net Income Available to Common Stockholders Per Weighted
Average Common Share Outstanding (30,132,057 and
24,137,615 as of June 30, 1997 and 1996, respectively)................ $ .17 $ .45
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 6
FIRST INDUSTRIAL REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 1997 June 30, 1996
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income......................................................... $ 19,197 $ 17,638
Income Allocated to Minority Interest.............................. 1,950 1,405
--------- --------
Income Before Minority Interest.................................... 21,147 19,043
Adjustments to Reconcile Net Income to Net Cash Provided
by Operating Activities:
Depreciation..................................................... 15,828 11,687
Amortization of Interest Rate Protection Agreements and
Deferred Financing Costs......................................... 1,380 1,574
Other Amortization................................................. 1,922 1,725
Disposition of Interest Rate Protection Agreements................. (1,430) ---
Gain on Sales of Properties........................................ (3,999) (4,320)
Extraordinary Loss................................................. 12,563 821
Provision for Bad Debts............................................ 150 150
Increase in Tenant Accounts Receivable and Prepaid
Expenses and Other Assets....................................... (16,166) (501)
Increase in Deferred Rent Receivable............................... (1,122) (432)
Increase in Accounts Payable and Accrued Expenses
and Rents Received in Advance and Security Deposits.............. 4,092 848
Organization Costs................................................. (62) ---
Decrease in Restricted Cash........................................ 4,443 1,819
--------- --------
Net Cash Provided by Operating Activities........................ 38,746 32,414
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases and Additions to Investment in Real Estate............... (216,882) (131,836)
Proceeds from Sales of Investment in Real Estate................... 21,879 12,119
Funding of Mortgage Loans Receivable............................... (17,667) ---
(Increase) Decrease in Restricted Cash............................. (19,763) 881
--------- --------
Net Cash Used in Investing Activities............................ (232,433) (118,836)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Sale of Common Stock................................. --- 113,850
Common Stock Underwriting Discounts/Offering Costs................. --- (6,957)
Proceeds from Exercise of Employee Stock Options................... 1,214 ---
Proceeds from Sale of Preferred Stock.............................. 150,000 ---
Preferred Stock Offering Costs..................................... (4,734) (408)
Proceeds from Acquisition Facilities Payable....................... 220,200 29,348
Repayments on Acquisition Facilities Payable....................... (169,600) (57,922)
Proceeds from Mortgage Loans Payable............................... --- 36,750
Repayments on Mortgage Loans Payable............................... (525) (427)
Proceeds from Defeasance Loan...................................... 309,800 ---
Repayment of Defeasance Loans...................................... (309,800)
Proceeds from Senior Unsecured Debt................................ 349,150 ---
Repayments on Construction Loans Payable........................... --- (4,873)
Repayment of Promissory Notes Payable.............................. (9,919) ---
Purchase of Interest Rate Protection Agreements.................... (150) ---
Proceeds from Sale of Interest Rate Protection Agreements.......... 9,950 ---
Purchase of U.S. Government Securities............................. (300,000) ---
Increase in Restricted Cash........................................ (6,000) ---
Dividends/Distributions............................................ (33,185) (22,431)
Preferred Stock Dividends.......................................... (3,077) (2,427)
Other Proceeds from Senior Unsecured Debt.......................... 2,246 ---
Debt Issuance Costs................................................ (7,070) (1,462)
--------- --------
Net Cash Provided by Financing Activities........................ 198,500 83,041
--------- --------
Net Increase (Decrease) in Cash and Cash Equivalents................. 4,813 (3,381)
Cash and Cash Equivalents, Beginning of Period....................... 7,646 8,919
--------- --------
Cash and Cash Equivalents, End of Period............................. $ 12,459 $ 5,538
========= ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 7
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
(UNAUDITED)
1. ORGANIZATION AND FORMATION OF COMPANY
First Industrial Realty Trust, Inc. (the "Company") was organized in the
state of Maryland on August 10, 1993. The Company is a real estate investment
trust ("REIT") as defined in the Internal Revenue Code. The Company is
continuing and expanding the Midwestern industrial property business of The
Shidler Group and the properties and businesses contributed by three other
contributing businesses (the "Contributing Businesses"). The Company's
operations are conducted primarily through First Industrial, L.P. (the
"Operating Partnership") of which the Company is the sole general partner. As
of June 30, 1997, the Company owned 453 in-service properties located in 16
states, containing an aggregate of approximately 39.1 million square feet of
gross leasable area. Of the 453 properties owned by the Company, 192 are held
by First Industrial Financing Partnership, L.P. (the "Financing Partnership"),
208 are held by the Operating Partnership, 19 are held by First Industrial
Securities, L.P., 23 are held by First Industrial Mortgage Partnership, L.P., 5
are held by First Industrial Pennsylvania, L.P., 5 are held by First Industrial
Harrisburg, L.P. and 1 is held by First Industrial Indianapolis, L.P. First
Industrial Realty Trust, Inc. is the sole general partner of the Operating
Partnership, with an approximate 88.0% ownership interest at June 30, 1997.
Minority interest in the Company at June 30, 1997 represents the approximate
12.0% aggregate partnership interest in the Operating Partnership held by the
limited partners thereof.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying interim financial statements have been prepared in
accordance with the accounting policies described in the financial statements
and related notes included in the Company's 1996 Form 10-K. These interim
financial statements should be read in conjunction with the December 31, 1996
audited financial statements and notes thereto included in the Company's 1996
Form 10-K. The following notes to these interim financial statements highlight
significant changes to the notes included in the December 31, 1996 audited
financial statements included in the Company's 1996 Form 10-K and present
interim disclosures as required by the Securities and Exchange Commission.
Tenant Accounts Receivable, net:
The Company provides an allowance for doubtful accounts against the
portion of tenants 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 $750 and $600 as of June 30, 1997 and
December 31, 1996, respectively.
Earning Per Common Share:
Earnings per share amounts are based on the weighted average amount of
common stock and common stock equivalents (employee stock options) outstanding.
Recent Accounting Pronouncements:
In February 1997, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standard No. 128 ("FAS 128"),
"Earnings per Share", effective for financial statements issued after December
15, 1997. The Company intends to adopt FAS 128 in fiscal year 1997 and will
include the disclosure of earnings per share in accordance with FAS 128 in the
1997 year end financial statements. The Company has determined the financial
impact to be immaterial for the six month and three month periods ended June
30, 1997 and 1996.
In February 1997, the FASB issued Statement of Financial Accounting
Standard No. 129 ("FAS 129"), "Disclosure of Information about Capital
Structure," and is effective for periods ending after December
6
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FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
(UNAUDITED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
15, 1997. This statement establishes standards for disclosing information
about an entity's capital structure. The financial statements of the Company
are prepared in accordance with the requirements of SFAS No. 129.
