FIRST INDUSTRIAL REALTY TRUST INC
10-Q, 1998-08-14
REAL ESTATE INVESTMENT TRUSTS
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<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 JUNE  30, 1998

/ /  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



                                 (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 5,
1998:  37,851,115.

<PAGE>   2

                      FIRST INDUSTRIAL REALTY TRUST, INC.
                                   FORM 10-Q
                FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 1998

                                     INDEX

                                                                       PAGE
                                                                       ----
PART I:  FINANCIAL INFORMATION

 Item 1.  Financial Statements

  Consolidated Balance Sheets as of June 30, 1998 and 
   December 31, 1997................................................. 2
  
 Consolidated Statements of Operations for the Six Months 
  Ended June 30, 1998 and June 30, 1997.............................. 3
 Consolidated Statements of Operations for the Three Months 
  Ended June 30, 1998 and June 30, 1997.............................. 4
 Consolidated Statements of Cash Flows for the Six Months 
  Ended June 30, 1998 and June  30, 1997............................. 5
 Notes to Consolidated Financial Statements.......................... 6  - 14


 Item 2. Management's Discussion and Analysis of Financial 
          Condition and Results of Operations........................ 15 - 22
         


PART II:  OTHER INFORMATION

 Item 1.  Legal Proceedings.......................................... 23
 Item 2.  Changes in Securities...................................... 23
 Item 3.  Defaults Upon Senior Securities............................ 23
 Item 4.  Submission of Matters to a Vote of Security Holders........ 23
 Item 5.  Other Information.......................................... 23
 Item 6.  Exhibits and Reports on Form 8-K and 8-K/A................. 23 - 24

SIGNATURE............................................................ 25

EXHIBIT INDEX........................................................ 26

                                        
                                       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, 
                                                                                            1998                         1997
                                                                                      ----------------             ----------------
                                     ASSETS
<S>                                                                                          <C>                         <C>
Assets:                                                                               
 Investment in Real Estate:                                                           
  Land................................................................................$       373,483              $        299,020
  Buildings and Improvements..........................................................      2,023,697                     1,663,731
  Furniture, Fixtures and Equipment...................................................          1,482                         1,437
  Construction in Progress............................................................         65,928                        30,158
  Less: Accumulated Depreciation......................................................       (146,464)                     (121,030)
                                                                                      ---------------              ----------------
      Net Investment in Real Estate...................................................      2,318,126                     1,873,316

  Cash and Cash Equivalents...........................................................         13,139                        13,222
  Restricted Cash.....................................................................          2,895                       313,060
  Tenant Accounts Receivable, Net.....................................................          9,106                         6,280
  Deferred Rent Receivable............................................................         11,909                        10,144
  Deferred Financing Costs, Net.......................................................          9,649                         8,594
  Prepaid Expenses and Other Assets, Net.............................................          59,035                        47,547
                                                                                      ---------------              ----------------
      Total Assets....................................................................$     2,423,859              $      2,272,163
                                                                                      ===============              ================

                      LIABILITIES AND STOCKHOLDERS' EQUITY
 Liabilities:                                                                         
  Mortgage Loans Payable..............................................................$       102,785              $        101,198
  Defeased Mortgage Loan Payable......................................................            ---                       300,000
  Senior Unsecured Debt, Net..........................................................        748,785                       648,994
  Acquisition Facility Payable........................................................        230,100                       129,400
  Accounts Payable and Accrued Expenses...............................................         45,183                        50,373
  Rents Received in Advance and Security Deposits.....................................         16,277                        14,104
  Dividends/Distributions Payable.....................................................         23,553                        22,010
                                                                                      ---------------              ----------------
      Total Liabilities...............................................................      1,166,683                     1,266,079
                                                                                      ---------------              ----------------
 Minority Interest....................................................................        179,624                       151,494
 Commitments and Contingencies........................................................            ---                           ---
 Stockholders' Equity:                                                                
                                                                                      
 Preferred Stock ($.01 par value, 10,000,000 shares authorized, 1,650,000,            
      40,000, 20,000, 50,000 and 30,000 shares of Series A, B, C, D and E             
      Cumulative Preferred Stock, respectively, issued and outstanding at June        
      30, 1998 having a liquidating preference of $25 per share ($41,250),            
      $2,500 per share ($100,000), $2,500 per share ($50,000), $2,500 per share       
      ($125,000) and $2,500 per share ($75,000), respectively, and 1,650,000,         
      40,000 and 20,000 shares of Series A, B and C Cumulative Preferred Stock,       
      respectively, issued and outstanding at December 31, 1997 having a              
      liquidation preference of $25 per share ($41,250), $2,500 per share             
      ($100,000) and $2,500 per share ($50,000), respectively)........................             18                            17
 Common Stock ($.01 par value, 100,000,000 shares authorized, 37,850,407 and          
     36,433,859 shares issued and outstanding at June 30, 1998 and December 31,       
     1997, respectively).........................                                                 378                           364
 Additional Paid-in-Capital...........................................................      1,169,850                       934,622
 Distributions in Excess of Accumulated Earnings......................................        (87,809)                      (76,996)
 Unamortized Value of Restricted Stock Grants.........................................         (4,885)                       (3,417)
                                                                                      ---------------              ----------------
     Total Stockholders' Equity.......................................................      1,077,552                       854,590
                                                                                      ---------------              ----------------
     Total Liabilities and Stockholders' Equity.......................................$     2,423,859              $      2,272,163
                                                                                      ===============              ================
</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, 1998        June 30, 1997
                                                                     -------------        -------------
<S>                                                                   <C>                 <C>
Revenues:
 Rental Income........................................................$  132,127         $    74,709
 Tenant Recoveries and Other Income...................................    31,392              19,925
 Interest Income on U.S. Government Securities........................       ---               4,157
                                                                      ----------         -----------
    Total Revenues....................................................   163,519              98,791
                                                                      ----------         -----------

Expenses:
 Real Estate Taxes....................................................    25,921              15,647
 Repairs and Maintenance..............................................     7,221               4,286
 Property Management..................................................     6,424               3,519
 Utilities............................................................     4,483               2,825
 Insurance............................................................       452                 276
 Other................................................................     2,698                 854
 General and Administrative...........................................     6,299               2,690
 Interest.............................................................    32,013              21,321
 Amortization of Interest Rate Protection Agreements
  and Deferred Financing Costs.........................................      401               1,380
 Depreciation and Other Amortization..................................    30,328              17,712
                                                                      ----------         -----------
    Total Expenses....................................................   116,240              70,510
                                                                      ----------         -----------

Income from Operations Before Income Allocated to Minority
 Interest and Disposition of Interest Rate Protection Agreements......    47,279              28,281
Income Allocated to Minority Interest.................................    (4,843)             (1,950)
Disposition of Interest Rate Protection Agreements....................       ---               1,430
                                                                      ----------         -----------
Income from Operations................................................    42,436              27,761
Gain on Sales of Real Estate, Net.....................................     2,376               3,999
                                                                      ----------         -----------
Income Before Extraordinary Loss and Cumulative Effect of Change in
 Accounting Principle.................................................    44,812              31,760
Extraordinary Loss....................................................       ---             (12,563)
Cumulative Effect of Change in Accounting Principle...................    (1,976)                ---
                                                                      ----------         -----------
Net Income............................................................    42,836              19,197
Less:  Preferred Stock Dividends......................................   (14,188)             (3,365)
                                                                      ----------         -----------
Net Income Available to Common  Stockholders..........................$   28,648         $    15,832
                                                                      ==========         ===========

Net Income Available to Common Stockholders Before Extraordinary 
 Loss and Cumulative Effect of Change in Accounting Principle per
 Weighted Average Common Share Outstanding:
    Basic............................................................. $   .83           $      .94
                                                                      ==========         ===========
    Diluted........................................................... $   .82           $      .94
                                                                      ==========         ===========
Net Income Available to Common Stockholders Per Weighted Average 
 Common Share Outstanding:
    Basic............................................................. $   .77             $    .53
                                                                      ==========         ===========
    Diluted........................................................... $   .77             $    .52    
                                                                      ==========         ===========
</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               Three Months
                                                                               Ended                      Ended
                                                                           June 30, 1998              June 30, 1997
                                                                          --------------              -------------
<S>                                                                       <C>                         <C>
Revenues:
 Rental Income.......................................................     $     70,246                 $   39,291
 Tenant Recoveries and Other Income..................................           17,059                      9,200
 Interest Income on U.S. Government Securities.......................              ---                      4,157
                                                                          --------------              -------------
   Total Revenues....................................................           87,305                     52,648
                                                                          --------------              -------------
Expenses:
 Real Estate Taxes...................................................           13,532                      8,100
 Repairs and Maintenance.............................................            3,829                      1,624
 Property Management.................................................            3,515                      1,841
 Utilities...........................................................            2,220                      1,215
 Insurance...........................................................              240                        137
 Other...............................................................            1,768                        345
 General and Administrative..........................................            3,665                      1,426
 Interest............................................................           17,252                     12,990
 Amortization of Interest Rate Protection Agreements and 
  Deferred Financing Costs...........................................              224                        784
 Depreciation and Other Amortization.................................           16,609                      9,095
                                                                          --------------              -------------
   Total Expenses....................................................           62,854                     37,557
                                                                          --------------              -------------

Income from Operations Before Income Allocated to Minority
 Interest and Disposition of Interest Rate Protection Agreements.....           24,451                     15,091
Income Allocated to Minority Interest................................           (2,186)                      (594)
Disposition of Interest Rate Protection Agreements...................              ---                      1,430
                                                                          --------------              -------------
Income from Operations...............................................           22,265                     15,927
Gain on Sales of Real Estate, Net....................................               16                      3,999
                                                                          --------------              -------------
Income Before Extraordinary Loss and Cumulative Effect of 
 Change in Accounting Principle......................................           22,281                     19,926
Extraordinary Loss...................................................              ---                    (12,563)
Cumulative Effect of Change in Accounting Principle..................           (1,976)                       ---
                                                                          --------------              -------------
Net Income...........................................................           20,305                      7,363
Less:  Preferred Stock Dividends.....................................           (8,210)                    (2,385)
                                                                          --------------              -------------
Net Income Available to Common Stockholders..........................     $     12,095                 $    4,978
                                                                          ==============              =============

Net Income Available to Common Stockholders Before 
 Extraordinary Loss and Cumulative Effect of Change in Accounting
 Principle per Weighted Average Common Share Outstanding:
   Basic.............................................................     $   .38                      $      .58
                                                                          ==============              =============
   Diluted...........................................................     $   .37                      $      .58
                                                                          ==============              =============
Net Income Available to Common Stockholders Per Weighted Average 
 Common Share Outstanding:
   Basic.............................................................     $   .32                      $      .17
                                                                          ==============              =============
   Diluted...........................................................     $   .32                      $      .16
                                                                          ==============              =============
</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, 1998                    June 30, 1997
                                                                   -------------------                ------------------
<S>                                                                 <C>                                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net Income....................................................    $         42,836                    $       19,197
 Income Allocated to Minority Interest.........................               4,843                             1,950
                                                                   -------------------                ------------------
 Income Before Minority Interest...............................              47,679                            21,147
 
 Adjustments to Reconcile Net Income to Net Cash
  Provided by Operating Activities:
 Depreciation..................................................              27,134                            15,828
 Amortization of Interest Rate Protection Agreements and
  Deferred Financing Costs.....................................                 401                             1,380
 Other Amortization............................................               3,568                             1,922
 Disposition of Interest Rate Protection Agreements............                 ---                            (1,430)
 Gain on Sales of Properties, Net..............................              (2,376)                           (3,999)
 Cumulative Effect of Change in Accounting Principle.........                 1,976                               ---
 Extraordinary Loss............................................                 ---                            12,563
 Provision for Bad Debts.......................................                 300                               150
 Increase in Tenant Accounts Receivable and Prepaid
  Expenses and Other  Assets...................................             (16,728)                          (16,166)
 Increase in Deferred Rent Receivable..........................              (1,956)                           (1,122)
 (Decrease) Increase in Accounts Payable and Accrued
  Expenses and Rents Received in Advance and Security
  Deposits.....................................................                (855)                            4,092
 Increase in Organization Costs................................                (396)                              (62)
 Decrease in Restricted Cash...................................               3,898                             4,443
                                                                   -------------------                ------------------
   Net Cash Provided by Operating Activities...................              62,645                            38,746
                                                                   -------------------                ------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchases and Additions to Investment in Real Estate and
 Closing Costs of Sales of Real Estate.........................            (460,575)                         (216,882)
 Proceeds from Sales of Investment in Real Estate..............              29,256                            21,879
 Repayment of Mortgage Loans Receivable........................               1,017                               ---
 Funding of Mortgage Loans Receivable..........................                 ---                           (17,667)
 Decrease (Increase) in Restricted Cash........................                 267                           (19,763)
                                                                   -------------------                ------------------
   Net Cash Used in Investing Activities.......................            (430,035)                         (232,433)
                                                                   -------------------                ------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from Sale of Common Stock............................              36,300                               ---
 Common Stock Underwriting Discounts/Offering Costs............              (2,934)                              ---
 Proceeds from Exercise of Employee Stock Options..............               1,968                             1,214
 Proceeds from Sale of Preferred Stock.........................             200,000                           150,000
 Preferred Stock Offering Costs................................              (7,300)                           (4,734)
 Proceeds from Mortgage Loans Payable..........................                 ---                               ---
 Repayments on Mortgage Loans Payable..........................            (300,939)                             (525)
 Repayment of Promissory Notes Payable.........................                 ---                            (9,919)
 Proceeds from Acquisition Facilities Payable..................             411,200                           220,200
 Repayments on Acquisition Facilities Payable..................            (310,500)                         (169,600)
 Proceeds from Senior Unsecured Debt...........................              99,753                           349,150
 Proceeds from Defeasance Loans................................                 ---                           309,800
 Repayment of Defeasance Loan..................................                 ---                          (309,800)
 Other Proceeds from Senior Unsecured Debt.....................               2,760                             2,246
 Other Costs of Senior Unsecured Debt..........................              (2,565)                              ---
 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)
 Decrease (Increase) in Restricted Cash........................             306,000                            (6,000)
 Dividends/Distributions.......................................             (44,502)                          (33,185)
 Preferred Stock Dividends.....................................             (14,188)                           (3,077)
 Debt Issuance Costs and Prepayment Fees.......................              (7,746)                           (7,070)
                                                                   -------------------                ------------------
   Net Cash Provided by Financing Activities...................             367,307                           198,500
                                                                   -------------------                ------------------
Net (Decrease) Increase in Cash and Cash Equivalents...........                 (83)                            4,813
Cash and Cash Equivalents, Beginning of Period.................              13,222                             7,646
                                                                   -------------------                ------------------
Cash and Cash Equivalents, End of Period.......................    $         13,139                    $       12,459
                                                                   ===================                ==================
</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's
operations are conducted primarily through First Industrial, L.P. (the
"Operating Partnership") of which the Company is the sole general partner with
an approximate 84.9% ownership interest at June 30, 1998.  As of June 30, 1998,
the Company owned 953 in-service properties located in 24 states, containing an
aggregate of approximately 67.7 million square feet of gross leasable area
("GLA").  Of the 953 properties owned by the Company, 812 are held by the
Operating Partnership, 23 are held by First Industrial Financing Partnership,
L.P., 19 are held by First Industrial Securities, L.P., 23 are held by First
Industrial Mortgage Partnership, L.P., 21 are held by First Industrial
Pennsylvania, L.P., five are held by First Industrial Harrisburg, L.P.,  four
are held by First Industrial Indianapolis, L.P., 45 are held by limited
liability corporations of which the Operating Partnership is the sole member,
and one is held by First Industrial Development Services, L.P.  Minority
interest in the Company at June 30, 1998 represents the approximate 15.1%
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 1997  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, 1997 audited financial statements
included in the Company's 1997 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 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 and the
reported amounts of revenues and expenses.  Actual results could differ from
those estimates.

