<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, 2000
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
----------------------
Commission File Number 1-13102
----------------------
FIRST INDUSTRIAL REALTY TRUST, INC.
(Exact Name of Registrant as Specified in its Charter)
MARYLAND 36-3935116
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
311 S. WACKER DRIVE, SUITE 4000, CHICAGO, ILLINOIS 60606
(Address of Principal Executive Offices)
(312) 344-4300
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes /X/ No / /
Number of shares of Common Stock, $.01 par value, outstanding as of August 10,
2000: 38,951,296
<PAGE> 2
FIRST INDUSTRIAL REALTY TRUST, INC.
FORM 10-Q
FOR THE PERIOD ENDED JUNE 30, 2000
INDEX
-----
<TABLE>
<CAPTION>
PAGE
PART I: FINANCIAL INFORMATION ----
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 2000 and December 31, 1999...................... 2
Consolidated Statements of Operations for the Six Months Ended June 30, 2000
and June 30, 1999.......................................................................... 3
Consolidated Statements of Operations for the Three Months Ended June 30, 2000
and June 30,1999........................................................................... 4
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2000
and June 30, 1999.......................................................................... 5
Notes to Consolidated Financial Statements................................................. 6-13
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ........................................................ 14-21
Item 3. Quantitative and Qualitative Disclosures About Market Risk............................ 21
PART II: OTHER INFORMATION
Item 1. Legal Proceedings ................................................................... 22
Item 2. Changes in Securities ............................................................... 22
Item 3. Defaults Upon Senior Securities...................................................... 22
Item 4. Submission of Matters to a Vote of Security Holders ................................. 22
Item 5. Other Information ................................................................... 22
Item 6. Exhibits and Report on Form 8-K...................................................... 22
SIGNATURE ...................................................................................... 24
EXHIBIT INDEX .................................................................................. 25
</TABLE>
1
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRST INDUSTRIAL REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
---------------- ----------------
ASSETS
<S> <C> <C>
Assets:
Investment in Real Estate:
Land ................................................................. $ 349,050 $ 383,938
Buildings and Improvements ........................................... 1,828,183 2,131,807
Furniture, Fixtures and Equipment .................................... 1,437 1,437
Construction in Progress ............................................. 52,826 80,410
Less: Accumulated Depreciation ....................................... (201,125) (211,456)
---------------- ----------------
Net Investment in Real Estate ................................ 2,030,371 2,386,136
Real Estate Held for Sale, Net of Accumulated Depreciation and
Amortization of $37,774............................................... 390,245 --
Cash and Cash Equivalents ............................................. 5,509 2,609
Restricted Cash ....................................................... 28,257 2,352
Tenant Accounts Receivable, Net ....................................... 11,583 9,924
Investments in Joint Ventures ......................................... 6,078 6,408
Deferred Rent Receivable .............................................. 17,325 17,137
Deferred Financing Costs, Net ......................................... 12,963 11,581
Prepaid Expenses and Other Assets, Net ................................ 89,416 90,816
---------------- ----------------
Total Assets ................................................. $ 2,591,747 $ 2,526,963
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage Loans Payable, Net ........................................ $ 103,783 $ 104,951
Senior Unsecured Debt, Net ......................................... 948,735 948,688
Acquisition Facility Payable ....................................... 161,800 94,000
Accounts Payable and Accrued Expenses .............................. 73,623 78,946
Rents Received in Advance and Security Deposits .................... 22,213 22,014
Dividends/Distributions Payable .................................... 28,601 28,164
---------------- ----------------
Total Liabilities ............................................ 1,338,755 1,276,763
---------------- ----------------
Minority Interest ..................................................... 188,448 190,974
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, 2000 and December 31, 1999, 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 ($75,000), respectively............ 18 18
Common Stock ($.01 par value, 100,000,000 shares authorized, 38,901,761
and 38,152,811 shares issued and outstanding at June 30, 2000 and
December 31, 1999, respectively)................................... 389 382
Treasury Shares, at cost (17,500 shares at June 30, 2000)............. (477) ---
Additional Paid-in-Capital............................................. 1,196,363 1,177,364
Distributions in Excess of Accumulated Earnings........................ (119,962) (114,451)
Unearned Value of Restricted Stock Grants.............................. (11,787) (4,087)
---------------- ----------------
Total Stockholders' Equity.................................... 1,064,544 1,059,226
---------------- ----------------