In June 1997, the FASB issued Statement of Financial Standards No. 130,
"Reporting Comprehensive Income." This statement, effective for fiscal years
beginning after December 15, 1997, would require 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 nonowner sources. It
includes all changes in equity during a period except those resulting from
investments by owners and distributions to owners. The Company has not yet
determined its comprehensive income.
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 periods 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 Company has not yet determined the impact
of this statement on its financial statements.
Reclassification:
Certain 1996 items have been reclassified to conform to the 1997
presentation.
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 June
30, 1997 and December 31 1996, and the reported amounts of revenues and
expenses for the six months and three months ended June 30, 1997 and 1996.
Actual results could differ from those estimates.
In the opinion of management, all adjustments consisting of normal
recurring adjustments necessary to present fairly the financial position of the
Company as of June 30, 1997 and the results of operations for the six months
and three months ended June 30, 1997 and 1996 and the cash flows for the six
months ended June 30, 1997 and 1996 have been included.
3. MORTGAGE LOANS, SENIOR UNSECURED DEBT, ACQUISITION FACILITY AND
PROMISSORY NOTES PAYABLE
In conjunction with an acquisition of a portfolio of properties on January
31, 1997, the Company assumed two mortgage loans in the amount of $3,800 (the
"Lazarus Burman Mortgage Loan I") and $705 (the "Lazarus Burman Mortgage Loan
II") which are each collateralized by a property located in Long Island, New
York. The Lazarus Burman Mortgage Loan I bears interest at a fixed interest
rate of 10%, provides for interest only payments prior to maturity and matures
on July 11, 1998. The Lazarus Burman Mortgage Loan II is interest free until
February 1998 at which time the mortgage loan bears interest at 8%
7
<PAGE> 9
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
(UNAUDITED)
3. MORTGAGE LOANS, SENIOR UNSECURED DEBT, ACQUISITION FACILITY AND
PROMISSORY NOTES PAYABLE, CONTINUED
and provides for interest only payments prior to maturity. The Lazarus Burman
Mortgage Loan II matures 180 days after the completion of a contingent event
relating to the environmental status of the property collateralizing the loan.
On April 4, 1997, the Company, through the Operating Partnership borrowed
$309.8 million from an institutional lender (the "Defeasance Loan"). The
Defeasance Loan was unsecured, bore interest at LIBOR plus 1% and had a
scheduled maturity of July 1, 1999. The gross proceeds from the Defeasance
Loan were used to purchase U.S. Government Securities as substitute collateral
to execute a legal defeasance of the 1994 Mortgage Loan (the "1994 Defeased
Mortgage Loan"). The terms of the legal defeasance require the Company to pay
down and retire the 1994 Defeased Mortgage Loan at the end of 1997. The
Defeasance Loan was retired in May, 1997, with the net proceeds from the
issuance of the 2007 Notes, the 2027 Notes and the 2011 Notes (as defined
below). As a result of the commitment for early retirement of the 1994
Defeased Mortgage Loan and the early retirement of the Defeasance Loan, the
Company has recorded an extraordinary loss in the second quarter of 1997 of
approximately $12.6 million. The extraordinary loss consists of a prepayment
fee on the 1994 Defeased Mortgage Loan and the write off of unamortized
deferred financing fees, legal costs and other expenses related to the 1994
Defeased Mortgage Loan and the Defeasance Loan.
On May 13, 1997, the Company, through the Operating Partnership, issued
$150 million (the "2007 Notes") and $100 million (the "2027 Notes") of senior
unsecured debt which mature on May 15, 2007 and May 15, 2027, respectively.
The 2027 Notes are redeemable, at the option of the holders thereof, on May 15,
2002. The 2007 Notes and the 2027 Notes bear a coupon interest rate of 7.60%
and 7.15%, respectively. Interest is paid semi-annually in arrears on May 15
and November 15. The issue prices of the 2007 Notes and the 2027 Notes were
99.965% and 99.854%, respectively. The Operating Partnership also entered into
interest rate protection agreements which were used to hedge the interest rate
on the 2007 Notes and the 2027 Notes. Including the impact of the offering
discount and the interest rate protection agreements, the Operating
Partnership's effective interest rates on the 2007 Notes and the 2027 Notes are
7.61% and 7.04%, respectively. The 2007 Notes and 2027 Notes contain certain
covenants including limitation on incurrence of debt and debt service coverage.
On May 22, 1997, the Company, through the Operating Partnership issued
$100 million of senior unsecured debt which matures on May 15, 2011 (the "2011
Notes"). The 2011 Notes bear a coupon interest rate of 7.375%. Interest is
paid semi-annually on May 15 and November 15. The 2011 Notes are redeemable at
the option of the holder thereof, on May 15, 2004. The Operating Partnership
received approximately $1.7 million of proceeds from the holder of the 2011
Notes as consideration for the put option. The Operating Partnership will
amortize the put option proceeds over the life of the put option as an
adjustment to interest expense. The issue price of the 2011 Notes was 99.348%.
The Operating Partnership also entered into an interest rate protection
agreement which was used to hedge the interest rate on the 2011 Notes.
Including the impact of the offering discount, the proceeds from the put option
and the interest rate protection agreement, the Operating Partnership's
effective interest rate on the 2011 Notes is 7.18%. The 2011 Notes contain
certain covenants including limitation on incurrence of debt and debt service
coverage.
8
<PAGE> 10
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
(UNAUDITED)
3. MORTGAGE LOANS, SENIOR UNSECURED DEBT, ACQUISITION FACILITY AND
PROMISSORY NOTES PAYABLE,
CONTINUED
The following table discloses certain information regarding the Company's
mortgage loans, senior unsecured debt, acquisition facility and promissory
notes payable:
<TABLE>
<CAPTION>
OUTSTANDING BALANCE AT ACCRUED INTEREST PAYABLE AT
---------------------------- --------------------------- INTEREST RATE AT
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, MATURITY
1997 1996 1997 1996 1997 DATE
---------- ------------- -------- ------------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C>
MORTGAGE LOANS PAYABLE
1994 Mortgage Loan.................. $ --- $300,000 $ --- $1,750 N/A N/A
1995 Mortgage Loan.................. 40,000 40,000 169 168 7.22% 1/11/26
Harrisburg Mortgage Loan............ 6,378 6,504 37 39 7.25% 12/15/00
CIGNA Loan.......................... 36,093 36,363 --- --- 7.50% 4/1/03
Assumed Loans....................... 9,086 9,215 --- --- 9.25% 1/1/13
Lazarus Burman Mortgage
Loan I............................ 3,800 --- 56 --- 10.00% 7/11/98
Lazarus Burman Mortgage
Loan II.......................... 705 --- --- --- (1) (1)
-------- -------- ------ ------
Total $ 96,062 $392,082 $ 262 $1,957
======== ======== ====== ======
DEFEASED MORTGAGE LOAN
1994 Defeased Mortgage Loan
(formerly known as the
1994 Mortgage Loan) $300,000 $ --- $1,773 $ --- 7.09% 12/31/97
======== ======== ====== ======
SENIOR UNSECURED DEBT
2007 Notes.......................... $149,948 (2) $ --- $1,494 $ --- 7.60% 5/15/07
2011 Notes.......................... 99,855 (2) --- 934 --- 7.38% 5/15/11 (3)
2027 Notes ......................... 99,354 (2) --- 799 --- 7.15% 5/15/27 (4)
-------- -------- ------ ------
Total $349,157 $ --- $3,227 $ ---
======== ======== ====== ======
ACQUISITION FACILITY PAYABLE
1996 Unsecured Acquisition
Facility.......................... $55,000 $ 4,400 $ 39 $ 3 8.50% (5) 4/1/00
======== ======== ====== ======
PROMISSORY NOTES PAYABLE
Promissory Notes.................... $ --- $ 9,919 $ --- $ 68 --- 1/6/97
======== ======== ====== ======
</TABLE>
(1) The Lazarus Burman Mortgage Loan II is interest free until February 1998
at which time the mortgage loan bears interest at 8%. The loan matures as
described above.