     In the opinion of management, all adjustments consist of normal recurring
adjustments necessary to present fairly the financial position of the Company
as of June 30, 1998 and the results of its operations and its cash flows for
each of the six months and three months ended June 30, 1998 and 1997.


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 $1,750 and $1,450 as of June 30, 1998 and
December 31, 1997, respectively.



                                      6
<PAGE>   8





                      FIRST INDUSTRIAL REALTY TRUST, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                  (UNAUDITED)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

Recent Accounting Pronouncements:

     In June 1997, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income".  This statement, effective for fiscal years beginning after December
15, 1997, requires the Company to report components of comprehensive income in a
financial statement that is displayed with the same prominence as other
financial statements.  Comprehensive income is defined by Concepts Statement No.
6, "Elements of Financial Statements" as the change in the equity of a business
enterprise during a period from transactions and other events and circumstances
from non-owner sources.  It includes all changes in equity during a period
except those resulting from investments by owners and distributions to owners.
The Company's net income available to common stockholders approximates its
comprehensive income as defined in Concepts Statement No. 6, "Elements of
Financial Statements".

     In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related Information".
This statement, effective for financial statements for fiscal years beginning
after December 15, 1997, requires that a public business enterprise report
financial and descriptive information about its reportable operating segments.
Generally, financial information is required to be reported on the basis that it
is used internally for evaluating segment performance and deciding how to
allocate resources to segments.  The Company has not yet determined the impact
of this statement on its financial statements.

     In March 1998, the FASB's Emerging Issues Task Force (the "Task Force")
issued Emerging Issues Task Force Issue No. 97-11, "Accounting for Internal
Costs Relating to Real Estate Property Acquisitions" ("EITF 97-11").  EITF
97-11, effective March 19, 1998, requires that internal costs of preacquisition
activities incurred in connection with the acquisition of an operating property
should be expensed as incurred.  The Task Force concluded that a property is
considered operating if, at the date of acquisition, major construction activity
is substantially completed on the property and (a) it is held available for
occupancy upon completion of tenant improvements by the acquirer or (b) it is
already income producing.  The Company adopted EITF 97-11 as of March 19, 1998.
Prior to March 19, 1998, the Company capitalized internal costs of
preacquisition activities incurred in connection with the acquisition of
operating properties.  The Company estimates that the adoption of EITF 97-11
will result in a cumulative increase of approximately $2,500 to $3,000 in the
amount of general and administrative expense reflected in the Company's
consolidated statement of operations in 1998.

     In April 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities" ("SOP 98-5").  SOP 98-5 requires
that the net unamortized balance of all start-up costs and organizational costs
be written off as a cumulative effect of a change in accounting principle and
all future start-up costs and organizational costs be expensed.  In the second
quarter of 1998, the Company reported a cumulative effect of a change in
accounting principle of approximately $1,976 to reflect the write-off of the
unamortized balance of organizational costs on the Company's balance sheet.

     During the second quarter of 1998, the FASB issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and
Hedging Activities".  This statement, effective for fiscal years beginning
after June 15, 1999, establishes accounting and reporting standards requiring
that every derivative instrument, including certain derivative instruments
imbedded in other contracts, be recorded in the balance sheet as either an
asset or liability measured at its fair value.  The statement also requires
that  the  changes in the derivative's fair value be recognized in earnings
unless specific hedge accounting


                                      7
<PAGE>   9

                      FIRST INDUSTRIAL REALTY TRUST, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                  (UNAUDITED)


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

criteria are met.  The Company is currently assessing the impact of this new
statement on its consolidated financial position, liquidity, and results of
operations.


3.   MORTGAGE LOANS, SENIOR UNSECURED DEBT AND ACQUISITION FACILITY PAYABLE

     On March 31, 1998, the Company, through the Operating Partnership, issued
$100,000 of Dealer remarketable securities which mature on April 5, 2011 and
bear a coupon interest rate of 6.50% (the "2011 Drs.").  The issue price of the
2011 Drs. was 99.753%.  Interest is paid semi-annually in arrears on April 5 and
October 5.  The 2011 Drs. are callable (the "Call Option"), at the option of
J.P. Morgan Securities, Inc., as Remarketing Dealer (the "Remarketing Dealer"),
on April 5, 2001 (the "Remarketing Date").  The Company received approximately
$2,760 of proceeds from the Remarketing Dealer as consideration for the Call
Option.  The Company will amortize these proceeds over the life of the Call
Option as an adjustment to interest expense.  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 upon a predetermined formula as disclosed in the
related Prospectus Supplement.  If the Remarketing Dealer elects not to remarket
the 2011 Drs., then the Operating Partnership will be required to repurchase, on
the Remarketing Date, any 2011 Drs. that have not been purchased by the
Remarketing Dealer at 100% of the principal amount thereof, plus accrued and
unpaid interest, if any.  The Company also settled an interest rate protection
agreement which was used to fix the interest rate on the 2011 Drs. prior to
issuance.  The debt issue discount and the settlement amount of the interest
rate protection agreement are being amortized over the life of the 2011 Drs. as
an adjustment to interest expense.  The 2011 Drs. contain certain covenants
including limitations on incurrence of debt and debt service coverage.

     On April 16, 1998, the Company, through the Operating Partnership, assumed
a mortgage loan in the amount of $2,525 (the "Acquisition Mortgage Loan IV").
The Acquisition Mortgage Loan IV is collateralized by one property in Baltimore,
Maryland, bears interest at a fixed rate of 8.95% and provides for monthly
principal and interest payments based on a 20-year amortization schedule.  The
Acquisition Mortgage Loan IV matures on October 1, 2006.  The Acquisition
Mortgage Loan IV may be prepaid only after October 1, 2001 in exchange for the
greater of a 1% prepayment fee or a yield maintenance premium.



                                      8
<PAGE>   10


                      FIRST INDUSTRIAL REALTY TRUST, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                  (UNAUDITED)


3.   MORTGAGE LOANS, SENIOR UNSECURED DEBT AND ACQUISITION FACILITY PAYABLE,
     CONTINUED

     The following table discloses certain information regarding the Company's
mortgage loans, senior unsecured debt and acquisition facility payable:
<TABLE>
<CAPTION>

                                    OUTSTANDING  BALANCE AT      ACCRUED INTEREST PAYABLE AT INTEREST RATE AT
                                ------------------------------- ---------------------------- ----------------
                                   JUNE 30,       DECEMBER  31,    JUNE 30,     DECEMBER 31,    JUNE 30,        MATURITY
                                     1998             1997           1998           1997          1998             DATE
                                ------------     -------------  ------------    ------------- ---------------  ---------- 
MORTGAGE LOANS PAYABLE
<S>                              <C>               C>           <C>              <C>              <C>            <C>  
1995 Mortgage Loan..............$     39,784      $   40,000     $      160      $     168        7.220%          1/11/26
CIGNA Loan......................      35,522          35,813            ---            ---        7.500%          4/01/03
Assumed Loans...................       8,809           8,950            ---            ---        9.250%          1/01/13
LB Mortgage Loan  II............         705             705            ---            ---        8.000%             (1)
Acquisition Mortgage Loan I.....       3,993           4,135            ---             29        8.500%          8/01/08
Acquisition Mortgage Loan II....       7,913           7,997             51             52        7.750%          4/01/06
Acquisition Mortgage Loan III...       3,543           3,598             26             27        8.875%          6/01/03
Acquisition Mortgage Loan IV....       2,516             ---             19            ---        8.950%         10/01/06
                                ------------      ----------     ----------      ---------     
Total...........................$    102,785      $  101,198     $      256      $     276
                                ============      ==========     ==========      =========
DEFEASED MORTGAGE LOAN
- ----------------------
1994 Mortgage Loan..............$        ---      $  300,000     $      ---      $   1,831         (2)              (2)
                                ============      ==========     ==========      =========
SENIOR UNSECURED DEBT
- ---------------------
2005 Notes......................$     50,000      $   50,000     $      383      $     393        6.900%         11/21/05
2006 Notes......................     150,000         150,000            875            671        7.000%         12/01/06
2007 Notes......................     149,953(3)      149,951          1,457          1,457        7.600%          5/15/07
2011 Notes......................      99,400(3)       99,377            942            942        7.375%          5/15/11(4)
2017 Notes......................      99,814(3)       99,809            625            479        7.500%         12/01/17(5)
2027 Notes .....................      99,859(3)       99,857            914            914        7.150%          5/15/27(6)
2011 Drs........................      99,759(3)          ---          1,625            ---        6.500%(8)       4/05/11(7)
                                ------------      ----------     ----------      ---------       
Total...........................$    748,785      $  648,994     $    6,821      $   4,856
                                ============      ==========     ==========      =========
ACQUISITION FACILITY PAYABLE
- ----------------------------
1997 Unsecured Acquisition
Facility........................$    230,100      $  129,400     $      695      $     297        6.510%          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)  The 1994 Defeased Mortgage Loan was paid off and retired on January 2,
     1998.

(3)  The 2007 Notes, 2011 Notes, 2017 Notes, 2027 Notes and the 2011 Drs. are
     net of unamortized discounts of $47, $600, $186, $141 and $241,
     respectively.

(4)  The 2011 Notes are redeemable at the option of the holder thereof, on May
     15, 2004.

(5)  The 2017 Notes are redeemable at the option of the Company at any time
     based upon a predetermined formula.

(6)  The 2027 Notes are redeemable at the option of the holders thereof, on
     May 15, 2002.

(7)  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.

(8)  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.

     The following is a schedule of the stated maturities of the mortgage
loans, senior unsecured debt and acquisition facility payable for the next five
years ending December 31, and thereafter:


<TABLE>
                     Amount
                 ----------
<S>              <C>
1998             $      919
1999                  2,080
2000                  2,252
2001                232,538
2002                  2,640
Thereafter          841,751
                 ----------
Total            $1,082,180
                 ==========
</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 above table.



                                      9
<PAGE>   11


                      FIRST INDUSTRIAL REALTY TRUST, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                  (UNAUDITED)

3.   MORTGAGE LOANS, SENIOR UNSECURED DEBT AND ACQUISITION FACILITY PAYABLE,
     CONTINUED

     The Company, from time to time, enters into interest rate protection
agreements which are used to lock into a fixed interest rate on anticipated
offerings of senior unsecured debt.  At June 30, 1998, the following interest
rate protection agreements were outstanding:


<TABLE>
<CAPTION>
   Notional        Origination                                                   Settlement
    Amount            Date             Interest Rate      Valuation Basis           Date
- ----------      -----------------      -------------      -----------------   ----------------
<S>                   <C>                <C>                 <C>               <C>
$   50,000       January 2, 1998          5.937%          30-Year Treasury    October 1, 1998
$  100,000      October 28, 1997          6.317%          30-Year Treasury     July 1, 1998
$  100,000      December 19, 1997         5.994%          30-Year Treasury    January 4, 1999
</TABLE>

4.   STOCKHOLDERS' EQUITY

Common Stock

     On April 23, 1998, the Company issued, in a private placement, 1,112,644
shares of $.01 par value Common Stock (the "April 1998 Equity Offering").  The
price per share in the April 1998 Equity Offering was $32.625, resulting in
gross offering proceeds of $36,300.  Proceeds to the Company, net of purchaser's
discount and total offering expenses, were approximately $34,100.

