<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 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
(Address of principal executive offices)
(312) 344-4300
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No
Number of shares of Common Stock, $.01 par value, outstanding as of May 11,
1998: 37,718,162
<PAGE> 2
FIRST INDUSTRIAL REALTY TRUST, INC.
FORM 10-Q
FOR THE PERIOD ENDED MARCH 31, 1998
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1998 and December 31, 1997............. 2
Consolidated Statements of Operations for the Three Months Ended March 31,
1998 and March 31, 1997............................................................ 3
Consolidated Statements of Cash Flows for the Three Months Ended March 31,
1998 and March 31, 1997............................................................ 4
Notes to Consolidated Financial Statements........................................ 5-12
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................................ 13-18
PART II: OTHER INFORMATION
Item 1. Legal Proceedings............................................................ 19
Item 2. Changes in Securities........................................................ 19
Item 3. Defaults Upon Senior Securities.............................................. 19
Item 4. Submission of Matters to a Vote of Security Holders.......................... 19
Item 5. Other Information............................................................ 19
Item 6. Exhibits and Reports on Form 8-K and Form 8-K/A.............................. 19-20
SIGNATURE............................................................................... 21
EXHIBIT INDEX........................................................................... 22
</TABLE>
1
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRST INDUSTRIAL REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------- ------------
<S> <C> <C>
ASSETS
Assets:
Investment in Real Estate:
Land....................................................... $ 327,242 $ 299,020
Buildings and Improvements................................. 1,773,519 1,663,731
Furniture, Fixtures and Equipment.......................... 1,437 1,437
Construction in Progress................................... 70,452 30,158
Less: Accumulated Depreciation............................. (131,452) (121,030)
---------- ----------
Net Investment in Real Estate.......................... 2,041,198 1,873,316
Cash and Cash Equivalents................................... 8,360 13,222
Restricted Cash............................................. 18,048 313,060
Tenant Accounts Receivable, Net............................. 8,226 6,280
Deferred Rent Receivable.................................... 11,017 10,144
Deferred Financing Costs, Net............................... 9,615 8,594
Prepaid Expenses and Other Assets, Net...................... 58,228 47,547
---------- ----------
Total Assets........................................... $2,154,692 $2,272,163
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage Loans Payable...................................... $ 100,721 $ 101,198
Defeased Mortgage Loan Payable.............................. --- 300,000
Senior Unsecured Debt, Net.................................. 748,763 648,994
Acquisition Facility Payable................................ 17,800 129,400
Accounts Payable and Accrued Expenses....................... 50,010 50,373
Rents Received in Advance and Security Deposits............. 16,451 14,104
Dividends/Distributions Payable............................. 22,709 22,010
---------- ----------
Total Liabilities...................................... 956,454 1,266,079
---------- ----------
Minority Interest............................................ 150,456 151,494
Commitments and Contingencies................................ --- ---
Stockholders' Equity:
Preferred Stock ($.01 per 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 March 31, 1998
having a liquidation 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,
36,603,489 and 36,433,859 shares issued and outstanding at
March 31, 1998 and December 31, 1997, respectively)........ 366 364
Additional Paid-in-Capital.................................. 1,132,374 934,622
Distributions in Excess of Accumulated Earnings............. (79,842) (76,996)
Unamortized Value of Restricted Stock Grants................ (5,134) (3,417)
---------- ----------
Total Stockholders' Equity............................. 1,047,782 854,590
---------- ----------
Total Liabilities and Stockholders' Equity............. $2,154,692 $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>
Three Months Three Months
Ended Ended
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Revenues:
Rental Income................................................... $ 61,881 $ 35,418
Tenant Recoveries and Other Income.............................. 14,333 10,725
-------- --------
Total Revenues............................................... 76,214 46,143
-------- --------
Expenses:
Real Estate Taxes............................................... 12,389 7,547
Repairs and Maintenance......................................... 3,392 2,662
Property Management............................................. 2,909 1,678
Utilities....................................................... 2,263 1,610
Insurance....................................................... 212 139
Other........................................................... 930 509
General and Administrative...................................... 2,634 1,264
Interest........................................................ 14,761 8,331
Amortization of Interest Rate Protection Agreements and
Deferred Financing Costs....................................... 177 596
Depreciation and Other Amortization............................. 13,719 8,617
-------- --------
Total Expenses............................................... 53,386 32,953
-------- --------
Income Before Gain on Sales of Real Estate and Minority Interest. 22,828 13,190
Gain on Sales of Real Estate..................................... 2,360 ---
-------- --------
Income Before Minority Interest.................................. 25,188 13,190
Income Allocated to Minority Interest............................ (2,657) (1,356)
-------- --------
Net Income....................................................... 22,531 11,834