(2) The 2007 Notes, 2011 Notes and 2027 Notes are net of unamortized
discounts of $52, $646 and $145, respectively.
(3) The 2011 Notes are redeemable at the option of the holder thereof, on May
15, 2004.
(4) The 2027 Notes are redeemable at the option of the holders thereof, on
May 15, 2002.
(5) In July 1997, the interest rate was converted to 6.38%.
The following is a schedule of maturities of the mortgage loans, senior
unsecured debt, acquisition facility, and promissory notes payable for the next
five years ending December 31, and thereafter:
<TABLE>
<CAPTION>
Amount
------
<S> <C>
1997 $300,470
1998 5,363
1999 1,710
2000 62,328
2001 1,683
Thereafter 428,803
--------
Total $800,357
========
</TABLE>
The above table presents the 1994 Defeased Mortgage Loan maturing in 1997
due to its scheduled prepayment. The 1994 Defeased Mortgage Loan is
collaterallized with U.S. Government securities which will be used to pay down
and retire the 1994 Defeased Mortgage Loan at the end of 1997. The maturity
9
<PAGE> 11
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
(UNAUDITED)
3. MORTGAGE LOANS, SENIOR UNSECURED DEBT, ACQUISITION FACILITY AND
PROMISSORY NOTES PAYABLE, CONTINUED
date of the Lazarus Burman Mortgage Loan II is based on a contingent event. As
a result, this loan is not included in the above table.
4. STOCKHOLDERS' EQUITY
On May 14, 1997, the Company issued 4,000,000 Depositary Shares, each
representing 1/100 of a share of the Company's 8 3/4% Series B Cumulative
Preferred Stock (the "Series B Preferred Shares"), at an initial offering price
of $25 per Depositary Share. Dividends on the Series B Preferred Shares
represented by the Depositary Shares are cumulative from the date of initial
issuance and are payable quarterly in arrears. With respect to the payment of
dividends and amounts upon liquidation, dissolution or winding up, the Series B
Preferred Shares rank senior to payments on the Company's common stock and pari
passu with the Company's Series A Cumulative Preferred Stock and Series C
Cumulative Preferred Stock. The Series B Preferred Shares are not redeemable
prior to May 14, 2002. On or after May 14, 2002, the Series B Shares are
redeemable for cash at the option of the Company, in whole or in part, at a
redemption price equivalent to $25 per Depositary Share, or $100 million in the
aggregate, plus dividends accrued and unpaid to the redemption date. The
Series B Preferred Shares have no stated maturity and are not convertible into
any other securities of the Company.
On June 6, 1997, the Company issued 2,000,000 Depositary Shares, each
representing 1/100 of a share of the Company's 8 5/8% Series C Cumulative
Preferred Stock (the "Series C Preferred Shares"), at an initial offering price
of $25 per Depositary Share. Dividends on the Series C Preferred Shares
represented by the Depositary Shares are cumulative from the date of initial
issuance and are payable quarterly in arrears. With respect to the payment of
dividends and amounts upon liquidation, dissolution or winding up, the Series C
Preferred Shares rank senior to payments on the Company's common stock and pari
passu with the Company's Series A Cumulative Preferred Stock and Series B
Cumulative Preferred Stock. The Series C Preferred Shares are not redeemable
prior to June 6, 2007. On or after June 6, 2007, the Series C Shares are
redeemable for cash at the option of the Company, in whole in part, at a
redemption price equivalent to $25 per Depositary Share, or $50.0 million in
the aggregate, plus dividends accrued and unpaid to the redemption date. The
Series C Preferred Shares have no stated maturity and are not convertible into
any other securities of the Company.
On January 20, 1997, the Company and the Operating Partnership paid a
fourth quarter 1996 distribution of 50.5 cents per common share/unit, totaling
approximately $16.3 million. On April 21, 1997, the Company and Operating
Partnership paid a first quarter 1997 distribution of 50.5 cents per common
share/unit, totaling approximately $16.9 million. On July 21, 1997, the
Company and the Operating Partnership paid a second quarter 1997 distribution
of 50.5 cents per common share/unit, totaling approximately $17.2 million.
On March 31, 1997, the Company paid a first quarter preferred stock
dividend of 59.375 cents per share on its Series A Cumulative Preferred Stock,
totaling approximately $1.0 million. On June 30, 1997, the Company paid a
second quarter preferred stock dividend of 59.375 cents per share and a period
prorated dividend of 27.95 cents per depositary share on its Series A
Cumulative Preferred Stock and Series B Cumulative Preferred Stock,
respectively, totaling in the aggregate approximately $2.1 million.
10
<PAGE> 12
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
(UNAUDITED)
5. ACQUISITION OF REAL ESTATE
During the six months ended June 30, 1997, the Company acquired 74
existing industrial properties and land parcels. The aggregate purchase price
for these acquisitions totaled approximately $253.5 million, excluding costs
incurred in conjunction with the acquisition of the properties.
6. DISPOSITION OF THE INTEREST RATE PROTECTION AGREEMENTS
In May, 1997, the Company sold its interest rate protection agreements and
entered into a new interest rate protection agreement at a cost of
approximately $.2 million with a notional value of $300 million which expires
at the end of 1997. This new interest rate protection agreement effectively
limits the interest rate on the 1994 Defeased Mortgage Loan to 7.2%. The gross
proceeds from the sale of the interest rate protection agreements were
approximately $10.0 million. The gain on disposition of the interest rate
protection agreements was approximately $1.4 million.
7. SALES OF REAL ESTATE
In June, 1997, the Company sold two properties located in Atlanta, Georgia
and three properties located in Nashville, Tennessee. Gross proceeds from
these sales were approximately $21.9 million. The gain on sales of real state
was approximately $4.0 million.
8. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
Six Months Ended
-----------------------------------
June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
Interest paid, net of capitalized interest............................. $ 18,048 $ 14,414
======== ========
Interest capitalized................................................... $ 294 $ 88
======== ========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Distribution payable on common stock/units and Series C Cumulative
Preferred Stock....................................................... $ 17,510 $ 12,759
IN CONJUNCTION WITH THE PROPERTY ACQUISITIONS, THE FOLLOWING ASSETS
AND LIABILITIES WERE ASSUMED AND OPERATING PARTNERSHIP UNITS
EXCHANGED:
Purchase of real estate................................................ $253,484 $142,068
Accrued real estate taxes and security deposits........................ (2,473) (1,769)
Mortgage loans......................................................... (4,505) (9,417)
Operating Partnerships units........................................... (53,471) (14,085)
-------- --------
$193,035 $116,797
======== ========
</TABLE>
9. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company 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 Company.
The Company has committed to the construction of two light industrial and
seven bulk warehouse properties totaling approximately 1.4 million square feet.
The estimated total construction costs are approximately $51.2 million.
11
<PAGE> 13
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
(UNAUDITED)
10. SUBSEQUENT EVENTS
From July 1, 1997 to August 12, 1997, the Company acquired 23 industrial
properties and several land parcels. The aggregate purchase price for these
acquisitions totaled approximately $36.5 million, excluding costs incurred in
conjunction with the acquisition of the properties.
11. PRO FORMA FINANCIAL INFORMATION
The pro forma financial information will be filed in an amendment to the
Company's Form 8-K dated June 30, 1997 as filed on July 15, 1997.
12
<PAGE> 14
FIRST INDUSTRIAL REALTY TRUST, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis of First Industrial Realty Trust,
Inc.'s (the "Company") 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.
RESULTS OF OPERATIONS
At June 30, 1997, the Company owned 453 in-service properties with
approximately 39.1 million square feet of gross leasable area ("GLA"), compared
to 320 in-service properties with approximately 28.3
million square feet of GLA at June 30, 1996. The addition of 139 properties
acquired or developed between July 1, 1996 and June 30, 1997 included the
acquisitions of 132 properties comprising approximately 10.5 million square
feet and the completed construction of seven properties containing a total of
approximately 1.1 million square feet. The sales of six properties comprised
of approximately .8 million square feet were also completed between July 1,
1996 and June 30, 1997.
COMPARISON OF SIX MONTHS ENDED JUNE 30, 1997 TO SIX MONTHS ENDED JUNE 30,
1996
Rental income and tenant recoveries and other income increased by $29.2
million or 44.7% due primarily to the properties acquired or developed after
June 30, 1996. Revenues from properties owned prior to January 1, 1996,
increased by approximately $1.7 million or 3.1% due to rent increases and
additional tenant recovery income charges for additional property expenses
incurred for the six months ended June 30, 1997.
Interest income on U.S. Government securities in 1997 represents interest
income earned on U.S. Government securities that are pledged as collateral to
legally defease the Company's $300 million mortgage loan (the "1994 Defeased
Mortgage Loan").
Property expenses, which include real estate taxes, repairs and
maintenance, property management, utilities, insurance and other expenses,
increased by $8.4 million or 44.3% due primarily to the properties acquired or
developed after June 30, 1996. Expenses from properties owned prior to January
1, 1996, increased by approximately $.3 million or 1.9% due to additional snow
removal expenses incurred in the Minneapolis metropolitan area and additional
utilities and property management expenses incurred in the majority of the
Company's geographical markets. This increase was partially offset by a
decrease in insurance expense.
General and administrative expense increased by $.8 million due primarily
to the additional expenses associated with managing the Company's growing
operations including additional professional fees relating to additional
properties owned and personnel to manage and expand the Company's business.
Interest expense increased by $7.3 million for the six months ended June
30, 1997 compared to the six months ended June 30, 1996 due primarily to a
higher average debt balance to fund the purchase of U.S. Government securities
to legally defease the 1994 Defeased Mortgage Loan and to fund the acquisition
of additional properties.
Amortization of interest rate protection agreements and deferred financing
costs decreased by $.2 million due primarily to a decrease in deferred
financing costs related to the loans in place during the six months ended June
30, 1997 compared to the loans that were in place during the six months ended
June 30, 1996.
Depreciation and other amortization increased by $4.3 million due
primarily to the additional depreciation and amortization related to the
properties acquired or developed after June 30, 1996.
13
<PAGE> 15
The disposition of interest rate protection agreements in 1997 represents
the sale of the Company's interest rate protection agreements. The Company
entered into a new interest rate protection agreement at a cost of
approximately $.2 million with a notional value of $300 million which expires
at the end of 1997. This new interest rate protection agreement effectively
limits the interest rate on the 1994 Defeased Mortgage Loan to 7.2%.
The $4.0 million gain on sales of properties resulted from the sale of two
properties located in Atlanta, Georgia and three properties in Nashville,
Tennessee. Gross proceeds from these sales were approximately $21.9 million.
The $12.6 million extraordinary loss in 1997 consists of a prepayment fee
on the 1994 Defeased Mortgage Loan and the write-off of unamortized deferred
financing fees, legal costs and other expenses incurred in committing to retire
the 1994 Defeased Mortgage Loan and in retiring the Company's $309.8 million
unsecured loan from an institutional investor (the "Defeasance Loan").
COMPARISON OF THREE MONTHS ENDED JUNE 30, 1997 TO THREE MONTHS ENDED JUNE
30, 1996
Rental income and tenant recoveries and other income increased by $13.7
million or 39.4%, due primarily to the properties acquired or developed after
June 30, 1996. Revenues from properties owned prior to April 1, 1996,
increased by approximately $.2 million or .6% due to rent increases which were
partially offset by a decrease in tenant recovery income charges due to a
decrease in property expenses incurred for the three months ended June 30,
1997.
Interest income on U.S. Government securities for 1997 represents interest
income earned on U.S. Government securities that are pledged as collateral to
legally defease the 1994 Defeased Mortgage Loan.
Property expenses, which include real estate taxes, repairs and
maintenance, property management, utilities, insurance and other expenses,
increased by $3.2 million or 32.2% due primarily to the properties acquired or
developed after June 30, 1996. Expenses from properties owned prior to April
1, 1996, decreased by approximately $.5 million or 4.8% due to a decrease in
utilities and insurance expenses in the majority of the Company's geographical
markets.
General and administrative expense increased by $.5 million due primarily
to the additional expenses associated with managing the Company's growing
operations (including additional professional fees relating to additional
properties owned and personnel to manage and expand the Company's business).
Interest expense increased by $5.6 million for the three month period
ended June 30, 1997 compared to the three month period ended June 30, 1996 due
primarily to a higher average debt balance to fund the purchase of U.S.