Preferred Stock:

     On February 4, 1998, the Company issued 5,000,000 Depositary Shares, each
representing 1/100th of a share of the Company's 7.95%, $.01 par value, Series D
Cumulative Preferred Stock (the "Series D Preferred Stock"), at an initial
offering price of  $25 per Depositary Share.  Dividends on the Series D
Preferred Stock represented by the Depositary Shares are cumulative from the
date of initial issuance and are payable quarterly in arrears.  With respect to
the dividends and amounts upon liquidation, dissolution or winding up,  the
Series D Preferred Stock ranks senior to payments on the Company's $.01 par
value common stock ("Common Stock") and pari passu with the Company's 91/2%,
$.01 par value, Series A Cumulative Preferred Stock (the "Series A Preferred
Stock"), 83/4%, $.01 par value, Series B Cumulative Preferred Stock (the "Series
B Preferred Stock"), 85/8%, $.01 par value, Series C Cumulative Preferred Stock
(the "Series C Preferred Stock") and Series E Preferred Stock (defined below);
however,  the Series A Preferred Stock has the benefit of a guarantee by First
Industrial Securities, L.P.  The  Series D Preferred Stock is not redeemable
prior to February 4, 2003.  On and after February 4, 2003, the Series D
Preferred Stock is redeemable for cash at the option of the Company, in whole or
part, at a redemption price equivalent to $25 per Depositary Share, or $125,000
in the aggregate, plus dividends accrued and unpaid to the redemption date.  The
Series D Preferred Stock has no stated maturity and is not convertible into any
other securities of the Company.

     On March 18, 1998, the Company issued 3,000,000 Depositary Shares, each
representing 1/100th of a share of the Company's 7.90%, $.01 par value, Series E
Cumulative Preferred Stock (the "Series E Preferred Stock"), at an initial
offering price of $25 per Depositary Share.  Dividends on the Series E Preferred
Stock 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 E Preferred Stock ranks senior to payments on the Company's Common
Stock and pari passu with the Company's Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock;
however, the  Series A Preferred Stock has the benefit of a guarantee by First
Industrial Securities, L.P.  The Series E Preferred Stock is not redeemable
prior to March 18, 2003.  On and after March 18, 2003, the Series E Preferred
Stock is 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 $75,000 in the
aggregate, plus dividends accrued and unpaid to the redemption date.  The Series
E Preferred Stock has no stated maturity and is not convertible into any other
securities of the Company.





                                     10
<PAGE>   12

                      FIRST INDUSTRIAL REALTY TRUST, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                  (UNAUDITED)

4.   STOCKHOLDERS' EQUITY, CONTINUED

Restricted Stock:

     During the six months ended June 30, 1998, the Company awarded 51,850
shares of restricted Common Stock to certain employees and 1,179 shares of
restricted Common Stock to certain Directors. Another employee of the Company
converted certain employee stock options to 6,123 shares of restricted Common
Stock.  These shares of restricted Common Stock had a fair value of $2,095 on
the date of grant.  The restricted Common Stock vests over a period from five to
ten years.  Compensation expense will be charged to earnings over the respective
vesting period.

Non-Qualified Employee Stock Options:

     On January 2, 1998, the Company granted 4,370,000 non-qualified employee
stock options.  These stock options vest over three years based upon certain
performance measures.  The stock options have a strike price of $35.8125 per
share and expire ten years from the date of grant.

     On May 14, 1998, the Company granted 899,000 non-qualified employee stock
options.  These stock-options vest over one year and have a strike price of
$31.13 per share.  These stock options expire between seven and ten years from
the date of grant.

Dividends/Distributions:

     The following table summarizes dividends/distributions for the six months
ended June 30, 1998:

COMMON STOCK/OPERATING PARTNERSHIP UNITS

<TABLE>
<CAPTION>
<S>                  <C>                 <C>               <C>                        <C>
                                                        Dividend/Distribution                 Total
                     Record Date       Payable Date        per Share/Unit             Dividend/Distribution
                     -----------       -------------       ---------------           ----------------------
Fourth Quarter 1997  December 31, 1997 January 20, 1998     $    .53000              $      22,010
First Quarter 1998   March 31, 1998    April 20, 1998       $    .53000              $      22,492
Second Quarter 1998  June 30, 1998     July 20, 1998        $    .53000              $      23,553

SERIES A PREFERRED STOCK

                                                             Dividend                    Total
                      Record Date     Payable Date           per Share                  Dividend
                     -----------       -------------       ---------------           ----------------------
First Quarter 1998   March 13, 1998   March 31, 1998        $    .59375              $          980
Second Quarter 1998  June 15, 1998    June 30, 1998         $    .59375              $          980


SERIES B PREFERRED STOCK

                                                              Dividend                   Total
                      Record Date     Payable Date            per Share                Dividend
                     -----------      -------------        ---------------           ----------------------
First Quarter 1998   March 13, 1998   March 31, 1998        $     54.68750           $        2,188
Second Quarter 1998  June 15, 1998    June 30, 1998         $     54.68750           $        2,188

SERIES C PREFERRED STOCK
                                                              Dividend                   Total
                      Record Date     Payable Date           per Share                  Dividend
                     -----------      -------------        ---------------           ----------------------
First Quarter 1998    March 13, 1998  March 31, 1998        $     53.90600           $        1,078
Second Quarter 1998   June 15, 1998   June 30, 1998         $     53.90600           $        1,078

SERIES D PREFERRED STOCK
                                                             Dividend                    Total
                      Record Date     Payable Date           per Share                 Dividend
                     -----------      -------------        ---------------           ----------------------
First Quarter 1998   March 13, 1998   March 31, 1998        $     30.36500           $        1,518
Second Quarter 1998  June 15, 1998    June 30, 1998         $     49.68700           $        2,484

SERIES E PREFERRED STOCK
                                                             Dividend                     Total
                      Record Date     Payable Date           per Share                  Dividend
                     ------------     -------------       ---------------           ----------------------
First Quarter 1998   June 15, 1998    June 30, 1998         $      7.13194           $          214
Second Quarter 1998  June 15, 1998    June 30, 1998         $     49.37500           $        1,480
</TABLE>




                                     11
<PAGE>   13

                      FIRST INDUSTRIAL REALTY TRUST, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                  (UNAUDITED)

5.     ACQUISITION OF REAL ESTATE

     During the six months ended June 30, 1998, the Company acquired 186
existing industrial properties and several land parcels.  The aggregate purchase
price for these acquisitions totaled approximately $418,399, excluding costs
incurred in conjunction with  the acquisition of the properties.

     Of the 186 existing industrial properties and several land parcels
purchased by the Company during the six months ended June 30, 1998, four
existing industrial properties were purchased from Western Suburban Industrial
Investments Limited Partnership ("Western") in which the sole general partner,
having a 5% interest, was Tomasz/Shidler Investment Corporation, of which the
sole shareholders were a Director and Director/Officer of the Company who also
had a 53% and 32% limited partnership interest in Western, respectively.
Further, an additional Director/Officer of the Company was a limited partner in
Western having an interest of 2%.  The aggregate purchase price for this
acquisition totaled approximately $7,900, excluding costs incurred in
conjunction with the acquisition of the properties.

     During the second quarter of 1998, the Company, through the Operating
Partnership, completed an acquisition of a real estate firm for which an officer
and an employee of the Company owned a 77.5% interest.  Gross proceeds to the
real estate firm totaled approximately $2,349.

6.     SALES OF REAL ESTATE

     During the six months ended June 30, 1998, the Company sold seven existing
industrial properties  and three land parcels.  Gross proceeds from these sales
were approximately $29,256.  The gain on sales of real state was approximately
$2,376, net of federal income taxes.


7.   SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS

     SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:



<TABLE>
<CAPTION>
                                                                         Six Months Ended
                                                               ------------------------------------
                                                                June 30, 1998        June 30, 1997
                                                               ---------------       --------------
<S>                                                            <C>                   <C>

 Interest paid, net of capitalized interest.................... $      31,501        $      18,048
                                                               ===============       ==============
 Interest capitalized.......................................... $       1,907        $         294
                                                               ===============       ==============

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
 Dividend/Distribution payable on Common Stock/Units .......... $      23,553        $      17,510
IN CONJUNCTION WITH THE PROPERTY ACQUISITIONS, THE 
FOLLOWING ASSETS AND LIABILITIES WERE ASSUMED AND 
OPERATING PARTNERSHIP UNITS EXCHANGED:
 Purchase of real estate........................................$     418,399        $     253,484
 Accrued real estate taxes and security deposits...............        (4,137)              (2,473)
 Mortgage loans................................................        (2,525)              (4,505)
 Operating Partnership Units...................................       (33,802)             (53,471)
                                                               ---------------       --------------
                                                                $     377,935        $     193,035
                                                               ===============       ==============
</TABLE>



                                     12
<PAGE>   14


                      FIRST INDUSTRIAL REALTY TRUST, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                  (UNAUDITED)

8.    EARNINGS PER SHARE

     Earnings per share amounts are based on the weighted average amount of
Common Stock and Common Stock equivalents (employee stock options) outstanding.
The outstanding units in the Operating Partnership (the "Units") have been
excluded from the diluted earnings per share calculation as there would be no
effect on the earnings per share amounts since the minority interests' share of
income would also be added back to net income.  The computation of basic and
diluted EPS is presented below:





<TABLE>
<CAPTION>

                                                            Six Months       Six Months      Three Months      Three Months 
                                                              Ended            Ended            Ended              Ended
                                                          June  30, 1998   June  30, 1997   June  30, 1998     June 30, 1997
                                                        ----------------   --------------   --------------     --------------
<S>                                                     <C>                   <C>             <C>               <C>
Numerator:
- ----------
Income Before Extraordinary Loss and Cumulative
 Effect of Change in Accounting Principle.............  $     44,812          $   31,760      $    22,281       $  19,926
Less: Preferred Dividends.............................       (14,188)             (3,365)          (8,210)         (2,385)
                                                        ----------------   --------------   --------------     --------------
Net Income Available to Common Stockholders Before
 Extraordinary Loss and Cumulative Effect of Change
 in Accounting Principle - For Basic and Diluted  EPS.        30,624              28,395           14,071          17,541

Extraordinary Loss....................................           ---             (12,563)             ---         (12,563)

Cumulative Effect of Change in Accounting Principle...        (1,976)                ---           (1,976)            ---
                                                        ----------------   --------------   --------------     --------------

Net Income Available to Common Stockholders- For
 Basic and Diluted  EPS...............................  $     28,648          $   15,832      $    12,095        $  4,978
                                                        ================   ==============   ==============     ==============

Denominator:
- ------------
 Weighted Average Shares - Basic......................        36,982              30,080           37,433          30,132
 Effect of Dilutive Securities:
  Employee and Director Common Stock Options..........           338                 283              264             271
                                                        ----------------   --------------   --------------     --------------
 Weighted Average Shares- Diluted.....................        37,320              30,363           37,697          30,403
                                                        ================   ==============   ==============     ==============

Basic EPS:
- ----------

Net Income Available to Common Stockholders Before
 Extraordinary Loss and Cumulative Effect of Change
 in Accounting Principle..............................  $        .83          $      .94      $       .38        $    .58
                                                        ================   ==============   ==============     ==============

Extraordinary Loss....................................  $        ---          $     (.41)     $       ---        $   (.41)
                                                        ================   ==============   ==============     ==============

Cumulative Effect of Change in Accounting Principle...  $       (.05)         $      ---      $      (.05)       $    ---
                                                        ================   ==============   ==============     ==============

Net Income Available to Common Stockholders...........  $        .77          $      .53      $       .32        $    .17
                                                        ================   ==============   ==============     ==============

Diluted EPS:
- ------------

Net Income Available to Common Stockholders Before
 Extraordinary Loss and Cumulative Effect of Change
 in Accounting Principle..............................  $        .82          $      .94      $       .37        $  .58
                                                        ================   ==============   ==============     ==============

Extraordinary Loss....................................  $        ---          $     (.41)     $       ---        $ (.41)
                                                        ================   ==============   ==============     ==============

Cumulative Effect of Change in Accounting Principle...  $       (.05)         $      ---      $      (.05)       $  ---
                                                        ================   ==============   ==============     ==============

Net Income Available to Common Stockholders...........  $        .77          $      .52      $       .32        $  .16
                                                        ================   ==============   ==============     ==============
</TABLE>


                                     13

<PAGE>   15

                      FIRST INDUSTRIAL REALTY TRUST, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
                                  (UNAUDITED)

9.   COMMITMENTS AND CONTINGENCIES

     In the normal course of business, the Company is involved in legal actions
arising from the operation of its business.  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 17 development projects
totaling approximately 2.1 million square feet of GLA.  The estimated total
construction costs are approximately $75,486.  These developments are expected
to be funded with cash flow from operations as well as borrowings under the
Company's $300,000 unsecured revolving credit facility (the "1997 Unsecured 
Acquisition Facility").

     In the second quarter of 1998, the Company, through the Operating
Partnership, entered into a non-binding letter of intent with an institutional
investor to create a joint venture that would invest in industrial properties.
The venture is subject, among other contingencies, to due diligence and the
negotiation of definitive documentation. There can be no assurance that such
venture will be created, or if created, will be successful.

10.   SUBSEQUENT EVENTS

     From July 1, 1998 to August 5, 1998, the Company acquired five industrial
properties.  The aggregate purchase price for these acquisitions totaled
approximately $22,362, excluding costs incurred in conjunction with the
acquisition of the properties.

     On July 20, 1998, the Company and the Operating Partnership paid a second
quarter 1998 dividend/distribution of $.53 per common share/Unit, totaling
approximately $23,553.