Total Liabilities and Stockholders' Equity.................... $ 2,591,747 $ 2,526,963
================ ================
</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, 2000 June 30, 1999
---------------- ----------------
<S> <C> <C>
Revenues:
Rental Income....................................................... $ 148,636 $ 149,074
Tenant Recoveries and Other Income.................................. 40,778 40,347
---------------- ----------------
Total Revenues................................................... 189,414 189,421
---------------- ----------------
Expenses:
Real Estate Taxes................................................... 29,436 29,534
Repairs and Maintenance............................................. 8,829 9,849
Property Management................................................. 7,133 5,600
Utilities........................................................... 4,929 5,204
Insurance........................................................... 621 435
Other............................................................... 3,078 2,015
General and Administrative.......................................... 8,229 6,496
Interest Expense.................................................... 40,076 40,302
Amortization of Deferred Financing Costs............................ 899 604
Depreciation and Other Amortization................................. 35,162 34,373
---------------- ---------------
Total Expenses................................................... 138,392 134,412
---------------- ---------------
Income from Operations Before Equity in Income of Joint Ventures and
Income Allocated to Minority Interest............................... 51,022 55,009
Equity in Income of Joint Ventures..................................... 119 246
Income Allocated to Minority Interest.................................. (8,109) (7,695)
---------------- ----------------
Income from Operations................................................. 43,032 47,560
Gain on Sales of Real Estate........................................... 15,931 8,342
---------------- ----------------
Net Income............................................................. 58,963 55,902
Less: Preferred Stock Dividends....................................... (16,422) (16,422)
---------------- ----------------
Net Income Available to Common Stockholders............................ $ 42,541 $ 39,480
================ ================
Net Income Available to Common Stockholders Per Weighted Average
Common Share Outstanding:
Basic............................................................ $ 1.10 $ 1.04
================= ================
Diluted.......................................................... $ 1.10 $ 1.04
================= ================
</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, 2000 June 30, 1999
---------------- ----------------
<S> <C> <C>
Revenues:
Rental Income.......................................................... $ 74,507 $ 73,787
Tenant Recoveries and Other Income..................................... 19,759
---------------- ------------------
Total Revenues............................................... 94,266 93,993
---------------- ------------------
Expenses:
Real Estate Taxes...................................................... 14,131 14,706
Repairs and Maintenance................................................ 4,275 4,136
Property Management.................................................... 3,829 2,794
Utilities.............................................................. 2,314 2,284
Insurance.............................................................. 433 203
Other.................................................................. 1,624 1,000
General and Administrative............................................. 4,568 3,402
Interest Expense....................................................... 20,291 20,223
Amortization of Deferred Financing Costs............................... 471 339
Depreciation and Other Amortization.................................... 17,541 17,304
---------------- ------------------
Total Expenses.............................................. 69,477 66,391
---------------- ------------------
Income from Operations Before Equity in Income of Joint Ventures and
Income Allocated to Minority Interest.................................. 24,789 27,602
Equity in Income of Joint Ventures........................................ 88 120
Income Allocated to Minority Interest..................................... (4,310) (4,252)
---------------- ------------------
Income from Operations.................................................... 20,567 23,470
Gain on Sales of Real Estate.............................................. 10,057 6,797
---------------- ------------------
Net Income................................................................ 30,624 30,267
Less: Preferred Stock Dividends.......................................... (8,211) (8,211)
---------------- ------------------
Net Income Available to Common Stockholders.............................. $ 22,413 $ 22,056
================ ==================
Net Income Available to Common Stockholders Per Weighted Average
Common Share Outstanding:
Basic......................................................... $ .58 $ .58
================ ==================
Diluted....................................................... $ .58 $ .58
================ ==================
</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, 2000 June 30,1999
------------------- -------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income................................................. $ 58,963 $ 55,902
Income Allocated to Minority Interest ..................... 8,109 7,695
------------------- -------------------
Income Before Minority Interest............................ 67,072 63,597