Government securities to legally defease the 1994 Defeased Mortgage Loan and to
fund the acquisition of additional properties.
Depreciation and other amortization increased by $2.0 million due
primarily to the additional depreciation and amortization related to the
properties acquired after June 30, 1996.
The disposition of interest rate protection agreements fees in 1997
represents the sale of the company's interest rate protection agreements. The
Company entered into a new interest rate protection agreement at a cost of
approximately $.2 million with a notional value of $300 million which expires
at the end of 1997. This new interest rate protection agreement effectively
limits the interest rate on the 1994 Defeased Mortgage Loan to 7.2%.
The $4.0 million gain on sales of properties resulted from the sale of two
properties located in Atlanta, Georgia and three properties in Nashville,
Tennessee. Gross proceeds from these sales were approximately $21.9 million.
The $12.6 million extraordinary loss in 1997 consists of a prepayment fee
on the 1994 Defeased Mortgage Loan and the write-off of unamortized deferred
financing fees, legal costs and other expenses incurred in committing to retire
the 1994 Defeased Mortgage Loan and in retiring the Defeasance Loan.
14
<PAGE> 16
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997, the Company's unrestricted cash and cash equivalents was
$12.5 million and restricted cash was $33.2 million. Included in restricted
cash is approximately $21.1 million of net proceeds from the sale of
properties. These sale proceeds will be disbursed as the Company exchanges
into properties under Section 1031 of the Internal Revenue Code. Restricted
cash also includes reserves required to be set aside under certain of the
Company's loans for payments of security deposit refunds, tenant improvements,
capital expenditures, interest, real estate taxes, insurance and potential
environmental costs. A portion of the cash reserve relating to payments for
potential environmental costs was established at the closing of the 1994
Mortgage Loan and is distributed to the Company as such expenditures are made,
and it is not required to be replenished to its original level. The portion of
the cash reserve on the 1994 Mortgage Loan relating to payments for tenant
improvements, capital expenditures, interest, real estate taxes and insurance
is established monthly, distributed to the Company as such expenditures are
made and is replenished to a level adequate to make the next periodic payment
of such expenditures. The portion of the cash reserve relating to payments for
capital expenditures, interest, real estate taxes and insurance on the 1995
Mortgage Loan is established monthly, distributed to the Company as such
expenditures are made and is replenished to a level adequate to make the next
periodic payment of such expenditures. The portion of the cash reserve relating
to security deposit refunds on the $40 million mortgage loan ("1995 Mortgage
Loan") is adjusted as tenants turn over.
Net cash provided by operating activities was $38.7 million for the six
months ended June 30, 1997 compared to $32.4 million for the six months ended
June 30, 1996. This increase is due primarily to an increase in net operating
income due to the operations of properties acquired or developed between July
1, 1996 and June 30, 1997 which was partially offset by an increase in tenant
accounts receivable, prepaid expenses and other assets.
Net cash used in investing activities increased to $232.4 million from
$118.8 million due primarily to an increase in the acquisition of properties
which was partially offset by the proceeds from the sale of five properties.
Net cash provided by financing activities increased to $198.5 million for
the six months ended June 30, 1997 from $83.0 million for the six months ended
June 30, 1996 due to the sale of preferred stock and senior unsecured debt and
an increase in borrowings under the Company's $200 million revolving credit
facility (the "1996 Unsecured Acquisition Facility") during the six months
ended June 30, 1997. These proceeds were partially offset by an increase in
dividends and distributions for the six months ended June 30, 1997 due to the
issuance of additional common shares and First Industrial, L.P. partnership
units in 1996 and 1997 as well as an increase in per common share/unit
distributions.
Funds from operations for the six months ended June 30, 1997 was $42.5
million, as compared to $26.9 million for the six months ended June 30, 1996,
as a result of the factors discussed in the analysis of operating results
above. Management considers funds from operations to be one measure of the
financial performance of an equity REIT that provides a relevant basis for
comparison among REITs, and it is presented to assist investors in analyzing
the performance of the Company. In accordance with the National Association of
Real Estate Investment Trusts' definition of funds from operations, the Company
calculates funds from operations to be equal to net income, excluding gains (or
losses) from debt restructuring and sales of property, plus depreciation and
amortization, excluding amortization of deferred financing costs and interest
rate protection agreements, and after adjustments for unconsolidated
partnerships and joint ventures. Funds from operations does not represent cash
generated from operating activities in accordance with generally accepted
accounting principles and is not necessarily indicative of cash available to
fund cash needs, including the payment of dividends and distributions. Funds
from operations should not be considered as a substitute for net income as a
measure of results of operations or for cash flow from operating activities
calculated in accordance with generally accepted accounting principles as a
measure of liquidity. Funds from operations as calculated by the Company may
not be comparable to similarly titled, but differently calculated, measures of
other REITs. The following is a reconciliation of net income to funds from
operations:
15
<PAGE> 17
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 1997 June 30, 1996
---------------- ----------------
<S> <C> <C>
Net Income Available to
Common Stockholders........... $ 15,832 $ 15,678
Adjustments:
Depreciation and Other
Amortization.................. 17,613 13,349
Extraordinary Items............. 12,563 821
Minority Interest............... 1,950 1,405
Gain on Sales of Properties..... (3,999) (4,320)
Gain on disposition of IRPA..... (1,430) ---
------- -------
Funds From Operations......... $42,529 $26,933
======= =======
</TABLE>
The ratio of earnings to fixed charges and preferred stock dividends was
1.93 for the six months ended June 30, 1997 compared to 1.77 for the six months
ended June 30, 1996. The increase is primarily due to increased net operating
income as discussed in the "Results of Operations" above.
Between January 1, 1997 and June 30, 1997, the Company purchased 74
industrial properties comprising approximately 6.1 million square feet, for an
aggregate purchase price of approximately $253.5 million. The acquisitions
activity were financed with borrowings under the 1996 Unsecured Acquisition
Facility, the issuance of 1,786,172 Operating Partnership units and $4.5
million of indebtedness assumed in connection with property acquisitions.
The Company has committed to the construction of two light industrial and
seven bulk warehouse properties totaling approximately 1.4 million square feet.
The estimated total construction costs are approximately $51.2 million. These
developments are expected to be funded with cash flow from operations as well
as borrowings under the Company's 1996 Unsecured Acquisition Facility.
On April 4, 1997, the Company borrowed $309.8 million from an
institutional lender. The Defeasance Loan was unsecured, bore interest at
LIBOR plus 1% and had a scheduled maturity of July 1, 1999. The gross proceeds
from the Defeasance Loan were used to purchase U.S. Government Securities as
substitute collateral to execute a legal defeasance of the 1994 Defeased
Mortgage Loan. The terms of the legal defeasance require the Company to pay
down and retire the 1994 Defeased Mortgage Loan at the end of 1997. The
Defeasance Loan was retired in May 1997, with the net proceeds from the
issuance of the 2007 Notes, the 2027 Notes and the 2011 Notes (as defined
below).