     On July 14, 1998, the Company, through the Operating Partnership, issued
$200,000 of senior unsecured debt which matures on July 15, 2028 and bears a
coupon interest rate of 7.60% (the "2028 Notes").  The issue price of the 2028
Notes was 99.882%.  Interest is paid semi-annually in arrears on January 15 and
July 15.  The Company also settled interest rate protection agreements, in the
notional amount of $150,000, which were used to fix the interest rate on the
2028 Notes prior to issuance.  The debt issue discount and the settlement amount
of the interest rate protection agreements are being amortized over the life of
the 2028 Notes as an adjustment to the interest expense.  The 2028 Notes contain
certain covenants including limitation on incurrence of debt and debt service
coverage.



                                     14
<PAGE>   16
                      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, 1998, the Company owned 953 in-service properties with
approximately 67.7 million square feet of gross leasable area ("GLA"), compared
to 454 in-service properties with approximately 39.1 million square feet of GLA
at June 30, 1997.  The addition of 511 properties acquired or developed between
July 1, 1997 and June 30, 1998 included the acquisitions of 502 properties
totaling approximately 26.9 million square feet of GLA and the completed
development of nine properties totaling approximately 2.2 million square feet of
GLA.  The Company also completed the expansion of two properties totaling
approximately .1 million square feet of GLA and the sale of 12 in-service
properties totaling approximately .6 million square feet of GLA, one property
held for redevelopment and several land parcels.

     COMPARISON OF SIX MONTHS ENDED JUNE 30, 1998 TO SIX MONTHS ENDED JUNE 30,
1997

     Rental income and tenant recoveries and other income increased by
approximately $68.9 million or 72.8% due primarily to the properties acquired or
developed after June 30, 1997.  Rental income and tenant recoveries and other
income from properties owned prior to January 1, 1997, decreased by
approximately $.2 million or .3% due primarily to general rent increases offset
by a decrease in tenant recovery income charges related to the decrease in
operating expenses as discussed below.

     Interest income on U.S. Government securities in 1997 represents interest
income earned on U.S. Government securities that were pledged as collateral to
legally defease the Company's $300 million mortgage loan (the "1994 Mortgage
Loan").

     Property expenses, which include real estate taxes, repairs and
maintenance, property management, utilities, insurance and other expenses,
increased by approximately $19.8 million or 72.2% due primarily to the
properties acquired or developed after June 30, 1997.  Expenses from properties
owned prior to January 1, 1997, decreased by approximately $.7 million or 3.1%
due primarily to a decrease in snow removal and related expenses incurred for
properties located in certain of the Company's metropolitan areas during the six
months ended June 30, 1998 as compared to the six months ended June 30, 1997.

     General and administrative expense increased by approximately $3.6 million,
of which, approximately $2.5 million is due primarily to the additional expenses
associated with managing the Company's growing operations including additional
professional fees relating to additional properties owned and additional
personnel to manage and expand the Company's business. Approximately $1.1
million of the increase is the result of the adoption of Emerging Issues Task
Force Issue No. 97-11, "Accounting for Internal Costs Relating to Real Estate
Property Acquisitions" ("EITF 97-11"), which requires that internal costs of
preacquisition activities incurred in connection with the acquisition of an
operating property should be expensed as incurred.  The Company adopted EITF
97-11 on March 19, 1998.

     Interest expense increased by approximately $10.7 million for the six
months ended June 30, 1998 compared to the six months ended June 30, 1997 due
primarily to a higher average debt balance outstanding resulting from the
issuance of unsecured debt to fund the acquisition and development of additional
properties.





                                     15
<PAGE>   17
     Amortization of interest rate protection agreements and deferred financing
costs decreased by approximately $1.0 million due primarily to the full
amortization of the deferred financing costs relating to the Company's 1994
Mortgage Loan which was paid off and retired on January 2, 1998.

     Depreciation and other amortization increased by approximately $12.6
million due primarily to the additional depreciation and amortization related to
the properties acquired or developed after June 30, 1997.

     The $2.4 million gain on sales of properties, net of federal income tax,
resulted from the sale of seven existing industrial properties and three land
parcels.  Gross proceeds from these sales were approximately $29.3 million.

     The $2.0 million cumulative effect of change in accounting principle is the
result of the write-off of the unamortized balance of organizational costs on
the Company's balance sheet due to the early adoption of Statement of Position
98-5, "Reporting on the Costs of Start-Up Activities" ("SOP 98-5"), as further
discussed later in this Management's Discussion and Analysis.


     COMPARISON OF THREE MONTHS ENDED JUNE 30, 1998 TO THREE MONTHS ENDED JUNE
30, 1997

     Rental income and tenant recoveries and other income increased by
approximately $38.8 million or 80.0%, due primarily to the properties acquired
or developed after June 30, 1997.  Rental income and tenant recoveries and other
income from properties owned prior to April 1, 1997, increased by approximately
$1.2 million or 2.7% due to general rent increases and an increase in tenant
recovery income charges due to an increase in property operating expenses as
discussed below.

     Interest income on U.S. government securities for 1997 represents interest
income earned on U.S. Government securities that were pledged as collateral to
legally defease the 1994 Mortgage Loan.

     Property expenses, which include real estate taxes, repairs and
maintenance, property management, utilities, insurance and other expenses,
increased by approximately $11.8 million or 89.3% due primarily to the
properties acquired or developed after June 30, 1997.  Expenses from properties
owned prior to April 1, 1997, increased by approximately $.4 million or 3.5% due
to an increase in real estate tax expense, utilities and other expense in the
majority of the Company's geographical markets.

     General and administrative expense increased by approximately $2.2 million,
of which, approximately $1.4 million is due primarily to the additional expenses
associated with managing the Company's growing operations including additional
professional fees relating to additional properties owned and additional
personnel to manage and expand the Company's business. Approximately $.8 million
of the increase is the result of the adoption of EITF 97-11.

     Interest expense increased by approximately $4.3 million for the three
months ended June 30, 1998 compared to the three months ended June 30, 1997 due
primarily to a higher average debt balance  outstanding resulting from the
issuance of unsecured debt to fund the acquisition and development of additional
properties.

     Amortization of interest rate protection agreements and deferred financing
costs decreased by approximately $.6 million due primarily to the full
amortization of the deferred financing costs relating to the Company's 1994
Mortgage Loan which was paid off and retired on January 2, 1998.

     Depreciation and other amortization increased by approximately $7.5 million
due primarily to the additional depreciation and amortization related to the
properties acquired or developed after June 30, 1997.



                                     16
<PAGE>   18
     The $2.0 million cumulative effect of change in accounting principle is the
result of the write-off of the unamortized balance of organizational costs on
the Company's balance sheet due to the early adoption of SOP 98-5, as further
discussed later in this Management's Discussion and Analysis.


LIQUIDITY AND CAPITAL RESOURCES

     At June 30, 1998, the Company's unrestricted cash and cash equivalents was
approximately $13.1 million and restricted cash was approximately $2.9 million.
The restricted cash reserves are required to be set aside under the Company's
$40.0 million mortgage loan (the "1995 Mortgage Loan") for payments of security
deposit refunds, tenant improvements, capital expenditures, interest, real
estate taxes, and insurance.  The portion of the cash reserve relating to
payments for capital expenditures, interest, real estate taxes, and insurance
for properties collateralizing 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 for the tenants
occupying the properties collateralizing the 1995 Mortgage Loan is adjusted as
tenants turn over.

     Net cash provided by operating activities was approximately $62.6 million
for the six months ended June 30, 1998 compared to approximately $38.7 million
for the six months ended June 30, 1997.  This increase is due primarily to an
increase in net operating income (which is defined as total revenues less
property related expenses) which is partially offset by an increase in interest
expense and general and administrative expense as discussed in "Results of
Operations" above.

     Net cash used in investing activities increased to approximately $430.0
million for the six months ended June 30, 1998  from approximately $232.4
million for the six months ended June 30, 1997.  This increase is due primarily
to an increase in the acquisition of properties, a decrease in the net sales of
real estate and a decrease in the funding of mortgage loans receivable.

     Net cash provided by financing activities increased to approximately $367.3
million for the six months ended June 30, 1998 from approximately $198.5 million
for the six months ended June 30, 1997 due to the issuance of common stock,
preferred stock and senior unsecured borrowings during the six months ended June
30, 1998.  These proceeds were partially offset by an increase in dividends and
distributions for the six months ended June 30, 1998 due to the issuance of
additional common and preferred shares of the Company and First Industrial, L.P.
partnership units (the "Units") after June 30, 1997 and an increase in per
common share/Unit distributions.

     Funds from operations for the six months ended June 30, 1998 were $63.0
million, as compared to $42.5 million for the six months ended June 30, 1997, 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 do 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.



                                     17
<PAGE>   19


     The following is a reconciliation of net income to funds from operations:


<TABLE>
<CAPTION>

                                             Six Months Ended Six Months Ended
                                              June 30, 1998    June 30, 1997
                                             ---------------- ----------------
<S>                                            <C>                <C>
Net Income Available to 
  Common Stockholders......................    $  28,648          $   15,832
Adjustments:
Depreciation and Other
  Amortization.............................       29,958              17,613
Extraordinary Items........................          ---              12,563
Cumulative Effect of Change in
  Accounting Principle.....................        1,976                 ---
Minority Interest..........................        4,843               1,950
Gain on Sales of Properties................       (2,376)             (3,999)
Gain on disposition of IRPA................          ---              (1,430)
                                             ---------------- ----------------
  Funds From Operations....................    $  63,049          $   42,529
                                             ================ ================
</TABLE>

     The ratio of earnings to fixed charges and preferred stock dividends was
1.64 for the six months ended June 30, 1998 compared to 1.93 for the six months
ended June 30, 1997.  The decrease is primarily due to additional interest
expense and preferred stock dividends incurred during the six months ended June
30, 1998 from additional debt and preferred stock issued to fund property
acquisitions and developments, which is partially offset by higher net operating
income from property acquisitions as discussed in the "Results of Operations"
above.

     Between January 1, 1998 and June 30, 1998, the Company purchased 186
industrial properties and several land parcels, for an aggregate purchase price
of approximately $418.4 million, excluding costs incurred in conjunction with
the acquisition of the properties.

     Of the 186 existing industrial properties and several land parcels
purchased by the Company during the six months ended June 30, 1998, four
existing industrial properties were purchased from Western Suburban Industrial
Investments Limited Partnership ("Western") in which the sole general partner,
having a 5% interest, was Tomasz/Shidler Investment Corporation, of which the
sole shareholders were a Director and Director/Officer of the Company who also
had a 53% and 32% limited partnership interest in Western, respectively.
Further, an additional Director/Officer of the Company was a limited partner in
Western having an interest of 2%.  The aggregate purchase price for this
acquisition totaled approximately $7.9 million, excluding costs incurred in
conjunction with the acquisition of the properties.

     During the second quarter of 1998, the Company, through the Operating
Partnership, completed an acquisition of a real estate firm for which an officer
and an employee of the Company owned a 77.5% interest.  Gross proceeds to the
real estate firm totaled approximately $2.3 million.

     During the six months ended June 30, 1998, the Company sold seven existing
industrial properties and three land parcels.  Gross proceeds from these sales
were approximately $29.3 million.  The gain on sales of real estate was
approximately $2.4 million, net of federal income taxes.

     The Company has committed to the construction of 17 development projects
totaling approximately 2.1 million square feet of GLA.  The estimated total
construction costs are approximately $75.5 million.  These developments are
expected to be funded with cash flow from operations as well as borrowings under
the Company's $300 million unsecured revolving credit facility (the "1997
Unsecured Acquisition Facility").



                                     18
<PAGE>   20
     From July 1, 1998 to August 5, 1998, the Company acquired five industrial
properties.  The aggregate purchase price for these acquisitions totaled
approximately $22.4 million, excluding costs incurred in conjunction with the
acquisition of the properties.

     On March 31, 1998, the Company, through the Operating Partnership, issued
$100 million of Dealer remarketable securities which mature on April 5, 2011 and
bear a coupon interest rate of 6.50% (the "2011 Drs.").  The issue price of the
2011 Drs. was 99.753%.  Interest is paid semi-annually in arrears on April 5 and
October 5.  The 2011 Drs. are callable (the "Call Option"), at the option of
J.P. Morgan Securities, Inc., as Remarketing Dealer (the "Remarketing Dealer"),
on April 5, 2001 (the "Remarketing Date").  The Company received approximately
$2.8 million of proceeds from the Remarketing Dealer as consideration for the
Call Option.  The Company will amortize these proceeds over the life of the Call
Option as an adjustment to interest expense.  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 upon a predetermined formula as disclosed in the
related Prospectus Supplement.  If the Remarketing Dealer elects not to remarket
the 2011 Drs., then the Operating Partnership will be required to repurchase, on
the Remarketing Date, any 2011 Drs. that have not been purchased by the
Remarketing Dealer at 100% of the principal amount thereof, plus accrued and
unpaid interest, if any.  The Company also settled an interest rate protection 
agreement which was used to fix the interest rate on the 2011 Drs. prior to
issuance.  The debt issue discount and the settlement amount of the interest
rate protection agreement are being amortized over the life of the 2011 Drs. as
an adjustment to interest expense.  The 2011 Drs. contain certain covenants
including limitations on incurrence of debt and debt service coverage.