Adjustments to Reconcile Net Income to Net Cash Provided
by Operating Activities:
Depreciation........................................... 31,693 31,412
Amortization of Deferred Financing Costs............... 899 604
Other Amortization .................................... 4,831 3,094
Provision for Bad Debt................................. 50 ---
Equity in Income of Joint Ventures..................... (119) (246)
Distributions from Joint Ventures...................... 119 246
Gain on Sales of Properties............................ (15,931) (8,342)
Increase in Tenant Accounts Receivable and Prepaid
Expenses and Other Assets, Net.................... (17,561) (7,178)
Increase in Deferred Rent Receivable................... (766) (2,515)
Decrease in Accounts Payable and Accrued Expenses and
Rents Received in Advance and Security Deposits... (1,449) (5,967)
Decrease (Increase) in Restricted Cash................. 53 (625)
-------------------- --------------------
Net Cash Provided by Operating Activities.... 68,891 74,080
-------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases and Additions to Investment in Real Estate....... (176,636) (95,245)
Net Proceeds from Sales of Investment in Real Estate....... 125,421 83,267
Contributions to and Investments in Joint Venture.......... (37) (778)
Distributions from Joint Venture........................... 367 119
Repayment of Mortgage Loans Receivable..................... 14,564 199
Increase in Restricted Cash ............................... (25,958) (27,917)
-------------------- --------------------
Net Cash Used in Investing Activities............ (62,279) (40,355)
-------------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Proceeds from Exercise of Employee Stock Options....... 6,667 59
Repayments on Mortgage Loans Payable....................... (1,130) (1,074)
Purchase of Treasury Shares................................ (477) ---
Purchase of U.S. Government Securities..................... (1,244) ---
Proceeds from Acquisition Facility Payable................. 111,000 56,600
Repayments on Acquisition Facility Payable................. (43,200) (33,300)
Dividends/Distributions.................................... (56,625) (54,227)
Preferred Stock Dividends.................................. (16,422) (16,422)
Cost of Debt Issuance...................................... (2,281) (646)
-------------------- --------------------
Net Cash Used in Financing Activities .......... (3,712) (49,010)
-------------------- --------------------
Net Increase (Decrease) in Cash and Cash Equivalents.......... 2,900 (15,285)
Cash and Cash Equivalents, Beginning of Period................ 2,609 21,823
-------------------- --------------------
Cash and Cash Equivalents, End of Period ..................... $ 5,509 $ 6,538
==================== ====================
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 7
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
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 84.3% ownership interest at June 30, 2000. As of June 30, 2000, the
Company owned 975 in-service properties located in 24 states, containing an
aggregate of approximately 68.3 million square feet of gross leasable area
("GLA") and two properties held for redevelopment. Of the 975 in-service
properties owned by the Company, 819 are held by the Operating Partnership, 99
are held by limited partnerships in which the Operating Partnership is the
limited partner and wholly-owned subsidiaries of the Company are the general
partners, 52 are held by limited liability companies of which the Operating
Partnership is the sole member and five are held by an entity in which the
Operating Partnership owns a 95% economic interest. The Company, through
wholly-owned limited liability companies of which the Operating Partnership is
the sole member, also owns 10% equity interests in, and provides asset and
property management services to, two joint ventures which invest in industrial
properties (the "September 1998 Joint Venture" and the "September 1999 Joint
Venture"). Minority interest in the Company at June 30, 2000 represents the
approximate 15.7% aggregate partnership interest in the Operating Partnership
held by the limited partners thereof.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited interim financial statements have been prepared
in accordance with the accounting policies described in the financial statements
and related notes included in the Company's 1999 Form 10-K and should be read in
conjunction with such financial statements and related notes. The following
notes to these interim financial statements highlight significant changes to the
notes included in the December 31, 1999 audited financial statements included in
the Company's 1999 Form 10-K and present interim disclosures as required by the
Securities and Exchange Commission.
In order to conform with generally accepted accounting principles,
management, in preparation of the Company's financial statements, is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities as of June 30,
2000 and December 31, 1999, and the reported amounts of revenues and expenses
for each of the six months and three months ended June 30, 2000 and 1999. Actual
results could differ from those estimates.
In the opinion of management, all adjustments consist of normal recurring
adjustments necessary for a fair statement of the financial position of the
Company as of June 30, 2000 and the results of its operations and its cash flows
for each of the six months and three months ended June 30, 2000 and 1999.
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 approximately $2,050 and $2,000 as of June
30, 2000 and December 31, 1999, respectively.
Reclassification:
Certain 1999 items have been reclassified to conform to the 2000
presentation.