Less: Preferred Stock Dividends................................. (5,978) (980)
-------- --------
Net Income Available to Common Stockholders..................... $ 16,553 $ 10,854
======== ========
Net Income Available to Common Stockholders Per Weighted
Average Common Share Outstanding
Basic.................................................... $ .45 $ .36
======== ========
Diluted.................................................. $ .45 $ .36
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 5
FIRST INDUSTRIAL REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1998 March 31, 1997
------------------ ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income.................................................... $ 22,531 $ 11,834
Income Allocated to Minority Interest......................... 2,657 1,356
-------- --------
Income Before Minority Interest............................... 25,188 13,190
Adjustments to Reconcile Net Income to Net Cash Provided
by Operating Activities:
Depreciation................................................ 12,392 7,709
Amortization of Interest Rate Protection Agreements and
Deferred Financing Costs................................... 177 596
Other Amortization.......................................... 1,580 908
Gain on Sales of Real Estate................................ (2,360) ---
Provision for Bad Debts..................................... --- 150
Increase in Tenant Accounts Receivable and Prepaid
Expenses and Other Assets.................................. (11,373) (8,444)
Increase in Deferred Rent Receivable........................ (1,064) (347)
Increase in Accounts Payable and Accrued Expenses
and Rents Received in Advance and Security Deposits........ 3,207 488
Increase in Organization Costs.............................. (97) (20)
Decrease (Increase) in Restricted Cash...................... 4,528 (3,875)
-------- --------
Net Cash Provided by Operating Activities.................. 32,178 10,355
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases and Additions to Investment in Real Estate.......... (196,507) (132,024)
Proceeds from Sales of Investment in Real Estate.............. 23,237 ---
Repayment of Mortgage Loans Receivable........................ 16 ---
Decrease (Increase) in Restricted Cash........................ (15,516) 312
-------- --------
Net Cash Used in Investing Activities...................... (188,770) (131,712)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Common Stock Underwriting Discounts/Offering Costs............ (464) (682)
Proceeds from Exercise of Employee Stock Options.............. --- 137
Proceeds from Sale of Preferred Stock......................... 200,000 ---
Preferred Stock Offering Costs................................ (6,692) ---
Repayments on Mortgage Loans Payable.......................... (300,477) (261)
Repayment of Promissory Notes Payable......................... --- (9,919)
Proceeds from Senior Unsecured Debt........................... 99,753 ---
Other Proceeds from Senior Unsecured Debt..................... 2,760 ---
Other Costs of Senior Unsecured Debt.......................... (2,565) ---
Proceeds from Acquisition Facility Payable.................... 164,900 143,700
Repayments on Acquisition Facility Payable.................... (276,500) ---
Dividends/Distributions....................................... (22,010) (16,281)
Preferred Stock Dividends..................................... (5,764) (980)
Debt Issuance Costs and a Prepayment Fee...................... (7,211) (370)
Decrease in Restricted Cash................................... 306,000 ---
-------- --------
Net Cash Provided by Financing Activities.................. 151,730 115,344
-------- --------
Net Decrease in Cash and Cash Equivalents...................... (4,862) (6,013)
Cash and Cash Equivalents, Beginning of Period................. 13,222 7,646
-------- --------
Cash and Cash Equivalents, End of Period....................... $ 8,360 $ 1,633
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 6
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 86% ownership interest at March 31, 1998. As of March 31,
1998, the Company owned 834 in-service properties located in 22 states,
containing an aggregate of approximately 61.0 million square feet of gross
leasable area ("GLA"). Of the 834 properties owned by the Company, 746 are
held by the Operating Partnership, 16 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., three are held by First Industrial Indianapolis, L.P. and one is held by
First Industrial Development Services, L.P. Minority interest in the Company
at March 31, 1998 represents the approximate 14% 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 March 31, 1998 and the results of its operations and its cash flows for
the three months ended March 31, 1998 and 1997.
Tenant Accounts Receivable, net:
The Company provides an allowance for doubtful accounts against the
portion of tenant accounts receivable which is estimated to be uncollectible.
Tenant accounts receivable in the consolidated balance sheets are shown net of
an allowance for doubtful accounts of $1,450 as of March 31, 1998 and December
31, 1997.
Reclassification:
Certain 1997 items have been reclassified to conform to the 1998
presentation.
5
<PAGE> 7
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
(UNAUDITED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
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 nonowner 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 an 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, assuming an increase in the amount of
acquisition support activity the Company outsources relative to such activity
the Company continues to perform internally.
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 expects to report a
cumulative effect of a change in accounting principle in the amount of
approximately $2,000 to reflect the write-off of the unamortized balance of
organizational costs on the Company's balance sheet.
6
<PAGE> 8
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
(UNAUDITED)
3. MORTGAGE LOANS, SENIOR UNSECURED DEBT AND ACQUISITION FACILITY PAYABLE,
CONTINUED
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 $2,760 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 to 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. The Company also entered into 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.