On May 13, 1997, the Operating Partnership issued $150 million (the "2007
Notes") and $100 million (the "2027 Notes") of senior unsecured debt which
mature on May 15, 2007 and May 15, 2027, respectively. The 2027 Notes are
redeemable, at the option of the holders thereof, on May 15, 2002. The 2007
Notes and the 2027 Notes bear a coupon interest rate of 7.60% and 7.15%,
respectively. Interest is paid semi-annually in arrears on May 15 and November
15. The issue prices of the 2007 Notes and the 2027 Notes were 99.965% and
99.854%, respectively. The Operating Partnership also entered into interest
rate protection agreements which were used to hedge the interest rate on the
2007 Notes and the 2027 Notes. Including the impact of the offering discount
and the interest rate protection agreements, the Operating Partnership's
effective interest rates on the 2007 Notes and the 2027 Notes are 7.61% and
7.04%, respectively.
On May 22, 1997, the Company, through the Operating Partnership issued
$100 million of senior unsecured debt which matures on May 15, 2011 (the "2011
Notes"). The 2011 Notes bear a coupon interest rate of 7.375%. Interest is
paid semi-annually on May 15 and November 15. The 2011 Notes are redeemable at
the option of the holder thereof, on May 15, 2004. The Operating Partnership
received approximately $1.7 million from the holder of the 2011 Notes as
consideration for this put option. The Operating Partnership will amortize the
put option proceeds over the life of the put option as an
16
<PAGE> 18
adjustment to interest expense. The issue price of the 2011 Notes was 99.348%.
The Operating Partnership also entered into an interest rate protection
agreement which was used to hedge the interest rate on the 2011 Notes.
Including the impact of the offering discount, the consideration from the put
option and the interest rate protection agreement, the Operating Partnership's
effective interest rate on the 2011 Notes is 7.18%.
On May 14, 1997, the Company issued 4,000,000 Depositary Shares, each
representing 1/100 of a share of the Company's 8 3/4% Series B Cumulative
Preferred Stock (the "Series B Preferred Shares"), at an initial offering price
of $25 per Depositary Share. Dividends on the Series B Preferred Shares
represented by the Depositary Shares are cumulative from the date of initial
issuance and are payable quarterly in arrears. With respect to the payment of
dividends and amounts upon liquidation, dissolution or winding up, the Series B
Preferred Shares rank senior to payments on the Company's common stock and pari
passu with the Company's Series A Cumulative Preferred Stock and Series C
Cumulative Preferred Stock. The Series B Preferred Shares are not redeemable
prior to May 14, 2002. On or after May 14, 2002, the Series B Shares are
redeemable for cash at the option of the Company, in whole or in part, at a
redemption price equivalent to $25 per Depositary Share, or $100 million in the
aggregate, plus dividends accrued and unpaid to the redemption date. The
Series B Preferred Shares have no stated maturity and are not convertible into
any other securities of the Company.
On June 6, 1997, the Company issued 2,000,000 Depositary Shares, each
representing 1/100 of a share of the Company's 8 5/8% Series C Cumulative
Preferred Stock (the "Series C Preferred Shares"), at an initial offering price
of $25 per Depositary Share. Dividends on the Series C Preferred Shares
represented by the Depositary Shares are cumulative from the date of initial
issuance and are payable quarterly in arrears. With respect to the payment of
dividends and amounts upon liquidation, dissolution or winding up, the Series C
Preferred Shares rank senior to payments on the Company's common stock and pari
passu with the Company's Series A Cumulative Preferred Stock and Series B
Cumulative Preferred Stock. The Series C Preferred Shares are not redeemable
prior to June 6, 2007. On or after June 6, 2007, the Series C Shares are
redeemable for cash at the option of the Company, in whole in part, at a
redemption price equivalent to $25 per Depositary Share, or $50.0 million in
the aggregate, plus dividends accrued and unpaid to the redemption date. The
Series C Preferred Shares have no stated maturity and are not convertible into
any other securities of the Company.
On January 20, 1997, the Company and the Operating Partnership paid a
fourth quarter 1996 distribution of 50.5 cents per common share/unit, totaling
approximately $16.3 million. On April 21, 1997, the Company and Operating
Partnership paid a first quarter 1997 distribution of 50.5 cents per common
share/unit, totaling approximately $16.9 million. On July 21, 1997, the
Company and the Operating Partnership paid a second quarter 1997 distribution
of 50.5 cents per common share/unit, totaling approximately $17.2 million. On
March 31, 1997, the Company paid a first quarter preferred stock dividend of
59.375 cents per share on its Series A Cumulative Preferred Stock, totaling
approximately $1.0 million On June 30, 1997, the Company paid a second quarter
preferred stock dividend of 59.375 cents per share and 27.95 cents per
despositary share on its Series A Cumulative Preferred Stock and Series B
Cumulative Preferred Stock, respectively, totaling in the aggregate
approximately $2.1 million.
The Company has considered its short-term (less than one year) 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,
debt service requirements and the minimum distribution required to maintain the
Company's REIT qualification under the Internal Revenue Code. The Company
anticipates that these needs will be met with cash flows provided by operating
activities.
The Company expects to meet long-term (greater than one year) liquidity
requirements such as property acquisitions, scheduled debt maturities, major
renovations, expansions and other nonrecurring
17
<PAGE> 19
capital improvements through long-term secured and unsecured indebtedness and
the issuance of additional equity securities. The Company may finance the
development or acquisition of additional properties through borrowings under
the 1996 Unsecured Acquisition Facility. At June 30, 1997, borrowings under the
1996 Unsecured Acquisition Facility bore interest at a weighted average
interest rate of 8.5% which was converted to an interest rate of 6.38% in July,
1997. As of June 30, 1997, the Company had approximately $144.0 million
available in additional borrowings under the 1996 Unsecured Acquisition
Facility. While the Company may sell properties if property or market
conditions make it desirable, the Company does not expect to sell assets in the
foreseeable future to satisfy its liquidity requirements.
OTHER
In February of 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 (FAS 128), "Earnings per
Share", effective for financial statements issued after December 15, 1997. The
Company intends to adopt FAS 128 in fiscal year 1997 and will include the
disclosure of earnings per share in accordance with FAS 128 in the 1997 year
end financial statements. The Company has determined the financial impact to
be immaterial for each of the three month periods ended March 31, 1997 and
1996.
In February 1997, the FASB issued Statement of Financial Accounting
Standard No. 129 ("FAS 129"), "Disclosure of Information about Capital
Structure," and is effective for periods ending after December 15, 1997. This
statement establishes standards for disclosing information about an entity's
capital structure. The financial statements of the Company are prepared in
accordance with the requirements of SFAS No. 129.