6
<PAGE> 8
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
3. INVESTMENTS IN JOINT VENTURES
During the six months ended June 30, 2000, the Company, through
wholly-owned limited liability companies in which the Operating Partnership is
the sole member, received, in the aggregate, approximately $1,412 in asset
management and property management fees from the September 1998 Joint Venture
and the September 1999 Joint Venture. The Company, through a wholly-owned
limited liability company in which the Operating Partnership is the sole member,
received distributions of approximately $486 from the September 1998 Joint
Venture. As of June 30, 2000, the September 1998 Joint Venture owned 146
industrial properties comprising approximately 7.5 million square feet of GLA
and the September 1999 Joint Venture owned 39 industrial properties comprising
approximately 1.2 million square feet of GLA.
4. MORTGAGE LOANS, NET, SENIOR UNSECURED DEBT, NET AND ACQUISITION FACILITY
PAYABLE
Mortgage Loans, Net: On December 29, 1995, the Company, through an entity
in which the Operating Partnership is the sole limited partner and a
wholly-owned subsidiary of the Company is the general partner, entered into a
$40,200 mortgage loan (the "1995 Mortgage Loan"). In June 2000, the Company
purchased approximately $1.2 million of U.S. Government securities as substitute
collateral to execute a legal defeasance of approximately $1.2 million of the
1995 Mortgage Loan (the "1995 Defeased Mortgage Loan"). The 1995 Defeased
Mortgage Loan requires monthly principal and interest payments based upon a
28-year amortization schedule. The interest rate under the 1995 Defeased
Mortgage Loan is fixed at 7.22% per annum. The terms of the legal defeasance
require the Company to use the gross proceeds from the maturities of the U.S.
Government securities to paydown and subsequently retire the 1995 Defeased
Mortgage Loan in January 2003. Upon the execution of the legal defeasance, one
of the 23 properties collateralizing the 1995 Mortgage Loan was released and
subsequently sold .
Acquisition Facility:
In June 2000, the Company amended and restated the 1997 Unsecured
Acquisition Facility and entered into a $300,000 unsecured revolving credit
facility (the "2000 Unsecured Acquisition Facility") which initially bears
interest at LIBOR plus .80% or the Prime Rate at the Company's election and
provides for interest only payments until maturity. Under the 2000 Unsecured
Acquisition Facility, the Company has the right, subject to certain conditions,
to increase the aggregate commitment under the 2000 Unsecured Acquisition
Facility up to $400,000. The Company may borrow under the 2000 Unsecured
Acquisition Facility to finance the acquisition and development of additional
properties and for other corporate purposes, including to obtain additional
working capital. The 2000 Unsecured Acquisition Facility contains certain
financial covenants relating to debt service coverage, market value net worth,
dividend payout ratio and total funded indebtedness. The 2000 Unsecured
Acquisition Facility matures on June 30, 2003.
7
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FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
4. MORTGAGE LOANS, NET, SENIOR UNSECURED DEBT, NET AND ACQUISITION FACILITY
PAYABLE
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
2000 1999 2000 1999 2000 DATE
------------ ------------- ------------ -------------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C>
MORTGAGE LOANS PAYABLE, NET
1995 Mortgage Loan............ $ 37,648 $ 39,099 $ 151 $ 165 7.220% 1/11/26
1995 Defeased Mortgage Loan... 1,208 --- 5 --- 7.220% 1/11/03
CIGNA Loan. .................. 34,300 34,636 214 216 7.500% 4/01/03
Assumed Loans................. 8,173 8,343 --- 9.250% 1/01/13
LB Mortgage Loan II........... 705 705 --- 8.000% (1)
Acquisition Mortgage Loan I... 3,446 3,591 --- 8.500% 8/01/08
Acquisition Mortgage Loan II.. 7,533 7,630 --- 7.750% 4/01/06
Acquisition Mortgage Loan III. 3,284 3,350 --- 8.875% 6/01/03
Acquisition Mortgage Loan IV.. 2,392 2,423 --- 8.950% 10/01/06
Acquisition Mortgage Loan V... 2,761 (2) 2,793 (2) --- 9.010% 9/01/06