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
--------------------------- --------------------------- ----------------
MARCH 31, DECEMBER 31, MARCH 31, DECEMBER 31, MARCH 31, MATURITY
1998 1997 1998 1997 1998 DATE
--------- ------------ --------- ------------ ---------------- --------
<S> <C> <C> <C> <C> <C> <C>
MORTGAGE LOANS PAYABLE
- ----------------------
1995 Mortgage Loan................ $ 39,886 $ 40,000 $ 168 $ 168 7.220% 1/11/26
CIGNA Loan........................ 35,669 35,813 --- --- 7.500% 4/01/03
Assumed Loans..................... 8,880 8,950 --- --- 9.250% 1/01/13
LB Mortgage Loan II.............. 705 705 4 --- 8.000% (1)
Acquisition Mortgage Loan I....... 4,054 4,135 --- 29 8.500% 8/01/08
Acquisition Mortgage Loan II...... 7,956 7,997 52 52 7.750% 4/01/06
Acquisition Mortgage Loan III..... 3,571 3,598 27 27 8.875% 6/01/03
-------- -------- ------- ------
Total............................. $100,721 $101,198 $ 251 $ 276
======== ======== ======= ======
DEFEASED MORTGAGE LOAN
- ----------------------
1994 Defeased Mortgage Loan
(formerly defined as the 1994
Mortgage Loan).................... $ --- $300,000 $ --- $1,831 (2) (2)
======== ======== ======= ======
SENIOR UNSECURED DEBT
- ---------------------
2005 Notes........................ $ 50,000 $ 50,000 $ 1,255 $ 393 6.900% 11/21/05
2006 Notes........................ 150,000 150,000 3,296 671 7.000% 12/01/06
2007 Notes........................ 149,952 (3) 149,951 4,307 1,457 7.600% 5/15/07
2011 Notes........................ 99,389 (3) 99,377 2,786 942 7.375% 5/15/11 (4)
2017 Notes........................ 99,811 (3) 99,809 2,354 479 7.500% 12/01/17 (5)
2027 Notes ....................... 99,858 (3) 99,857 2,701 914 7.150% 5/15/27 (6)
2011 Drs.......................... 99,753 (3) --- 18 --- 6.500% (8) 4/05/11 (7)
-------- -------- ------- ------
Total............................. $748,763 $648,994 $16,717 $4,856
======== ======== ======= ======
ACQUISITION FACILITY PAYABLE
- ----------------------------
1997 Unsecured Acquisition
Facility......................... $ 17,800 $129,400 $ 539 $ 297 6.488% 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 $48, $611, $189, $142 and $247,
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
upon a predetermined formula as disclosed in the related Prospectus
Supplement.
7
<PAGE> 9
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
(UNAUDITED)
3. MORTGAGE LOANS, SENIOR UNSECURED DEBT AND ACQUISITION FACILITY PAYABLE,
CONTINUED
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>
<CAPTION>
Amount
--------
<S> <C>
1998 $ 1,342
1999 2,020
2000 2,187
2001 20,167
2002 2,563
Thereafter 839,537
--------
Total $867,816
========
</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.
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 March 31, 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
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
8
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FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
(UNAUDITED)
4. STOCKHOLDERS' EQUITY, CONTINUED
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.
Restricted Stock:
During the three months ended March 31, 1998, the Company awarded 51,850
shares of restricted Common Stock to certain employees and 552 shares of
restricted Common Stock to certain Directors. Another employee of the Company
converted certain employee stock options to 3,765 shares of restricted Common
Stock. These shares of restricted Common Stock had a fair value of $1,999 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.
Dividends/Distributions:
The following table summarizes dividends/distributions for the quarter
ended March 31, 1998:
COMMON STOCK/OPERATING PARTNERSHIP UNITS
- ----------------------------------------
<TABLE>
<CAPTION>
Dividend/Distribution Total
Record Date Payable Date per Share/Unit Dividend/Distribution
------------------ ---------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
Fourth Quarter 1997 December 31, 1997 January 20, 1998 $ .53000 $ 22,010
First Quarter 1998 March 31, 1998 April 20, 1998 $ .53000 $ 22,492
SERIES A PREFERRED STOCK
- ------------------------
Dividend Total
Record Date Payable Date per Share Dividend/Distribution
------------------ ---------------- --------------------- ---------------------
First Quarter 1998 March 13, 1998 March 31, 1998 $ .59375 $ 980
SERIES B PREFERRED STOCK
- ------------------------
Dividend Total
Record Date Payable Date per Share Dividend/Distribution
------------------ ---------------- --------------------- ---------------------
First Quarter 1998 March 13, 1998 March 31, 1998 $ 54.68750 $ 2,188
SERIES C PREFERRED STOCK
- ------------------------
Dividend Total
Record Date Payable Date per Share Dividend/Distribution
------------------ ---------------- --------------------- ---------------------
First Quarter 1998 March 13, 1998 March 31, 1998 $ 53.90600 $ 1,078
</TABLE>
9
<PAGE> 11
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
(UNAUDITED)
4. STOCKHOLDERS' EQUITY, CONTINUED
SERIES D PREFERRED STOCK
- ------------------------
<TABLE>
<CAPTION>
Dividend Total
Record Date Payable Date per Share Dividend/Distribution
-------------- -------------- -------------- ---------------------
<S> <C> <C> <C> <C>
First Quarter 1998 March 13, 1998 March 31, 1998 $ 30.36500 $ 1,518
</TABLE>
The Company has accrued $7.13194 per Series E Preferred Share, totaling
$214, for the three months ended March 31, 1998. This dividend will be paid on
June 30, 1998.