     On April 16, 1998, the Company, through the Operating Partnership, assumed
a mortgage loan in the amount of $2.5 million (the "Acquisition Mortgage Loan
IV").  The Acquisition Mortgage Loan IV is collateralized by one property in
Baltimore, Maryland, bears interest at a fixed rate of 8.95% and provides for
monthly principle and interest payments based on a 20-year amortization
schedule.  The Acquisition Mortgage Loan IV matures October 1, 2006.  The
Acquisition Mortgage Loan IV may be prepaid only after October 1, 2001 in
exchange for the greater of a 1% prepayment fee or a yield maintenance premium.

     On July 14, 1998, the Company through the Operating Partnership, issued
$200 million of senior unsecured debt which matures on July 15, 2028 and bears a
coupon interest rate of 7.60% (the "2028 Notes").  The issue price of the 2028
Notes was 99.882%.  Interest is paid semi-annually in arrears on January 15 and
July 15.  The Company also settled interest rate protection agreements, in the
notional amount of $150 million, which were used to fix the interest rate on the
2028 Notes prior to issuance.  The debt issue discount and the settlement amount
of the interest rate protection agreements are being amortized over the life of
the 2028 Notes as an adjustment to the interest expense.  The 2028 Notes contain
certain covenants including limitation on incurrence of debt and debt service
coverage.

     On February 4, 1998, the Company issued 5,000,000 Depositary Shares, each
representing 1/100th of a share of the Company's 7.95%, $.01 par value, Series
D Cumulative Preferred Stock (the "Series D Preferred Stock"), at an initial
offering price of  $25 per Depositary Share.  Dividends on the Series D
Preferred Stock represented by the Depositary Shares are cumulative from the
date of initial issuance and are payable quarterly in arrears.  With respect to
the dividends and amounts upon liquidation, dissolution or winding up,  the
Series D Preferred Stock ranks senior to payments on the Company's $.01 par
value common stock ("Common Stock") and pari passu with the Company's 91/2%,
$.01 par value, Series A Cumulative Preferred Stock (the "Series A Preferred
Stock"), 83/4%, $.01 par value, Series B Cumulative Preferred Stock (the
"Series B Preferred Stock"), 85/8%, $.01 par value, Series C Cumulative
Preferred Stock (the "Series C Preferred Stock") and Series E Preferred Stock
(defined below); however,  the Series A Preferred Stock has the benefit of a
guarantee by First Industrial Securities, L.P.  The  Series D Preferred Stock
is not redeemable prior to February 4, 2003.  On and after February 4, 2003,
the Series D Preferred Stock is redeemable for cash at the option of the
Company, in whole or part, at a redemption 



                                     19
<PAGE>   21


price equivalent to $25 per Depositary Share, or $125.0 million in the
aggregate, plus dividends accrued and unpaid to the redemption date.  The Series
D Preferred Stock has no stated maturity and is not convertible into any other
securities of the Company.

     On March 18, 1998, the Company issued 3,000,000 Depositary Shares, each
representing 1/100th of a share of the Company's 7.90%, $.01 par value, Series E
Cumulative Preferred Stock (the "Series E Preferred Stock"), at an initial
offering price of $25 per Depositary Share.  Dividends on the Series E Preferred
Stock 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 E Preferred Stock ranks senior to payments on the Company's Common
Stock and pari passu with the Company's Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock; however,
the  Series A Preferred Stock has the benefit of a guarantee by First Industrial
Securities, L.P.  The Series E Preferred Stock is not redeemable prior to March
18, 2003.  On and after March 18, 2003, the Series E Preferred Stock is
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 $75.0 million in the
aggregate, plus dividends accrued and unpaid to the redemption date. The Series
E Preferred Stock has no stated maturity and is not convertible into any other
securities of the Company.

     On April 23, 1998, the Company issued, in a private placement, 1,112,644
shares of $.01 par value Common Stock (the "April 1998 Equity Offering").  The
price per share in the April 1998 Equity Offering was $32.625, resulting in
gross offering proceeds of $36.3 million.  Proceeds to the Company, net of
purchaser's discount and total offering expenses, were approximately $34.1
million.

     During the six months ended June 30, 1998, the Company awarded 51,850
shares of restricted Common Stock to certain employees and 1,179 shares of
restricted Common Stock to certain Directors. Another employee of the Company
converted certain employee stock options to 6,123 shares of restricted Common
Stock.  These shares of restricted Common Stock had a fair value of $2.1 million
on the date of grant.  The restricted Common Stock vests over a period from five
to ten years.  Compensation expense will be charged to earnings over the
respective vesting period.

     On January 2, 1998, the Company granted 4,370,000 non-qualified employee
stock options.  These stock options vest over three years based upon certain
performance measures.  The stock options have a strike price of $35.8125 per
share and expire ten years from the date of grant.

     On May 14, 1998, the Company granted 899,000 non-qualified employee stock
options.  These stock-options vest over one year and have a strike price of
$31.13 per share.  These stock options expire between seven and ten years from
the date of grant.

     On January 20, 1998, the Company and the Operating Partnership paid a
fourth quarter 1997 distribution of $.53 per common share/Unit, totaling
approximately $22.0 million.  On April 20, 1998, the Company and Operating
Partnership paid a first quarter 1998 distribution of $.53 per common
share/Unit, totaling approximately $22.5 million.  On July 20, 1998, the Company
and the Operating Partnership paid a second quarter 1998 distribution of $.53
per common share/Unit, totaling approximately $23.6 million.

     On March 31, 1998, the Company paid first quarter preferred stock dividends
of $.59375 per share on its 9.5% Series A Cumulative Preferred Stock, $54.688
per share (equivalent to $.54688 per Depositary Share) on its 8.75% Series B
Cumulative Preferred Stock, $53.906 per share (equivalent to $.53906 per
Depositary Share) on its 8.63% Series C Cumulative Preferred Stock and a period
prorated first quarter preferred stock dividend of $30.365 per share (equivalent
to $.30365 per Depositary Share) on its 7.95% Series D Cumulative Preferred
Stock.  The preferred stock dividends paid on March 31, 1998 totaled, in the
aggregate, approximately $5.8 million.  On March 31, 1998, the Company accrued a
first quarter 



                                     20
<PAGE>   22


period prorated preferred stock dividend of $7.13194 per share (equivalent to
$.0713194 per Depositary Share), totaling $.2 million, on its 7.90% Series E
Cumulative Preferred Stock.

     On June 30, 1998, the Company paid second quarter preferred stock dividends
of $.59375 per share on its 9.5% Series A Cumulative Preferred Stock, $54.688
per share (equivalent to $.54688 per Depositary Share) on its 8.75% Series B
Cumulative Preferred Stock, $53.906 per share (equivalent to $.53906 per
Depositary Share) on its 8.63% Series C Cumulative Preferred Stock and $49.687
per share (equivalent to $.49687 per Depositary Share) on its 7.95% Series D
Cumulative Preferred Stock and a period prorated first quarter dividend and a
second quarter dividend totaling $56.5069 per share (equivalent to $.565069 per
Depositary Share) on its 7.90% Series E Cumulative Preferred Stock.  The
preferred stock dividends paid on June 30, 1998 totaled, in the aggregate,
approximately $8.4 million.

     In the second quarter of 1998, the Company, through the Operating
Partnership, entered into a non-binding letter of intent with an institutional
investor to create a joint venture that would invest in industrial properties.
The venture is subject, among other contingencies, to due diligence and the
negotiation of definitive documentation.  There can be no assurance that such
venture will be created, or if created, will be successful.

     The Company has considered its short-term (one year or less) liquidity
needs and the adequacy of its estimated cash flow from operations and other
expected liquidity sources to meet these needs.  The Company believes that its
principal short-term liquidity needs are to fund normal recurring expenses,
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 capital improvements through
long-term secured and unsecured indebtedness and the issuance of additional
equity securities.  On June 30, 1998, the Company had registered under the
Securities Act of 1933, as amended (the "Securities Act"), approximately $589.2
million of common stock, preferred stock and depositary shares and $300.0
million of debt securities.  As of August 5, 1998, $589.2 million of common
stock, preferred stock and depositary shares and $100.0 million of debt
securities remained registered under the Securities Act and were unissued.  The
Company may finance the development or acquisition of additional properties
through borrowings under the 1997 Unsecured Acquisition Facility. At June 30,
1998, borrowings under the 1997 Unsecured Acquisition Facility bore interest at
a weighted average interest rate of 6.51%.  As of August 5, 1998, the Company
had approximately $231.9 million available in additional borrowings under the
1997 Unsecured Acquisition Facility.  Along with the Company's current strategy
of meeting long-term liquidity requirements through the issuance, from time to
time, of long-term secured and unsecured indebtedness and additional equity
securities, the Company is actively considering joint ventures with various
institutional partners and the disposition of select assets as additional
financing strategies.


OTHER

     In June 1997, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income".  This statement, effective for fiscal years beginning after December
15, 1997, requires the Company to report components of comprehensive income in a
financial statement that is displayed with the same prominence as other
financial statements.  Comprehensive income is defined by Concepts Statement No.
6, "Elements of Financial Statements" as the change in the equity of a business
enterprise during a period from transactions and other events and circumstances
from non-owner sources.  It includes all changes in equity during a period
except those 



                                     21
<PAGE>   23
resulting from investments by owners and distributions to owners.  The Company's
net income available to common stockholders approximates its comprehensive
income as defined in Concepts Statement No. 6, "Elements of Financial
Statements".

     In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related Information".
This statement, effective for financial statements for fiscal years beginning
after December 15, 1997, requires that a public business enterprise report
financial and descriptive information about its reportable operating segments.
Generally, financial information is required to be reported on the basis that it
is used internally for evaluating segment performance and deciding how to
allocate resources to segments.  The Company has not yet determined the impact
of this statement on its financial statements.

     In March 1998, the FASB's Emerging Issues Task Force (the "Task Force")
issued Emerging Issues Task Force Issue No. 97-11, "Accounting for Internal
Costs Relating to Real Estate Property Acquisitions" ("EITF 97-11").  EITF
97-11, effective March 19, 1998, requires that internal costs of preacquisition
activities incurred in connection with the acquisition of an operating property
should be expensed as incurred.  The Task Force concluded that a property is
considered operating if, at the date of acquisition, major construction activity
is substantially completed on the property and (a) it is held available for
occupancy upon completion of tenant improvements by the acquirer or (b) it is
already income producing.  The Company adopted EITF 97-11 as of March 19, 1998.
Prior to March 19, 1998, the Company capitalized internal costs of
preacquisition activities incurred in connection with the acquisition of
operating properties. The Company estimates that the adoption of EITF 97-11 will
result in a cumulative increase of approximately $2.5 million to $3.0 million in
the amount of general and administrative expense reflected in the Company's
consolidated statement of operations in 1998.

     In April 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities" ("SOP 98-5").  SOP 98-5 requires
that the net unamortized balance of all start up costs and organizational costs
be written off as a cumulative effect of a change in accounting principle and
all future start-up costs and organizational costs be expensed.  In the second
quarter of 1998, the Company  reported a cumulative effect of a change in
accounting principle in the amount of approximately $2.0 million to reflect the
write-off of the unamortized balance of organizational costs on the Company's
balance sheet.

     During the second quarter of 1998, the FASB issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities".  This statement, effective for fiscal years beginning after June
15, 1999, establishes accounting and reporting standards requiring that every
derivative instrument, including certain derivative instruments imbedded in
other contracts, be recorded in the balance sheet as either an asset or
liability measured at its fair value.  The statement also requires that the
changes in the derivative's fair value be recognized in earnings unless specific
hedge accounting criteria are met.  The Company is currently assessing the
impact of this new statement on its consolidated financial position, liquidity,
and results of operations.


                                     22
<PAGE>   24






                           PART II. OTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS
     None.

ITEM 2. CHANGES IN SECURITIES

     On April 23, 1998, the Company issued, in a private placement, 1,112,644
     shares of $.01 par value Common Stock (the "April 1998 Equity Offering") to
     Merrill Lynch, Pierce, Fenner & Smith Incorporated.  The price per share in
     the April 1998 Equity Offering was $32.625, resulting in gross offering
     proceeds of $36.3 million.  Proceeds to the Company, net of purchaser's
     discount and total offering expenses, were approximately $34.1 million.

     All of the shares issued in the April 1998 Equity Offering were issued in
     reliance on Section 4 (2) of the Securities Act of 1933, as amended,
     including Regulation D promulgated thereunder.  No underwriter was used in
     connection with such issuance.

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 REPORTS ON FORM 8-K AND FORM 8-K/A

Exhibit No.    Description

   4.1     Supplemental Indenture No.5, dated as of July 14, 1998, between the
           Operating Partnership and the U.S. Bank Trust National Association,
           relating to the Operating Partnership's 7.60% Notes due July 15, 2008
           (incorporated by reference to Exhibit 4.1 of the Form 8-K of First
           Industrial, L.P. dated July 15, 1998, File No. 333-21873)

   10.1    Sixth Amended and Restated Limited Partnership Agreement of First
           Industrial, L.P. (the "L.P. Agreement"), dated March 18, 1998
           (incorporated by reference to Exhibit 10.1 of the Company's Annual
           Report on Form 10-K for the year ended December 31, 1997, File No.
           1-13102)

10.2  *    Fourth Amendment to the L.P. Agreement dated June 24, 1998

10.3  *    Fifth Amendment to the L.P. Agreement dated July 16, 1998

27.1  *    Financial Data Schedule for the Six Months Ended June 30, 1998

27.2  *    Financial Data Schedule for the Six Months Ended June 30, 1997 
           (Restated)

      *    Filed herewith.

Reports on Form 8-K and Form 8-K/A:

      Report on Form 8-K dated April 6, 1998, filed April 20, 1998, as amended
      by the report on Form 8-K/A No. 1 filed June 16, 1998, relating to the
      acquisition of 167 properties and seven land parcels for future
      development.  The reports include Combined Historical Statements of



                                     23
<PAGE>   25
      Revenues and Certain Expenses for the acquired and to be acquired
      properties and Pro Forma Balance Sheet and Pro Forma Statements of
      Operations for the Company.