In June 1997, the FASB issued Statement of Financial Standards No. 130,
"Reporting Comprehensive Income." This statement, effective for fiscal years
beginning after December 15, 1997, would require 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 nonowner sources. It
includes all changes in equity during a period except those resulting from
investments by owners and distributions to owners. The Company has not yet
determined its comprehensive income.
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 periods 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 Company has not yet determined the impact
of this statement on its financial statements.
18
<PAGE> 20
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 14, 1997, the Company held its Annual Meeting of Stockholders.
At the meeting, three Class III directors of the Company were elected to
serve until the 2000 Annual Meeting of Stockholders and until their respective
successors are duly elected and qualified. The votes cast for each director
were:
For election of John Rau:
Votes for: 26,675,871
Votes withheld: 27,514
For election of Robert J. Slater:
Votes for: 26,676,371
Votes withheld 27,014
For election of Michael T. Tomasz
Votes for: 26,676,371
Votes withheld: 27,014
In addition, the appointment of Coopers & Lybrand, L.L.P. as independent
auditors of the Company for the fiscal year ending December 31, 1997 was
ratified at the meeting with 26,654,274 shares voting in favor, 15,614 shares
voting against and 33,497 shares abstaining.
ITEM 5. OTHER INFORMATION
Not applicable.
19
<PAGE> 21
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
Exhibit No. Description
----------- -----------
1.1 Underwriting agreement relating to 7.60% Notes due 2007
and 7.15% Notes due 2027 (incorporated by reference to
Exhibit 1 of Form 8-K of First Industrial, L.P. dated May
8, 1997, File No. 333-21873).
1.2 Underwriting agreement relating to Depositary
Shares each representing 1/100 of a share of 8 3/4%
Series B Cumulative Preferred Stock with a liquidation
preference equivalent to $25.00 per Depositary Share
(incorporated by reference to Exhibit 1.1 of Form 8-K of
the Company dated May 13, 1997, File No. 1-13102).
1.3 Underwriting Agreement dated June 3, 1997 relating to
Depositary Shares each representing 1/100 of a share of
8 5/8% Series C Cumulative Preferred Stock with a
liquidation preference equivalent to $25.00 per
Depositary Share (incorporated by reference to Exhibit 1
of Form 8-K of the Company dated June 6, 1997, File No.
1-13102).
3.1 Articles Supplementary relating to the Company's 8 3/4%
Series B Cumulative Preferred Stock, $.01 par value
(incorporated by reference to Exhibit 3.1 of Form 10-Q of
the Company for the fiscal quarter ended March 31, 1997,
as amended by Form 10-Q/A No. 1 of the Company filed May
30, 1997, File No. 1-13102).
3.2 Articles Supplementary to the Amended and Restated
Articles of Incorporation of the Company relating to the
Company's Series C Cumulative Preferred Stock, par value
$.01 (incorporated by reference to Exhibit 4.1 of Form
8-K of the Company dated June 6, 1997, File No. 1-13102).
4.1 Indenture, dated as of May 13, 1997 between First
Industrial, L.P. and First Trust National Association, as
Trustee (incorporated by reference to Exhibit 4.1
of Form 10-Q of the Company for the fiscal quarter ended
March 31, 1997, as amended by Form 10-Q/A No. 1 of the
Company filed May 30, 1997, File No. 1-13102).
4.2 Supplemental Indenture No. 1, dated as of May 13, 1997
between First Industrial, L.P. and First Trust National
Association relating to the $150 million of 7.60%
notes due 2007 and $100 million of 7.15% Notes due 2027
(incorporated by reference to Exhibit 4.2 of Form 10-Q of
the Company for the fiscal quarter ended March 31, 1997,
as amended by Form 10-Q/A No. 1 of the Company filed
May 30, 1997, File No. 1-13102).
4.3 Supplemental Indenture No, 2 dated as of May 22, 1997
between First Industrial, L.P. and First Trust National
Association as Trustee relating to $100 million of 7
3/8% Notes Due 2011 (incorporated by reference to
Exhibit 4.4 of Form 10-Q of First Industrial, L.P. for
the fiscal quarter ended March 31, 1997, File No.
333-21873).
20
<PAGE> 22
4.4 Trust Agreement, dated as of May 16, 1997 between First
Industrial, L.P. and First Bank National Association, as
Trustee (incorporated by reference to Exhibit 4.5 of the
Form 10-Q of First Industrial, L.P. for the fiscal
quarter ended March 31, 1997, File No. 333-21873).
4.5 Deposit Agreement dated May 14, 1997, by and among the
Company, First Chicago Trust Company of New York and
holders from time to time of Depositary Receipts
(incorporated by reference to Exhibit 4.3 of the Form
10-Q of the Company for the fiscal quarter ended March
31, 1997, as amended by Form 10-Q/A No. 1 of the Company
filed May 30, 1997, File No. 1-13102).
4.6 Form of Depositary Receipt to be issued pursuant to the
Deposit Agreement (incorporated by reference to Exhibit
4.3 of Form 8-K of the Company dated May 13, 1997,
File No. 1-13102).
4.7 Form of Stock Certificate for Series B Cumulative
Preferred Stock (incorporated by reference to Exhibit
4.4 of Form 8-K of the Company dated May 13, 1997, File
No. 1-13102).
4.8 Deposit Agreement dated June 6, 1997 between the Company
and First Chicago Trust Company of New York
(incorporated by reference to Exhibit 4.2 of Form 8-K of
the Company dated June 6, 1997, File No. 1-13102).
4.9 Form of Stock Certificate for Series C Cumulative
Preferred Stock (incorporated by reference to Exhibit
4.3 of Form 8-K of the Company dated June 6, 1997, File
No. 1-13102).
10.1 Third Amended and Restated Limited Partnership Agreement
of First Industrial, L.P. (incorporated by reference to
Exhibit 10 of Form 8-K of First Industrial, L.P. dated
May 14, 1997, File No. 333-21873).
10.2 Fourth Amended and Restated Limited Partnership
Agreement of First Industrial, L.P. (incorporated
by reference to Exhibit 4 of the Form 8-K of First
Industrial, L.P. dated June 13, 1997, File No.
333-21873).
10.3 First Amendment to the Fourth Amended and Restated
Limited Partnership Agreement of First Industrial, L.P.
(incorporated by reference to Exhibit 10.3 of Form 10-Q
of the Company for the fiscal quarter ended June 30,
1997 filed August 14, 1997, File No. 1-13102)
10.4 Second Amendment to the Fourth Amended and Restated
Limited Partnership Agreement of First Industrial, L.P.