5. ACQUISITION OF REAL ESTATE
During the three months ended March 31, 1998, the Company acquired 70
existing industrial properties and several land parcels. The aggregate
purchase price for these acquisitions totaled approximately $157,940,
excluding costs incurred in conjunction with the acquisition of the properties.
Of the 70 existing industrial properties and several land parcels
purchased by the Company during the three months ended March 31, 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.
6. SALES OF REAL ESTATE
During the three months ended March 31, 1998, the Company sold six
existing industrial properties and a land parcel. Gross proceeds from these
sales were approximately $23,237. The gain on sales of real estate was
approximately $2,360.
7. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Interest paid, net of capitalized interest............................ $ 4,514 $ 7,615
============== ==============
Interest capitalized.................................................. $ 935 $ 193
============== ==============
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Distribution payable on Common Stock/Units and Series E Preferred
Stock (March 31, 1998 only)........................................ $ 22,709 $ 16,904
IN CONJUNCTION WITH THE PROPERTY ACQUISITIONS, THE FOLLOWING ASSETS
AND LIABILITIES WERE ASSUMED AND OPERATING PARTNERSHIP UNITS
EXCHANGED:
Purchase of real estate............................................... $ 157,940 $ 175,995
Accrued real estate taxes and security deposits....................... (2,067) (1,753)
Mortgage loans........................................................ --- (4,505)
Operating Partnerships Units.......................................... (1,971) (49,483)
-------------- --------------
$ 153,902 $ 120,254
============== ==============
</TABLE>
10
<PAGE> 12
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR 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 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>
Three Months Three Months
Ended Ended
March 31, March 31,
1998 1997
--------------- -----------------
<S> <C> <C>
Numerator:
----------
Net Income................................................. $ 22,531 $ 11,834
Less: Preferred Stock Dividends............................ (5,978) (980)
--------------- -----------------
Net Income Available to Common
Stockholders- For Basic and Diluted EPS.................. $ 16,553 $ 10,854
=============== =================
Denominator:
------------
Weighted Average Common Shares-Basic....................... 36,525,832 30,028,238
=============== =================
Effect of Dilutive Securities:
Employee Common Stock Options ........................... 374,177 72,838
--------------- -----------------
Weighted Average Common Shares-Diluted..................... 36,900,009 30,101,076
=============== =================
Basic EPS:
----------
Net Income Available to Common Stockholders.............. $ .45 $ .36
=============== =================
Diluted EPS:
------------
Net Income Available to Common Stockholders................ $ .45 $ .36
=============== =================
</TABLE>
9. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company is involved in legal actions
arising from the ownership of its properties. In management's opinion, the
liabilities, if any, that may ultimately result from such legal actions are not
expected to have a materially adverse effect on the consolidated financial
position, operations or liquidity of the Company.
The Company has committed to the construction of 15 developments totaling
approximately 2.5 million square feet of GLA. The estimated total construction
costs are approximately $80,954. These developments are expected to be funded
with cash flow from operations as well as borrowings under the 1997 Unsecured
Acquisition Facility.
11
<PAGE> 13
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
(UNAUDITED)
10. SUBSEQUENT EVENTS
From April 1, 1998 to May 11, 1998, the Company acquired 97 industrial
properties and one land parcel. The aggregate purchase price for these
acquisitions totaled approximately $206,926, excluding costs incurred in
conjunction with the acquisition of the properties.
On April 20, 1998, the Company and the Operating Partnership paid a first
quarter 1998 distribution of $.53 per common share/Unit, totaling approximately
$22,492.
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"). On
April 23, 1998, the last reported sale price per share on the New York Stock
Exchange was $32.625. Proceeds to the Company, net of discounts and estimated
total offering expenses, were approximately $33,900.
11. PRO FORMA FINANCIAL INFORMATION
The pro forma financial information will be filed in an amendment to the
Company's Form 8-K dated April 6, 1998 as filed on April 20, 1998.
12
<PAGE> 14
FIRST INDUSTRIAL REALTY TRUST, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis of First Industrial Realty Trust,
Inc.'s (the "Company") financial condition and results of operations should be
read in conjunction with the financial statements and notes thereto appearing
elsewhere in this Form 10-Q.