      Report on Form 8-K dated April 24, 1998, filed April 27, 1998, and the
      report on Form 8-K filed May 5, 1998, each relating to the Company's
      offering of 1,112,644 shares of common stock, par value $.01 per share.

================================================================================

     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






                                     24
<PAGE>   26
                                   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 13, 1998                 By: /s/ Michael J. Havala
                                      -----------------------------------------
                                      Michael J. Havala
                                      Chief Financial Officer
                                      (Principal Financial and Accounting 
                                       Officer)



                                     25 
<PAGE>   27

                                 EXHIBIT INDEX

Exhibit No.    Description

 4.1           Supplemental Indenture No.5, dated as of July 14, 1998, between
               the Operating Partnership and the U.S. Bank Trust National
               Association, relating to the Operating Partnership's 7.60% Notes
               due July 15, 2008 (incorporated by reference to Exhibit 4.1 of
               the Form 8-K of First Industrial, L.P. dated July 15, 1998, File
               No. 333-21873)

10.1           Sixth Amended and Restated Limited Partnership Agreement of First
               Industrial, L.P. (the "L.P. Agreement"), dated March 18, 1998
               (incorporated by reference to Exhibit 10.1 of the Company's
               Annual Report on Form 10-K for the year ended December 31, 1997,
               File No. 1-13102)

10.2*          Fourth Amendment to the L.P. Agreement dated June 24, 1998

10.3*          Fifth Amendment to the L.P. Agreement dated July 16, 1998

27.1*          Financial Data Schedule for the Six Months Ended June 30, 1998

27.2*          Financial Data Schedule for the Six Months Ended June 30, 1997 
               (Restated)

    *          Filed herewith.


                                     26





<PAGE>   1
                                                                   EXHIBIT 10.2

                              FOURTH AMENDMENT TO
                           SIXTH AMENDED AND RESTATED
                        LIMITED PARTNERSHIP AGREEMENT OF
                             FIRST INDUSTRIAL, L.P.

     As of June 24, 1998, the undersigned, being the sole general partner of
First Industrial, L.P. (the "PARTNERSHIP"), a limited partnership formed under
the Delaware Revised Uniform Limited Partnership Act and pursuant to the terms
of that certain Sixth Amended and Restated Limited Partnership Agreement, dated
March 18, 1998 (as amended by the first amendment thereto dated April 1, 1998,
the second amendment thereto dated April 3, 1998 and the third amendment thereto
dated April 16, 1998 (collectively, the "PARTNERSHIP AGREEMENT"), does hereby
amend the Partnership Agreement as follows:

     Capitalized terms used but not defined in this Fourth Amendment (this
"AMENDMENT") shall have the same meanings that are ascribed to them in the
Partnership Agreement.

     1.  ADDITIONAL LIMITED PARTNERS.  The Persons identified on SCHEDULE 1A
hereto are hereby admitted to the Partnership as Substituted Limited Partners or
Additional Limited Partners, as the case may be, owning the number of Units and
having made the Capital Contributions set forth on such SCHEDULE 1A or, for such
Persons as who are already Limited Partners, such Persons are issued the number
of additional Units and have made the Capital Contribution set forth on SCHEDULE
1A.  Such persons hereby adopt the Partnership Agreement. The undersigned
acknowledges that those of the Persons identified on SCHEDULE 1A hereto that are
Substituted Limited Partners have received their Partnership Interests from
various Additional Limited Partners, and the undersigned hereby consents to such
transfers.

     2.  SCHEDULE OF PARTNERS.  EXHIBIT 1B to the Partnership Agreement is
hereby deleted in its entirety and replaced by EXHIBIT 1B hereto which
identifies the Partners following consummation of the transactions referred to
in Section 1 hereof.

     3.  RATIFICATION.  Except as expressly modified by this Amendment, all of
the provisions of the Partnership Agreement are affirmed and ratified and remain
in full force and effect.


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                      SIGNATURE PAGE IMMEDIATELY FOLLOWS]


<PAGE>   2


     IN WITNESS WHEREOF, the undersigned has executed this Amendment as of the
date first written above.

                                    FIRST INDUSTRIAL REALTY TRUST, INC., 
                                    as sole general partner of the Partnership


                                    By: /s/ Michael J. Havala
                                        ----------------------------------
                                         Name: Michael J. Havala
                                               --------------------------- 
                                         Title: Chief Financial Officer
                                               ---------------------------














                                      2


<PAGE>   3


                                  SCHEDULE 1A


Additional Limited Partners         Number of Units       Capital Contribution
- ---------------------------         ---------------       --------------------

Apollo/Pacifica Bryant, LLC             42,935                $1,326,691.50

Collins Family Trust                    24,836                  $767,432.40

Kelly Collins                            7,979                  $246,551.10

Michael Collins                          7,979                  $246,551.10

Timothy Gudim                           15,959                  $493,133.10

Edwin & Cathleen Hession                 7,979                  $246,551.10

Steve Leonard                            1,321                   $40,818.90

Pacifica Holding Company                23,119                  $714,377.10










                                      3


<PAGE>   4


                                   EXHIBIT 1B

                              SCHEDULE OF PARTNERS


GENERAL PARTNER                                          NUMBER OF UNITS
- ---------------                                          ---------------

First Industrial Realty Trust, Inc.                           30,892,739


LIMITED PARTNERS                                         NUMBER OF UNITS
- ----------------                                         ---------------

Aimee Freyer Lifetime Trust dated 11/1/65                          2,384

Daniel R. Andrew, TR of the Daniel R. Andrew                     137,489
Trust UA Dec 29 92                          

Charles T. Andrews                                                   754

Gordon E. Atkins                                                   6,767

William J. Atkins                                                 22,381

E. Donald Bafford                                                  3,374

William Baloh                                                      8,582

Edward N. Barad                                                    2,283

UA dated April 11, 1996 Blurton 1996                                 598
Revocable Family Trust              

James Bolt                                                         5,587

Harriett Bonn                                                     28,804

Michael W. Brennan                                                 7,702

Robert Brown                                                       2,123

Henry D. Bullock & Terri D. Bullock & Shawn                        1,970
Stevenson TR of the Bullock Childrens
Education Trust UA Dec 20 94, FBO Benjamin
Dure Bullock                               


                                      4


<PAGE>   5

LIMITED PARTNERS                                         NUMBER OF UNITS
- ----------------                                         ---------------

Henry D. Bullock & Terri D. Bullock & Shawn                        1,970
Stevenson TR of the Bullock Childrens
Education Trust UA Dec 20 94, FBO Christine
Laurel Bullock                             

Henry D. Bullock & Terri D. Bullock TR of                          9,151
the Henry D. & Terri D. Bullock Trust UA Aug 28 92

Edward Burger                                                      9,151

Calamer Inc.                                                       1,233

Perry C. Caplan                                                    1,388

Irwin Carasso                                                     17,192

Carol P. Freyer Lifetime Trust dated 11/1/72                       2,384

The Carthage Partners LLC                                         34,939

Cliffwood Development Company                                     64,823

Collins Family Trust dated 5/6/69                                137,833

Kelly Collins                                                     11,124

Michael Collins                                                   17,377

Charles S. Cook and Shelby H. Cook, tenants                          634
in the entirety                            

Caroline Atkins Coutret                                            7,327

David Cleborne Crow                                                5,159

Gretchen Smith Crow                                                2,602

Michael G. Damone, TR of the Michael G.                          144,296
Damone Trust UA Nov 4 69               

Myrna R. Debilak                                                   5,447




                                      5


<PAGE>   6

LIMITED PARTNERS                                         NUMBER OF UNITS
- ----------------                                         ---------------

Robert L. Denton                                                   6,286

C G Property  Development                                         27,975

Greg and Christina Downs, joint tenants                              474

Gregory Downs                                                         48

Draizin Family Partnership, LP                                   357,896

Joseph S. Dresner                                                149,531

Ethel Road Associates                                             29,511

Fitz & Smith Partnership                                           3,410

Fourbur Family Co., L.P.                                         620,273

Gamma Three Associates Limited Partnership                         3,338

Dennis G. Goodwin and Jeannie L. Goodwin,                          6,166
tenants in the entirety                  

Clay Hamlin & Lynn Hamlin, joint tenants                          15,159
with rights of survivorship             

Henry E. Dietz Trust UA Jan 16 81                                 36,476

Highland Associates Limited Partnership                           69,039

Robert W. Holman Jr.                                             150,146

Holman/Shidler Investment Corporation                             22,079

Steven B. Hoyt                                                   175,000

Internal Investment Company                                        3,016

Frederick K. Ito                                                   3,880

The Jack Friedman Revocable Living Trust UA                       26,005
March 23, 1978                             

Jayeff Associates Limited Partnership                             16,249


                                      6


<PAGE>   7

LIMITED PARTNERS                                         NUMBER OF UNITS
- ----------------                                         ---------------

Michael W. Jenkins                                                 3,917

Jernie Holdings Corp.                                            180,499

John E. De B Blockey Trust                                         8,293

Thomas J. Johnson, Jr. and Sandra L.                               2,142
Johnson, tenants in the entirety    

Nourhan Kailian                                                    2,183

Peter Kepic                                                        9,261

Lambert Investment Corporation                                    13,606

Paul T. Lambert                                                   39,749

Constance Lazarus                                                417,961

Jerome Lazarus                                                    18,653

LGR Investment Fund Ltd                                           22,556

Malcolm Properties, L.L.C.                                        25,342

Princeton South at Lawrenceville LLC                               4,692

Shidler Equities LP                                              254,541

Duane  Lund                                                          617

R. Craig Martin                                                      754

J. Stanley Mattison                                                   12

Menlo Park Presbyterian Church                                       230

Eileen Millar                                                      2,922

Linda Miller                                                       2,000

The Milton Dresner Revocable Trust UA                            149,531
October 22, 1976                     

Montrose Kennedy Associates                                        4,874


                                      7


<PAGE>   8


LIMITED PARTNERS                                         NUMBER OF UNITS
- ----------------                                         ---------------

Peter Murphy                                                      56,184

Anthony Muscatello                                                81,654

Joseph Musti                                                       1,508

Dean A. Nachtigall                                                10,076

New Land Associates Limited Partnership                            1,664

North Star Associates Limited Partnership                         19,333

Arden O'Connor                                                    13,845

Peter O'Connor                                                    66,181

Princeton South at Lawrenceville One                               4,426

Eduardo Paneque                                                    2,000

Partridge Road Associates Limited Partnership                      2,751

R.C.P. Associates, a New Jersey limited                            3,060
partnership                            

Jack F. Ream                                                       1,071

Glenn C. Rexroth and Linda A. Rexroth, as                          2,142
tenants in the entirety                  

James C. Reynolds                                                 40,154

Andre G. Richard                                                   1,508

RJB Ford City Limited Partnership                                158,438

RJB II Limited Partnership                                        40,788

Edward C. Roberts and Rebecca S. Roberts,                          8,308
tenants in the entirety                  

W.F.O. Rosenmiller                                                   634


                                      8


<PAGE>   9

LIMITED PARTNERS                                         NUMBER OF UNITS
- ----------------                                         ---------------

Edward Jon Sarama                                                    634

Shadeland Associates Limited Partnership                          42,976

Shadeland Corporation                                              4,442

Jay H. Shidler                                                    66,984

Jay H. Shidler and Wallette A. Shidler,                            1,223
tenants in the entirety                

Michael B. Slade                                                   2,829

David W. Smith, and Doris L. Smith, tenants                          754
in the entirety                            

Gary L. Smith and Joyce A. Smith, tenants in                       1,508
the entirety                                

Kevin Smith                                                       13,571

South Broad Company                                               72,421

South Gold Company                                                82,433

SRS Partnership                                                    2,142

UA Dated May 21, 1996 FBO Robert Stein                            56,778

S. Larry Stein                                                    56,778

Jonathan Stott                                                    80,026

Suburban Roseland Associates, a Limited                            3,002
Partnership                            

Thelma C. Gretzinger Trust                                           450

Thomas K. Barad & Jill E. Barad, Co-Trustees                       2,283
of the Thomas K. Barad & Jill E. Barad Trust
Dated 10-18-89                              



                                      9


<PAGE>   10

LIMITED PARTNERS                                         NUMBER OF UNITS
- ----------------                                         ---------------

Michael T. Tomasz                                                 25,847

Barry L. Tracey                                                    2,142

Van Brunt Associates                                              39,370

Worlds Fair Associates                                             6,134

Worlds Fair III Associates                                        14,094

The Worlds Fair Office Associates                                  3,343

Worlds Fair Partners Limited Partnership                           1,664

The Worlds Fair V Associates                                       3,340

The Worlds Fair 25 Associates                                     13,677

Brothers Partnership                                               1,748

BSDK Enterprises                                                   3,596

Estate of Albert Sklar                                             3,912

Rand H. Falbaum                                                   17,022

William M. Fausone                                                16,480

Elizabeth Fitzpatrick                                              3,800

Fred Trust dated 6/16/77                                             653

Carol P. Freyer                                                   12,173

Lee Karen Freyer                                                  10,665

Aimee Freyer-Valls                                                12,173

David Fried                                                        1,326

Ester Fried                                                        3,177

Douglas Frye                                                       2,216


                                     10


<PAGE>   11

LIMITED PARTNERS                                         NUMBER OF UNITS
- ----------------                                         ---------------