(incorporated by reference to Exhibit 10.4 of Form 10-Q
of the Company for the fiscal quarter ended June 30,
1997 filed August 14, 1997, File No. 1-13102)
27 Financial Data Schedule (incorporated by reference to
Exhibit 27 of Form 10-Q of the Company for the fiscal
quarter ended June 30, 1997 filed August 14, 1997, File
No. 1-13102)
21
<PAGE> 23
Reports on Form 8-K and Form 8-K/A:
- -----------------------------------
Report on Form 8-K dated February 12, 1997, as amended by the report on
Form 8-K/A No. 1 filed April 10, 1997, relating to the acquisition of 104
industrial properties and four land parcels for future development. The
reports included Combined Historical Statements of Revenues and Certain
Expenses for the acquired properties and Pro Forma Statements of
Operations for First Industrial Realty Trust, Inc.
Report on Form 8-K dated June 30, 1997, relating to the acquisition of 68
properties, one parking lot and land parcels for future development.
The Company has prepared supplemental financial and operating information
which is available without charge upon request to the Company. Please direct
requests as follows:
First Industrial Realty Trust, Inc.
311 S. Wacker, Suite 4000
Chicago, IL 60606
Attention: Investor Relations
22
<PAGE> 24
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 REALTY TRUST, INC.
Date: August 26, 1997 By: /s/ Michael J. Havala
----------------------
Michael J. Havala
Chief Financial Officer
(Principal Financial and Accounting Officer)
23
<PAGE> 25
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
1.1 Underwriting agreement relating to 7.60% Notes due 2007
and 7.15% Notes due 2027 (incorporated by reference to
Exhibit 1 of Form 8-K of First Industrial, L.P. dated
May 8, 1997, File No. 333-21873).
1.2 Underwriting agreement relating to Depositary Shares
each representing 1/100 of a share of 8 3/4% Series B
Cumulative Preferred Stock with a liquidation preference
equivalent to $25.00 per Depositary Share (incorporated
by reference to Exhibit 1.1 of Form 8-K of the Company
dated May 13, 1997, File No. 1-13102).
1.3 Underwriting Agreement dated June 3, 1997 relating to
Depositary Shares each representing 1/100 of a share
of 8 5/8% Series C Cumulative Preferred Stock with a
liquidation preference equivalent to $25.00 per
Depositary Share (incorporated by reference to Exhibit 1
of Form 8-K of the Company dated June 6, 1997, File No.
1-13102).
3.1 Articles Supplementary relating to the Company's 8 3/4%
Series B Cumulative Preferred Stock, $.01 par value
(incorporated by reference to Exhibit 3.1 of Form 10-Q
of the Company for the fiscal quarter ended March 31,
1997, as amended by Form 10-Q/A No. 1 of the Company
filed May 30, 1997, File No. 1-13102).
3.2 Articles Supplementary to the Amended and Restated
Articles of Incorporation of the Company relating
to the Company's Series C Cumulative Preferred Stock, par
value $.01 (incorporated by reference to Exhibit 4.1 of
Form 8-K of the Company dated June 6, 1997, File No.
1-13102).
4.1 Indenture, dated as of May 13, 1997 between First
Industrial, L.P. and First Trust National Association, as
Trustee (incorporated by reference to Exhibit 4.1
of Form 10-Q of the Company for the fiscal quarter ended
March 31, 1997, as amended by Form 10-Q/A No. 1 of the
Company filed May 30, 1997, File No. 1-13102).
4.2 Supplemental Indenture No. 1, dated as of May 13, 1997
between First Industrial, L.P. and First Trust
National Association relating to the $150 million of
7.60% notes due 2007 and $100 million of 7.15% Notes due
2027 (incorporated by reference to Exhibit 4.2 of Form
10-Q of the Company for the fiscal quarter ended March
31, 1997, as amended by Form 10-Q/A No. 1 of the Company
filed May 30, 1997, File No. 1-13102).
4.3 Supplemental Indenture No, 2 dated as of May 22, 1997
between First Industrial, L.P. and First Trust
National Association as Trustee relating to $100 million
of 7 3/8% Notes Due 2011 (incorporated by reference to
Exhibit 4.4 of Form 10-Q of First Industrial, L.P. for
the fiscal quarter ended March 31, 1997, File No.
333-21873).
24
<PAGE> 26
4.4 Trust Agreement, dated as of May 16, 1997 between First
Industrial, L.P. and First Bank National Association, as
Trustee (incorporated by reference to Exhibit 4.5 of the
Form 10-Q of First Industrial, L.P. for the fiscal
quarter ended March 31, 1997, File No. 333-21873).
4.5 Deposit Agreement dated May 14, 1997, by and among the
Company, First Chicago Trust Company of New York and
holders from time to time of Depositary Receipts
(incorporated by reference to Exhibit 4.3 of the Form
10-Q of the Company for the fiscal quarter ended March
31, 1997, as amended by Form 10-Q/A No. 1 of the Company
filed May 30, 1997, File No. 1-13102).
4.6 Form of Depositary Receipt to be issued pursuant to the
Deposit Agreement (incorporated by reference to
Exhibit 4.3 of Form 8-K of the Company dated May 13,
1997, File No. 1-13102).
4.7 Form of Stock Certificate for Series B Cumulative
Preferred Stock (incorporated by reference to Exhibit
4.4 of Form 8-K of the Company dated May 13, 1997, File
No. 1-13102).
4.8 Deposit Agreement dated June 6, 1997 between the Company
and First Chicago Trust Company of New York (incorporated
by reference to Exhibit 4.2 of Form 8-K of the Company
dated June 6, 1997, File No. 1-13102).
4.9 Form of Stock Certificate for Series C Cumulative
Preferred Stock (incorporated by reference to Exhibit 4.3
of Form 8-K of the Company dated June 6, 1997, File No.
1-13102).
10.1 Third Amended and Restated Limited Partnership Agreement
of First Industrial, L.P. (incorporated by reference to
Exhibit 10 of Form 8-K of First Industrial, L.P.
dated May 14, 1997, File No. 333-21873).
10.2 Fourth Amended and Restated Limited Partnership
Agreement of First Industrial, L.P. (incorporated by
reference to Exhibit 4 of the Form 8-K of First
Industrial, L.P. dated June 13, 1997, File No.
333-21873).
10.3 First Amendment to the Fourth Amended and Restated
Limited Partnership Agreement of First Industrial, L.P.
(incorporated by reference to Exhibit 10.3 of Form 10-Q
of the Company for the fiscal quarter ended June 30,
1997 filed August 14, 1997, File No. 1-13102)
10.4 Second Amendment to the Fourth Amended and Restated
Limited Partnership Agreement of First Industrial, L.P.
(incorporated by reference to Exhibit 10.4 of Form 10-Q
of the Company for the fiscal quarter ended June 30,
1997 filed August 14, 1997, File No. 1-13102)
27 Financial Data Schedule (incorporated by reference to
Exhibit 27 of Form 10-Q of the Company for the fiscal
quarter ended June 30, 1997 filed August 14, 1997, File
No. 1-13102)
25