RESULTS OF OPERATIONS
At March 31, 1998, the Company owned 834 in-service properties with
approximately 61.0 million square feet of gross leasable area ("GLA"), compared
to 431 in-service properties with approximately 37.4 million square feet of GLA
at March 31, 1997. The addition of 419 properties acquired or developed
between April 1, 1997 and March 31, 1998 included the acquisitions of 411
properties totaling approximately 23.0 million square feet of GLA and the
completed development of eight properties. The Company also completed the
expansion of three properties totaling approximately 1.8 million square feet of
GLA and the sales of 16 in-service properties totaling approximately 1.2
million square feet of GLA, one property held for redevelopment and several
land parcels.
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1998 TO THREE MONTHS ENDED
MARCH 31, 1997
Rental income and tenant recoveries and other income increased by
approximately $30.1 million or 65.2% due primarily to the properties acquired
or developed after April 1, 1997. Rental income and tenant recoveries and
other income from properties owned prior to January 1, 1997, decreased by
approximately $.3 million or 1.0% due primarily to an increase in rental income
due to general rent increases offset by a decrease in tenant recoveries related
to the decrease in operating expenses as discussed below.
Property expenses, which include real estate taxes, repairs and
maintenance, property management, utilities, insurance and other expenses,
increased by approximately $8.0 million or 56.2% due primarily to the
properties acquired or developed after April 1, 1997. Expenses from properties
owned prior to January 1, 1997, decreased by approximately $.9 million or 7.9%
due primarily to a decrease in snow removal and related expenses for properties
located in certain of the Company's metropolitan areas during the three months
ended March 31, 1998.
General and administrative expense increased by approximately $1.4 million
due primarily to the additional expenses associated with managing the Company's
growing operations including additional professional fees relating to
additional properties owned and additional personnel to manage and expand the
Company's business.
Interest expense increased by approximately $6.4 million for the three
months ended March 31, 1998 compared to the three months ended March 31, 1997
due primarily to a higher average debt balance outstanding resulting from the
issuance of unsecured debt to fund the acquisition of additional properties.
Amortization of interest rate protection agreements and deferred financing
costs decreased by approximately $.4 million due primarily to the full
amortization of the deferred financing costs relating to the Company's $300
million mortgage loan (the "1994 Mortgage Loan") which was paid off and retired
on January 2, 1998.
Depreciation and other amortization increased by approximately $5.1
million due primarily to the additional depreciation and amortization related
to the properties acquired or developed after April 1, 1997.
The $2.4 million gain on sales of properties resulted from the sales of
six properties and a land parcel. Gross proceeds from these sales were
approximately $23.2 million.
13
<PAGE> 15
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998, the Company's unrestricted cash and cash equivalents
was approximately $8.4 million and restricted cash was approximately $18.0
million. Included in restricted cash are approximately $2.3 million of cash
reserves 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. Also included in restricted cash is approximately $15.7
million of net proceeds from the sale of properties. These sales proceeds will
be disbursed as the Company exchanges into properties under Section 1031 of the
Internal Revenue Code.
Net cash provided by operating activities was approximately $32.2 million
for the three months ended March 31, 1998 compared to approximately $10.4
million for the three months ended March 31, 1997. This increase is due
primarily to an increase in net operating income (which is defined as total
revenues less property related expenses) as discussed in the "Results of
Operations" above and a decrease in restricted cash due to the distribution of
restricted cash from the servicer of the 1994 Mortgage Loan upon the retirement
of such mortgage loan.
Net cash used in investing activities increased to approximately $188.8
million for the three months ended March 31, 1998 from approximately $131.7
million for the three months ended March 31, 1997 due primarily to an increase
in the acquisition of properties which was partially offset by the proceeds
from the sale of six properties and a parcel of land.
Net cash provided by financing activities increased to approximately
$151.7 million for the three months ended March 31, 1998 from approximately
$115.3 million for the three months ended March 31, 1997 due to the issuance of
preferred stock and senior unsecured debt during the three months ended March
31, 1998. These proceeds were partially offset by a net decrease in borrowings
under the Company's $300 million revolving credit facility (the "1997 Unsecured
Acquisition Facility") and an increase in dividends and distributions for the
three months ended March 31, 1998 due to the issuance of additional common and
preferred shares of the Company and First Industrial, L.P. partnership units
after March 31, 1997 and an increase in per common share/Unit distributions.
Funds from operations for the three months ended March 31, 1998 was $30.4
million, as compared to $20.8 million for the three months ended March 31,
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 does not represent cash
generated from operating activities in accordance with generally accepted
accounting principles and is not necessarily indicative of cash available to
fund cash needs, including the payment of dividends and distributions. Funds
from operations should not be considered as a substitute for net income as a
measure of results of operations or for cash flow from operating activities
calculated in accordance with generally accepted accounting principles as a
measure of liquidity. Funds from operations as calculated by the Company may
not be comparable to similarly titled, but differently calculated, measures of
other REITs.