J. Peter Gaffney                                                     727

Gerlach Family Trust dated 6/28/85                                   874

Patricia O. Godchaux                                               9,387

Timothy Gudim                                                     27,797

Timothy & Melissa Gudim, joint tenants                             3,285

H/Airport GP Inc.                                                  1,433

Vivian Hack                                                       22,522

Martha J. Harbinson                                                3,329

Turner Harshaw                                                     1,132

Cathleen Hession                                                   3,137

Howard Trust dated 4/30/79                                           653

John A. and Gloria H. Sage Family Trust UDT                       15,864
dated 6/7/94                               

L. Chris Johnson                                                   3,196

Johnson Living Trust dated 2/18/83                                 1,078

Charles Mark Jordan                                                   57

JPG Investment                                                       919

David R. Kahnweiler                                                5,436

Thomas Kendall                                                       546

Kirshner Family Trust #1 dated 4/8/76                             29,558

Kirshner Trust #4 FBO Todd Kirshner                               20,258

Kolpack MD Pension                                                   994

Chester A. Latcham                                                 2,493


                                     11


<PAGE>   12

LIMITED PARTNERS                                         NUMBER OF UNITS
- ----------------                                         ---------------

Lee Karen Freyer Lifetime Trust dated 11/1/65                      2,384

Georgia Leonard                                                      664

Robert Leonard III                                                 5,856

Steve Leonard                                                     37,646

Leslie A. Rubin LTD                                                3,577

CLMM LLC                                                           3,825

PAC-II LLC                                                        17,356

Sealy Professional Drive LLC                                       2,906

Sealy Unitholder LLC                                              31,552

SPM Industrial LLC                                                 5,262

Reyem Partners LP                                                  8,489

Henry E. Mawicke                                                     636

Richard McClintock                                                   623

McElroy Management Inc.                                            5,478

MCS Properties, Inc.                                               5,958

Lila Atkins Mulkey                                                 7,327

James Muslow, Jr.                                                  4,911

Adel Nassif                                                        4,910

Kris Nielsen                                                          28

Catherine A. O'Brien                                                 832

Martha E. O'Brien                                                    832

Steve Ohren                                                       31,828



                                     12


<PAGE>   13

LIMITED PARTNERS                                         NUMBER OF UNITS
- ----------------                                         ---------------

Pacifica Holding Company                                          97,893

Sybil T. Patten                                                    1,816

Betty S. Phillips                                                  3,912

Jeffrey Pion                                                       2,879

Pipkin Family Trust dated 10/6/89                                  3,140

Robert J. Powers                                                  37,674

Manor Properties                                                 143,408

Elizabeth Hutton Hagen Fitzpatrick IRA dated                         607
9/1/91                                      

Robert S. Hood Living Trust dated 1/9/90 &                         3,591
Amended 12/16/96                          

James Sage                                                         2,156

Kathleen Sage                                                      3,350

Wilton Wade Sample                                                 5,449

Sealy & Company, Inc.                                             37,119

Sealy Florida, Inc.                                                  675

Mark P. Sealy                                                      8,451

Sealy Real Estate Services, Inc.                                 148,478

Scott P. Sealy                                                    40,902

Marilyn Rangel IRA dated 2/5/86                                      969

Siskel Family Partnership                                         11,359

Siskel Revocable Trust 1987 dated 4/17/1987                       10,087

Suzanne Siskel                                                     3,802



                                     13


<PAGE>   14

LIMITED PARTNERS                                         NUMBER OF UNITS
- ----------------                                         ---------------

Steve Smith                                                          386

Sterling Alsip trust dated August 1, 1989                            794

Sterling Family Trust dated 3/27/80                                3,559

Donald C. Thompson                                                38,524

TUT Investments I LLC                                              5,274

William S. Tyrrell                                                 2,906

Van Gilder Family Partnership                                      2,262

Virginia B. and Norton Sharpe Living trust                        12,055
UDT dated 4/26/96                         

Steve Walbridge                                                      338

Richard Walker, Jr.                                                  963

Charles Kendall Jr. Rollover  IRA dated                              656
1/21/93                                

William B. Wiener, Jr.                                            41,119

Patricia Wiener-Shifke                                            12,944

William J. Mallen Trust dated 4/29/94                              8,016

Fred Wilson                                                       35,787

World's Fair Thirty                                                1,442

Wolsum, Inc.                                                       2,427

Johannson Yap                                                      1,680

Gerald & Sharon Zuckerman                                            615

Stephen Mann                                                      15,017

Stanley Gruber                                                    30,032

Seymour Israel                                                    15,016


                                     14


<PAGE>   15

LIMITED PARTNERS                                         NUMBER OF UNITS
- ----------------                                         ---------------

J. O'Neil Duffy, Sr.                                                 513

James O. Duffy, Jr.                                                  513

Garrett E. Sheehan                                                   513

Sam Shamie Trust Agreement dated March 16,                       337,753
1978, as restated on November 16, 1993    

Richard H. Zimmerman Living Trust dated                           47,174
October 15, 1990, as amended           

Keith J. Pomeroy Revocable Trust Agreement,                      128,783
dated December 13, 1976, as amended and
restated on June 28, 1995                  

Enid Braden Trust of June 28, 1995                                18,464

Sam L. Yaker Revocable Trust Agreement dated                      30,285
February 14, 1984                           

Armenag Kalaydjian Revocable Trust Agreement                      21,655
dated February 28, 1984                     

RBZ LLC                                                              124

KEP LLC                                                           78,873

ESAA Associates Limited Partnership                               19,367

Paul F. Obrecht, Jr.                                               5,289

Richard F. Obrecht                                                 5,289

Thomas F. Obrecht                                                  5,289

George F. Obrecht                                                  5,289

Joan R. Kreiger Revocable Trust                                   15,184

William L. Kreiger, Jr.                                            3,374



                                     15


<PAGE>   16


LIMITED PARTNERS                                         NUMBER OF UNITS
- ----------------                                         ---------------

Elmer H. Wingate                                                   1,688

Apollo/Pacifica Bryant LLC                                        42,977

Edwin and Cathleen Hession                                         7,987














                                     16



<PAGE>   1
                                                                   EXHIBIT 10.3

                               FIFTH AMENDMENT TO
                           SIXTH AMENDED AND RESTATED
                        LIMITED PARTNERSHIP AGREEMENT OF
                             FIRST INDUSTRIAL, L.P.

     As of July 16, 1998, the undersigned, being the sole general partner of
First Industrial, L.P. (the "PARTNERSHIP"), a limited partnership formed under
the Delaware Revised Uniform Limited Partnership Act and pursuant to the terms
of that certain Sixth Amended and Restated Limited Partnership Agreement, dated
March 18, 1998 (as amended by the first amendment thereto dated April 1, 1998
and the second amendment thereto dated April 3, 1998, the third amendment
thereto dated April 16, 1998, and the fourth amendment thereto dated May 20,
1998) (collectively, the "PARTNERSHIP AGREEMENT"), does hereby amend the
Partnership Agreement as follows:

     Capitalized terms used but not defined in this Fifth Amendment (this
"AMENDMENT") shall have the same meanings that are ascribed to them in the
Partnership Agreement.

     1.  ADDITIONAL LIMITED PARTNERS.  The Persons identified on SCHEDULE 1A
hereto are hereby admitted to the Partnership as Substituted Limited Partners or
Additional Limited Partners, as the case may be, owning the number of Units and
having made the Capital Contributions set forth on such SCHEDULE 1A.  Such
persons hereby adopt the Partnership Agreement. The undersigned acknowledges
that those of the Persons identified on SCHEDULE 1A hereto that are Substituted
Limited Partners have received their Partnership Interests from various
Additional Limited Partners, and the undersigned hereby consents to such
transfers.

     2.  SCHEDULE OF PARTNERS.  EXHIBIT 1B to the Partnership Agreement is
hereby deleted in its entirety and replaced by EXHIBIT 1B hereto which
identifies the Partners following consummation of the transactions referred to
in Section 1 hereof.

     3.  PROTECTED AMOUNTS.  In connection with the transactions consummated
pursuant to that certain Contribution Agreement dated as of December 9, 1997, by
and between FR and Thompson Kirk Properties, Inc., a Florida corporation, TRAC
Design Builders, Inc., a Florida corporation, Thompson Center I, Ltd., a Florida
limited partnership, TR Developers, Ltd., a Florida limited partnership,
Thompson and Rubin Limited, a Florida limited partnership, TRA Limited, a
Florida limited partnership, Thompson Center II Joint Venture, a Florida general
partnership, Thompson Center Adamo Limited Partnership, a Florida limited
partnership, Thompson-Rubin Sunventure, Ltd., a Florida limited partnership,
TK-SV, TK Properties, a Florida general partnership, the Principal, D.C.
Thompson, Ltd., a Florida limited partnership f/k/a Thompson Rubin Associates, a
Florida general partnership, and various additional individuals and entities; as
amended by that certain First Amendment to Contribution Agreement (as amended,
the "CONTRIBUTION AGREEMENT"); and certain Protected Amounts are being
established for the Additional Limited Partners admitted pursuant to this
Amendment, which Protected Amounts are reflected on EXHIBIT 1D attached hereto
and shall be incorporated as part of EXHIBIT 1D of the Partnership Agreement.

     4.  RATIFICATION.  Except as expressly modified by this Amendment, all of
the provisions of the Partnership Agreement are affirmed and ratified and remain
in full force and effect.

               [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK;
                      SIGNATURE PAGE IMMEDIATELY FOLLOWS]



     IN WITNESS WHEREOF, the undersigned has executed this Amendment as of the
date first written above.

                                    FIRST INDUSTRIAL REALTY TRUST, INC., 
                                    as sole general partner of the Partnership


                                    By: /s/ Gary H. Heigl
                                        ---------------------------------------
                                         Name:  Gary H. Heigl
                                               --------------------------------
                                         Title: Sr. V.P. Capital Markets
                                                -------------------------------

<PAGE>   2



                                  SCHEDULE 1A



Additional Limited Partners      Number of Units      Capital Contribution
- ---------------------------      ---------------      --------------------

Donald C. Thompson                     719                 $22,411.23

Leslie A. Rubin                        471                 $14,681.07












                                      2


<PAGE>   3


                                   EXHIBIT 1D

                               PROTECTED AMOUNTS



                                                    Protected Amount
                                                    ----------------

1.   Donald C. Thompson                                 $422,800

2.   Leslie A. Rubin                                    $277,200











                                      3


<PAGE>   4


                                   EXHIBIT 1B

                              SCHEDULE OF PARTNERS



GENERAL PARTNER                                  NUMBER OF UNITS
- ---------------                                  ---------------

First Industrial Realty Trust, Inc.                   30,892,739


LIMITED PARTNERS                                 NUMBER OF UNITS
- ----------------                                 ---------------

Aimee Freyer Lifetime Trust dated                          2,384
11/1/65                          

Daniel R. Andrew, TR of the Daniel                       137,489
R. Andrew Trust UA Dec 29 92      

Charles T. Andrews                                           754

Gordon E. Atkins                                           6,767

William J. Atkins                                         22,381

E. Donald Bafford                                          3,374

William Baloh                                              8,582

Edward N. Barad                                            2,283

UA dated April 11, 1996 Blurton 1996                         598
Revocable Family Trust              

James Bolt                                                 5,587

Harriett Bonn                                             28,804

Michael W. Brennan                                         7,702

Robert Brown                                               2,123

Henry D. Bullock & Terri D. Bullock                        1,970
& Shawn Stevenson TR of the Bullock
Childrens Education Trust UA Dec 20
94, FBO Benjamin Dure Bullock      




                                      4


<PAGE>   5


LIMITED PARTNERS                                 NUMBER OF UNITS
- ----------------                                 ---------------

Henry D. Bullock & Terri D. Bullock                        1,970
& Shawn Stevenson TR of the Bullock
Childrens Education Trust UA Dec 20
94, FBO Christine Laurel Bullock   

Henry D. Bullock & Terri D. Bullock                        9,151
TR of the Henry D. & Terri D.
Bullock Trust UA Aug 28 92         

Edward Burger                                              9,151

Calamer Inc.                                               1,233

Perry C. Caplan                                            1,388

Irwin Carasso                                             17,192

Carol P. Freyer Lifetime Trust dated                       2,384
11/1/72                             

The Carthage Partners LLC                                 34,939

Cliffwood Development Company                             64,823

Collins Family Trust dated 5/6/69                        137,833

Kelly Collins                                             11,124

Michael Collins                                           17,377

Charles S. Cook and Shelby H. Cook,                          634
tenants in the entirety            

Caroline Atkins Coutret                                    7,327

David Cleborne Crow                                        5,159

Gretchen Smith Crow                                        2,602

Michael G. Damone, TR of the Michael                     144,296
G. Damone Trust UA Nov 4 69         

Myrna R. Debilak                                           5,447

Robert L. Denton                                           6,286


                                      5


<PAGE>   6

LIMITED PARTNERS                                 NUMBER OF UNITS
- ----------------                                 ---------------

C G Property  Development                                 27,975

Greg and Christina Downs, joint                              474
tenants                        

Gregory Downs                                                 48

Draizin Family Partnership, LP                           357,896

Joseph S. Dresner                                        149,531

Ethel Road Associates                                     29,511

Fitz & Smith Partnership                                   3,410

Fourbur Family Co., L.P.                                 620,273

Gamma Three Associates Limited                             3,338
Partnership                   

Dennis G. Goodwin and Jeannie L.                           6,166
Goodwin, tenants in the entirety

Clay Hamlin & Lynn Hamlin, joint                          15,159
tenants with rights of survivorship