14
<PAGE> 16
The following is a reconciliation of net income to funds from operations:
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1998 March 31, 1997
------------------ ------------------
<S> <C> <C>
Net Income Available to
Common Stockholders.................. $ 16,553 $ 10,854
Adjustments:
Depreciation and Other
Amortization......................... 13,584 8,575
Minority Interest...................... 2,657 1,356
Gain on Sales of Properties............ (2,360) ---
------------------ ------------------
Funds From Operations................ $ 30,434 $ 20,785
================== ==================
</TABLE>
The ratio of earnings to fixed charges and preferred stock dividends was
1.73 for the three months ended March 31, 1998 compared to 2.19 for the three
months ended March 31, 1997. The decrease is primarily due to additional
interest expense and preferred stock dividends incurred during the three months
ended March 31, 1998 from additional debt and preferred stock issued to fund
property acquisitions and to pay down and retire the 1994 Mortgage Loan, 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 March 31, 1998, the Company purchased 70
industrial properties and several land parcels, for an aggregate purchase price
of approximately $157.9 million, excluding costs incurred in conjunction with
the acquisition of the properties.
Of the 70 existing industrial properties and several land parcels
purchased by the Company during the three months ended March 31, 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 three months ended March 31, 1998, the Company sold six
existing industrial properties and a land parcel. Gross proceeds from these
sales were approximately $23.2 million. The gain on sales of real estate was
approximately $2.4 million.
The Company has committed to the construction of 15 developments totaling
approximately 2.5 million square feet of GLA. The estimated total construction
costs are approximately $81.0 million. These developments are expected to be
funded with cash flow from operations as well as borrowings under the 1997
Unsecured Acquisition Facility.
From April 1, 1998 to May 11, 1998, the Company acquired 97 industrial
properties and one land parcel. The aggregate purchase price for these
acquisitions totaled approximately $206.9 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.
15
<PAGE> 17
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 to 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. The Company also entered into 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 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 $125.0 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.
During the three months ended March 31, 1998, the Company awarded 51,850
shares of restricted Common Stock to certain employees and 552 shares of
restricted Common Stock to certain Directors. Another employee of the Company
converted certain employee stock options to 3,765 shares of restricted Common
Stock. These shares of restricted Common Stock had a fair value of $2.0
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 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 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 March 31, 1998, the Company paid a first quarter preferred stock
dividend of $.59375 per share on its Series A Cumulative Preferred Stock,
totaling approximately $1.0 million.
16
<PAGE> 18
On March 31, 1998, the Company paid a first quarter preferred dividend of
$54.688 per share (equivalent to $.54688 per Depositary Share) on its Series B
Cumulative Preferred Stock, totaling $2.2 million.
On March 31, 1998, the Company paid a first quarter preferred dividend of
$53.906 per share (equivalent to $.53906 per Depositary Share) on its Series C
Cumulative Preferred Stock, totaling $1.1 million.
On March 31, 1998, the Company paid a period prorated first quarter
preferred dividend of $30.365 per share (equivalent to $.30365 per Depositary
Share) on its Series D Preferred Stock, totaling $1.5 million.
The Company has accrued $7.13194 per Series E Preferred Share (equivalent
to $.07132 per Depositary Share), totaling $.2 million, for the three months
ended March 31, 1998. This dividend will be paid on June 30, 1998.
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"). On
April 23, 1998, the last reported sale price per share on the New York Stock
Exchange was $32.625. Proceeds to the Company, net of discounts and estimated
total offering expenses, were approximately $33.9 million.
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 March 31, 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 May 11, 1998, $589.2 million of common
stock, preferred stock and depositary shares and $300.0 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 March 31,
1998, borrowings under the 1997 Unsecured Acquisition Facility bore interest at
a weighted average interest rate of 6.488%. As of May 11, 1998, the Company
had approximately $141.6 million available in additional borrowings under the
1997 Unsecured Acquisition Facility. While the Company may sell properties if
property or market conditions make it desirable, the Company does not expect to
sell assets in the foreseeable future to satisfy its liquidity requirements.
OTHER
In 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
17
<PAGE> 19
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 an 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, assuming an increase in the
amount of acquisition support activity the Company outsources relative to such
activity the Company continues to perform internally.
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 expects to report 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.
18
<PAGE> 20
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K AND FORM 8-K/A
Exhibit No. Description
3.1 Articles Supplementary relating to the Company's 7.95% Series D
Cumulative Preferred Stock, $.01 par value (incorporated by
reference to Exhibit 4.1 of the Form 8-K of the Company dated
February 6, 1998, File No. 1-13102)
3.2 Articles Supplementary relating to the Company's 7.90% Series E
Cumulative Preferred Stock, $.01 par value (incorporated by
reference to Exhibit 3.9 of the Company's Annual Report on Form 10-K
for the year ended December 31, 1997, File No. 1-13102)
4.1 Deposit Agreement, dated February 4, 1998, by and among the Company,
First Chicago Trust Company of New York and holders from time to
time of Depositary Receipts (incorporated by reference to Exhibit
4.2 of the Form 8-K of the Company, dated February 6, 1998, File No.
1-13102)
4.2 Deposit Agreement, dated March 18, 1998, by and among the Company,
First Chicago Trust Company of New York and holders from time to
time of Depositary Receipts (incorporated by reference to Exhibit
4.12 of the Company's Annual Report on Form 10-K for the year ended
December 31, 1998, File No. 1-13102)
4.3 6.50% dealer remarketable security due April 5, 2011 in principal
amount of $100 million issued by First Industrial, L.P.
(incorporated by reference to Exhibit 4.2 of the Form 8-K of
First Industrial, L.P. dated April 7, 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* First Amendment to the L.P. Agreement dated April 1, 1998
10.3* Second Amendment to the L.P. Agreement dated April 3, 1998
10.4* Third Amendment to the L.P. Agreement dated April 16, 1998
10.5 Registration Rights Agreement, dated April 29, 1998, relating to
the Company's Common Stock, par value $.01 per share, between the
Company, the Operating Partnership and Merrill Lynch, Pierce,
Fenner & Smith Incorporated (incorporated by reference to Exhibit
4.1 of the Form 8-K of the Company dated May 1, 1998, File No.
1-13102)
27.1* Financial Data Schedule For the Three Months Ended March 31, 1998
27.2* Financial Data Schedule For the Three Months Ended March 31, 1997
(Restated)
* Filed herewith.
Reports on Form 8-K and Form 8-K/A:
Report on Form 8-K/A No. 1 dated December 11, 1997, filed January 22,
1998, as amended by the report on Form 8-K/A No. 2 filed February 26,
1998, relating to the acquisition of 85 properties, the negotiations to
acquire an additional property and the acquisition of land parcels for
future development. The reports include Combined Historical Statements of
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 February 4, 1998, filed February 6, 1998,
relating to the Company's offering of Depositary Shares each representing
1/100 of a share of 7.95% Series D Cumulative Preferred Stock.
Report on Form 8-K dated March 13, 1998, filed March 27, 1998, relating
to the Company's offering of Depositary Shares each representing 1/100 of
a share of 7.90% Series E Cumulative Preferred Stock.
Report on Form 8-K filed as of April 20, 1998, dated April 6, 1998,
relating to the acquisition of 167 properties and seven land parcels for
future development.
19
<PAGE> 21
================================================================================
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
20
<PAGE> 22
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: May 14, 1998 By: /s/ Michael J. Havala
---------------------
Michael J. Havala
Chief Financial Officer
(Principal Financial and Accounting Officer)
21
<PAGE> 23
EXHIBIT INDEX
Exhibit No. Description
- ---------- -----------
3.1 Articles Supplementary relating to the Company's 7.95% Series D
Cumulative Preferred Stock, $.01 par value (incorporated by
reference to Exhibit 4.1 of the Form 8-K of the Company dated
February 6, 1998, File No. 1-13102)
3.2 Articles Supplementary relating to the Company's 7.90% Series E
Cumulative Preferred Stock, $.01 par value (incorporated by
reference to Exhibit 3.9 of the Company's Annual Report on Form
10-K for the year ended December 31, 1997, File No. 1-13102)
4.1 Deposit Agreement, dated February 4, 1998, by and among the
Company, First Chicago Trust Company of New York and holders from
time to time of Depositary Receipts (incorporated by reference to
Exhibit 4.2 of the Form 8-K of the Company, dated February 6,
1998, File No. 1-13102)
4.2 Deposit Agreement, dated March 18, 1998, by and among the Company,
First Chicago Trust Company of New York and holders from time to
time of Depositary Receipts (incorporated by reference to Exhibit
4.12 of the Company's Annual Report on Form 10-K for the year
ended December 31, 1998, File No. 1-13102)
4.3 6.50% dealer remarketable security due April 5, 2011 in
principal amount of $100 million issued by First Industrial, L.P.
(incorporated by reference to Exhibit 4.2 of the Form 8-K of
First Industrial, L.P. dated April 7, 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 * First Amendment to the L.P. Agreement dated April 1, 1998
10.3 * Second Amendment to the L.P. Agreement dated April 3, 1998
10.4 * Third Amendment to the L.P. Agreement dated April 16, 1998
10.5 Registration Rights Agreement, dated April 29, 1998, relating to
the Company's Common Stock, par value $.01 per share, between the
Company, the Operating Partnership and Merrill Lynch, Pierce,
Fenner & Smith Incorporated (incorporated by reference to
Exhibit 4.1 of the Form 8-K of the Company dated May 1, 1998,
File No. 1-13102)
27.1 * Financial Data Schedule For the Three Months Ended March 31, 1998
27.2 * Financial Data Schedule For the Three Months Ended March 31, 1997
(Restated)
* Filed herewith.