Henry E. Dietz Trust UA Jan 16 81                         36,476

Highland Associates Limited                               69,039
Partnership                

Robert W. Holman Jr.                                     150,146

Holman/Shidler Investment Corporation                     22,079

Steven B. Hoyt                                           175,000

Internal Investment Company                                3,016

Frederick K. Ito                                           3,880

The Jack Friedman Revocable Living                        26,005
Trust UA March 23, 1978           

Jayeff Associates Limited Partnership                     16,249

Michael W. Jenkins                                         3,917



                                      6


<PAGE>   7

LIMITED PARTNERS                                 NUMBER OF UNITS
- ----------------                                 ---------------

Jernie Holdings Corp.                                    180,499

John E. De B Blockey Trust                                 8,293

Thomas J. Johnson, Jr. and Sandra L.                       2,142
Johnson, tenants in the entirety    

Nourhan Kailian                                            2,183

Peter Kepic                                                9,261

Lambert Investment Corporation                            13,606

Paul T. Lambert                                           39,749

Constance Lazarus                                        417,961

Jerome Lazarus                                            18,653

LGR Investment Fund Ltd                                   22,556

Malcolm Properties, L.L.C.                                25,342

Princeton South at Lawrenceville LLC                       4,692

Shidler Equities LP                                      254,541

Duane Lund                                                   617

R. Craig Martin                                              754

J. Stanley Mattison                                           12

Menlo Park Presbyterian Church                               230

Eileen Millar                                              2,922

Linda Miller                                               2,000

The Milton Dresner Revocable Trust                       149,531
UA October 22, 1976               

Montrose Kennedy Associates                                4,874

Peter Murphy                                              56,184



                                      7


<PAGE>   8

LIMITED PARTNERS                                 NUMBER OF UNITS
- ----------------                                 ---------------

Anthony Muscatello                                        81,654

Joseph Musti                                               1,508

Dean A. Nachtigall                                        10,076

New Land Associates Limited                                1,664
Partnership                

North Star Associates Limited                             19,333
Partnership                  

Arden O'Connor                                            13,845

Peter O'Connor                                            66,181

Princeton South at Lawrenceville One                       4,426

Eduardo Paneque                                            2,000

Partridge Road Associates Limited                          2,751
Partnership                      

R.C.P. Associates, a New Jersey                            3,060
limited partnership            

Jack F. Ream                                               1,071

Glenn C. Rexroth and Linda A.                              2,142  
Rexroth, as tenants in the entirety

James C. Reynolds                                         40,154

Andre G. Richard                                           1,508

RJB Ford City Limited Partnership                        158,438

RJB II Limited Partnership                                40,788

Edward C. Roberts and Rebecca S.                           8,308
Roberts, tenants in the entirety

W.F.O. Rosenmiller                                           634

Edward Jon Sarama                                            634


                                      8


<PAGE>   9

LIMITED PARTNERS                                 NUMBER OF UNITS
- ----------------                                 ---------------

Shadeland Associates Limited                              42,976
Partnership                 

Shadeland Corporation                                      4,442

Jay H. Shidler                                            66,984

Jay H. Shidler and Wallette A.                             1,223
Shidler, tenants in the entirety

Michael B. Slade                                           2,829

David W. Smith, and Doris L. Smith,                          754
tenants in the entirety            

Gary L. Smith and Joyce A. Smith,                          1,508
tenants in the entirety          

Kevin Smith                                               13,571

South Broad Company                                       72,421

South Gold Company                                        82,433

SRS Partnership                                            2,142

UA Dated May 21, 1996 FBO Robert                          56,778
Stein                           

S. Larry Stein                                            56,778

Jonathan Stott                                            80,026

Suburban Roseland Associates, a                            3,002
Limited Partnership            

Thelma C. Gretzinger Trust                                   450

Thomas K. Barad & Jill E. Barad,                           2,283
Co-Trustees of the Thomas K. Barad &
Jill E. Barad Trust Dated 10-18-89

Michael T. Tomasz                                         25,847

Barry L. Tracey                                            2,142



                                      9


<PAGE>   10

LIMITED PARTNERS                                 NUMBER OF UNITS
- ----------------                                 ---------------

Van Brunt Associates                                      39,370

Worlds Fair Associates                                     6,134

Worlds Fair III Associates                                14,094

The Worlds Fair Office Associates                          3,343

Worlds Fair Partners Limited                               1,664
Partnership                 

The Worlds Fair V Associates                               3,340

The Worlds Fair 25 Associates                             13,677

Brothers Partnership                                       1,748

BSDK Enterprises                                           3,596

Estate of Albert Sklar                                     3,912

Rand H. Falbaum                                           17,022

William M. Fausone                                        16,480

Elizabeth Fitzpatrick                                      3,800

Fred Trust dated 6/16/77                                     653

Carol P. Freyer                                           12,173

Lee Karen Freyer                                          10,665

Aimee Freyer-Valls                                        12,173

David Fried                                                1,326

Ester Fried                                                3,177

Douglas Frye                                               2,216

J. Peter Gaffney                                             727

Gerlach Family Trust dated 6/28/85                           874

Patricia O. Godchaux                                       9,387


                                     10


<PAGE>   11

LIMITED PARTNERS                                 NUMBER OF UNITS
- ----------------                                 ---------------

Timothy Gudim                                             27,797

Timothy & Melissa Gudim, joint                             3,285
tenants                       

H/Airport GP Inc.                                          1,433

Vivian Hack                                               22,522

Martha J. Harbinson                                        3,329

Turner Harshaw                                             1,132

Cathleen Hession                                           3,137

Howard Trust dated 4/30/79                                   653

John A. and Gloria H. Sage Family                         15,864
Trust UDT dated 6/7/94           

L. Chris Johnson                                           3,196

Johnson Living Trust dated 2/18/83                         1,078

Charles Mark Jordan                                           57

JPG Investment                                               919

David R. Kahnweiler                                        5,436

Thomas Kendall                                               546

Kirshner Family Trust #1 dated 4/8/76                     29,558

Kirshner Trust #4 FBO Todd Kirshner                       20,258

Kolpack MD Pension                                           994

Chester A. Latcham                                         2,493

Lee Karen Freyer Lifetime Trust                            2,384
dated 11/1/65                  

Georgia Leonard                                              664

Robert Leonard III                                         5,856


                                     11


<PAGE>   12

LIMITED PARTNERS                                 NUMBER OF UNITS
- ----------------                                 ---------------

Steve Leonard                                             37,646

Leslie A. Rubin LTD                                        3,577

CLMM LLC                                                   3,825

PAC-II LLC                                                17,356

Sealy Professional Drive LLC                               2,906

Sealy Unitholder LLC                                      31,552

SPM Industrial LLC                                         5,262

Reyem Partners LP                                          8,489

Henry E. Mawicke                                             636

Richard McClintock                                           623

McElroy Management Inc.                                    5,478

MCS Properties, Inc.                                       5,958

Lila Atkins Mulkey                                         7,327

James Muslow, Jr.                                          4,911

Adel Nassif                                                4,910

Kris Nielsen                                                  28

Catherine A. O'Brien                                         832

Martha E. O'Brien                                            832

Steve Ohren                                               31,828

Pacifica Holding Company                                  97,893

Sybil T. Patten                                            1,816

Betty S. Phillips                                          3,912

Jeffrey Pion                                               2,879



                                     12


<PAGE>   13

LIMITED PARTNERS                                 NUMBER OF UNITS
- ----------------                                 ---------------

Pipkin Family Trust dated 10/6/89                          3,140

Robert J. Powers                                          37,674

Manor Properties                                         143,408

Elizabeth Hutton Hagen Fitzpatrick                           607
IRA dated 9/1/91                  

Robert S. Hood Living Trust dated                          3,591
1/9/90 & Amended 12/16/96        

James Sage                                                 2,156

Kathleen Sage                                              3,350

Wilton Wade Sample                                         5,449

Sealy & Company, Inc.                                     37,119

Sealy Florida, Inc.                                          675

Mark P. Sealy                                              8,451

Sealy Real Estate Services, Inc.                         148,478

Scott P. Sealy                                            40,902

Marilyn Rangel IRA dated 2/5/86                              969

Siskel Family Partnership                                 11,359

Siskel Revocable Trust 1987 dated                         10,087
4/17/1987                        

Suzanne Siskel                                             3,802

Steve Smith                                                  386

Sterling Alsip trust dated August 1,                         794
1989                                

Sterling Family Trust dated 3/27/80                        3,559

Donald C. Thompson                                        39,243



                                     13


<PAGE>   14

LIMITED PARTNERS                                 NUMBER OF UNITS
- ----------------                                 ---------------

TUT Investments I LLC                                      5,274

William S. Tyrrell                                         2,906

Van Gilder Family Partnership                              2,262

Virginia B. and Norton Sharpe Living                      12,055
trust UDT dated 4/26/96             

Steve Walbridge                                              338

Richard Walker, Jr.                                          963

Charles Kendall Jr. Rollover  IRA                            656
dated 1/21/93                    

William B. Wiener, Jr.                                    41,119

Patricia Wiener-Shifke                                    12,944

William J. Mallen Trust dated 4/29/94                      8,016

Fred Wilson                                               35,787

World's Fair Thirty                                        1,442

Wolsum, Inc.                                               2,427

Johannson Yap                                              1,680

Gerald & Sharon Zuckerman                                    615

Stephen Mann                                              15,017

Stanley Gruber                                            30,032

Seymour Israel                                            15,016

J. O'Neil Duffy, Sr.                                         513

James O. Duffy, Jr.                                          513

Garrett E. Sheehan                                           513



                                     14


<PAGE>   15

LIMITED PARTNERS                                 NUMBER OF UNITS
- ----------------                                 ---------------

Sam Shamie Trust Agreement dated                         337,753
March 16, 1978, as restated on
November 16, 1993               

Richard H. Zimmerman Living Trust                         47,174
dated October 15, 1990, as amended

Keith J. Pomeroy Revocable Trust                         128,783
Agreement, dated December 13, 1976,
as amended and restated on June 28,
1995                            

Enid Braden Trust of June 28, 1995                        18,464

Sam L. Yaker Revocable Trust                              30,285
Agreement dated February 14, 1984

Armenag Kalaydjian Revocable Trust                        21,655
Agreement dated February 28, 1984 

RBZ LLC                                                      124

KEP LLC                                                   78,873

ESAA Associates Limited Partnership                       19,367

Paul F. Obrecht, Jr.                                       5,289

Richard F. Obrecht                                         5,289

Thomas F. Obrecht                                          5,289

George F. Obrecht                                          5,289

Joan R. Kreiger Revocable Trust                           15,184

William L. Kreiger, Jr.                                    3,374

Elmer H. Wingate                                           1,688

Apollo/Pacifica Bryant LLC                                42,977

Edwin and Cathleen Hession                                 7,987

Leslie A. Rubin                                              471



                                     15




<TABLE> <S> <C>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF FIRST INDUSTRIAL REALTY TRUST, INC. FOR THE SIX MONTHS
ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
       
<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          DEC-31-1998
<PERIOD-START>                             JAN-01-1998
<PERIOD-END>                               JUN-30-1998
<EXCHANGE-RATE>                                      1
<CASH>                                          13,139
<SECURITIES>                                         0
<RECEIVABLES>                                   10,856
<ALLOWANCES>                                   (1,750)
<INVENTORY>                                          0
<CURRENT-ASSETS>                                22,245
<PP&E>                                       2,464,590
<DEPRECIATION>                               (146,464)
<TOTAL-ASSETS>                               2,423,859
<CURRENT-LIABILITIES>                           68,736
<BONDS>                                      1,081,670
                                0
                                         18
<COMMON>                                           378
<OTHER-SE>                                   1,077,156
<TOTAL-LIABILITY-AND-EQUITY>                 2,423,859
<SALES>                                              0
<TOTAL-REVENUES>                               163,519
<CGS>                                                0
<TOTAL-COSTS>                                 (47,199)
<OTHER-EXPENSES>                                37,028
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                            (32,013)
<INCOME-PRETAX>                                 44,812
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                             44,812
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                      (1,976)
<NET-INCOME>                                    42,836
<EPS-PRIMARY>                                      .77
<EPS-DILUTED>                                      .77
        

</TABLE>

<TABLE> <S> <C>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF FIRST INDUSTRIAL REALTY TRUST, INC. FOR THE SIX MONTHS
ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
       
<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          DEC-31-1997
<PERIOD-START>                             JAN-01-1997
<PERIOD-END>                               JUN-30-1997
<EXCHANGE-RATE>                                      1
<CASH>                                          12,459
<SECURITIES>                                   304,204
<RECEIVABLES>                                    7,673
<ALLOWANCES>                                     (750)
<INVENTORY>                                          0
<CURRENT-ASSETS>                                19,382
<PP&E>                                       1,308,750
<DEPRECIATION>                               (103,547)
<TOTAL-ASSETS>                               1,620,117
<CURRENT-LIABILITIES>                           52,938
<BONDS>                                        500,219
                                0
                                         17
<COMMON>                                           301
<OTHER-SE>                                     665,980
<TOTAL-LIABILITY-AND-EQUITY>                 1,620,117
<SALES>                                              0
<TOTAL-REVENUES>                                98,791
<CGS>                                                0
<TOTAL-COSTS>                                 (27,407)
<OTHER-EXPENSES>                              (21,782)
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                            (21,321)
<INCOME-PRETAX>                                 31,760
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                             31,760
<DISCONTINUED>                                       0
<EXTRAORDINARY>                               (12,563)
<CHANGES>                                            0
<NET-INCOME>                                    19,197
<EPS-PRIMARY>                                      .53
<EPS-DILUTED>                                      .52
        

</TABLE>


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