22
<PAGE> 1
EXHIBIT-10.2
FIRST AMENDMENT TO
SIXTH AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT OF
FIRST INDUSTRIAL, L.P.
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 (the "Partnership Agreement") does hereby amend the Partnership Agreement
as follows:
Capitalized terms used but not defined in this First Amendment shall
have the same meanings that are ascribed to them in the Partnership Agreement.
1. Additional Limited Partners. The Persons identified on Schedule 1 hereto
are hereby admitted to the Partnership as Additional Limited Partners owning the
number of Units and having made the Capital Contributions set forth on such
Schedule 1. Such persons hereby adopt the Partnership Agreement.
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 First Amendment, all
of the provisions of the Partnership Agreement are affirmed and ratified and
remain in full force and effect.
Dated: April 1, 1998
FIRST INDUSTRIAL REALTY TRUST, INC.
As sole General Partner of the
Partnership
By: /s/ Michael T. Tomasz
-------------------------------
Name: Michael T. Tomasz
Title: President and Chief
Executive Officer
<PAGE> 1
EXHIBIT-10.3
SECOND AMENDMENT TO
SIXTH AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT OF
FIRST INDUSTRIAL, L.P.
As of April 3, 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
as of March 18, 1998 (the "PARTNERSHIP AGREEMENT"), as amended to date, does
hereby amend the Partnership Agreement as follows:
Capitalized terms used but not defined in this First Amendment shall
have the same meanings that are ascribed to them in the Partnership Agreement.
1. ADDITIONAL LIMITED PARTNERS. The Persons identified on EXHIBIT 1A
hereto are hereby admitted to the Partnership as Additional Limited Partners
owning the number of Units and having made the Capital Contributions set forth
on such EXHIBIT 1A. Such persons hereby adopt the Partnership Agreement.
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 (the "CONTRIBUTION AGREEMENT"),
dated April 3, 1998, by and between FR Acquisitions, Inc., a Maryland
corporation (it having assigned its entire right, title and interest in and to
the Contribution Agreement to the Partnership), and Sam Shamie and Keith Pomeroy
certain Protected Amounts are being established for the Additional Limited
Partners admitted pursuant to this First 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 First Amendment,
all of the provisions of the Partnership Agreement are affirmed and ratified and
remain in full force and effect.
* * *
<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 T. Tomasz
-------------------------------
Name: Michael Tomasz
Title: President and Chief
Executive Officer
<PAGE> 1
EXHIBIT-10.4
THIRD AMENDMENT TO
SIXTH AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT OF
FIRST INDUSTRIAL, L.P.
As of April 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 (collectively, the
"PARTNERSHIP AGREEMENT"), does hereby amend the Partnership Agreement as
follows:
Capitalized terms used but not defined in this Third 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 (the "CONTRIBUTION AGREEMENT"),
dated April 14, 1998, by and between FR Acquisitions, Inc., a Maryland
corporation (it having assigned its entire right, title and interest in and to
the Contribution Agreement to the Partnership), and the other parties listed on
the signature pages of the Contribution Agreement, 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]
<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 T. Tomasz
---------------------------------
Name: Michael T. Tomasz
------------------------
Title: Chief Executive Officer
------------------------
2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
FINANCIAL STATEMENTS OF FIRST INDUSTRIAL REALTY TRUST, INC. FOR THE THREE MONTHS
ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B)
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 8,360
<SECURITIES> 0
<RECEIVABLES> 9,676
<ALLOWANCES> (1,450)
<INVENTORY> 0
<CURRENT-ASSETS> 16,586
<PP&E> 2,172,650
<DEPRECIATION> (131,452)
<TOTAL-ASSETS> 2,154,692
<CURRENT-LIABILITIES> 72,719
<BONDS> 0
0
18
<COMMON> 366
<OTHER-SE> 1,047,398
<TOTAL-LIABILITY-AND-EQUITY> 2,154,692
<SALES> 0
<TOTAL-REVENUES> 76,214
<CGS> 0
<TOTAL-COSTS> (22,095)
<OTHER-EXPENSES> (16,530)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (14,761)
<INCOME-PRETAX> 22,531
<INCOME-TAX> 0
<INCOME-CONTINUING> 22,531
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,531
<EPS-PRIMARY> .45
<EPS-DILUTED> .45
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
FINANCIAL STATEMENTS OF FIRST INDUSTRIAL REALTY TRUST, INC. FOR THE THREE
MONTHS ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH (B) FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 46,143
<CGS> 0
<TOTAL-COSTS> (14,145)
<OTHER-EXPENSES> (10,477)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (8,331)
<INCOME-PRETAX> 11,834
<INCOME-TAX> 0
<INCOME-CONTINUING> 11,834
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,834
<EPS-PRIMARY> .36
<EPS-DILUTED> .36
</TABLE>