Acquisition Mortgage Loan VI.. 974 (2) 991 (2) --- 8.875% 11/01/06
Acquisition Mortgage Loan VII. 1,359 (2) 1,390 (2) --- 9.750% 3/15/02
----------- ------------ ------------- -----------
Total ........................ $ 103,783 $ 104,951 $ 370 $ 381
=========== ============ ============= ===========
SENIOR UNSECURED DEBT, NET
2005 Notes ................... $ 50,000 $ 50,000 $ 383 $ 383 6.900% 11/21/05
2006 Notes ................... 150,000 150,000 875 875 7.000% 12/01/06
2007 Notes ................... 149,964 (3) 149,961 (3) 1,457 1,457 7.600% 5/15/07
2011 Notes ................... 99,494 (3) 99,470 (3) 942 942 7.375% 5/15/11 (4)
2017 Notes ................... 99,833 (3) 99,828 (3) 625 625 7.500% 12/01/17
2027 Notes ................... 99,869 (3) 99,867 (3) 914 914 7.150% 5/15/27 (5)
2028 Notes ................... 199,779 (3) 199,776 (3) 7,009 7,009 7.600% 7/15/28
2011 Drs ..................... 99,796 (3) 99,786 (3) 1,553 1,553 6.500% (7) 4/05/11 (6)
----------- ------------ ------------- -----------
Total ....................... $ 948,735 $ 948,688 $ 13,758 $ 13,758
=========== ============ ============= ===========
ACQUISITION FACILITY PAYABLE
1997 Unsecured Acquisition
Facility.................... --- $ 94,000 $ --- $ 663 (8) (8)
=========== ============ ============= ===========
2000 Unsecured Acquisition
Facility.................... $ 161,800 $ --- $ 34 $ --- 7.5400% 6/30/03
=========== ============ ============= ===========
</TABLE>
(1) The maturity date of the LB Mortgage Loan II is based on a contingent
event relating to the environmental status of the property collateralizing
the loan.
(2) At June 30, 2000, the Acquisition Mortgage Loan V, the Acquisition Mortgage
Loan VI and the Acquisition Mortgage Loan VII are net of unamortized
premiums of $239, $53 and $49, respectively. At December 31, 1999, the
Acquisition Mortgage Loan V, the Acquisition Mortgage Loan VI and the
Acquisition Mortgage Loan VII are net of unamortized premiums of $258, $57
and $64, respectively.
(3) At June 30, 2000, the 2007 Notes, 2011 Notes, 2017 Notes, 2027 Notes, 2028
Notes and the 2011 Drs. are net of unamortized discounts of $36, $506,
$167, $131, $221 and $204, respectively. At December 31, 1999, the 2007
Notes, 2011 Notes, 2017 Notes, 2027 Notes, 2028 Notes and the 2011 Drs. are
net of unamortized discounts of $39, $530, $172, $133, $224 and $214,
respectively.
(4) The 2011 Notes are redeemable at the option of the holder thereof, on May
15, 2004.
(5) The 2027 Notes are redeemable at the option of the holders thereof, on May
15, 2002.
(6) The 2011 Drs. are required to be redeemed by the Operating Partnership on
April 5, 2001 if the Remarketing Dealer elects not to remarket the 2011
Drs.
(7) The 2011 Drs. bear interest at an annual rate of 6.50% to the Remarketing
Date. If the holder of the Call Option calls the 2011 Drs. and elects to
remarket the 2011 Drs., then after the Remarketing Date, the interest rate
on the 2011 Drs. will be reset at a fixed rate until April 5, 2011 based on
a predetermined formula as disclosed in the related Prospectus Supplement.
(8) The 1997 Unsecured Acquisition Facility was amended and restated in June
2000.
8
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FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
4. MORTGAGE LOANS, NET, SENIOR UNSECURED DEBT, NET AND ACQUISITION FACILITY
PAYABLE, CONTINUED
The following is a schedule of the stated maturities and scheduled
principal payments of the mortgage loans, senior unsecured debt and acquisition
facility payable for each of the next five years ending December 31, and
thereafter:
Amount
---------------
Remainder of 2000 $ 1,176
2001 2,507
2002 3,935
2003 200,135
2004 1,998
Thereafter 1,004,786
---------------
Total $ 1,214,537
===============
The maturity date of the LB Mortgage Loan II is based on a contingent
event. As a result, this loan is not included in the preceding table.
5. STOCKHOLDERS' EQUITY
Restricted Stock:
During the six months ended June 30, 2000, the Company awarded 355,139
shares of restricted common stock to certain employees and 1,833 shares of
restricted common stock to certain Directors. Other employees of the Company
converted certain in-the-money employee stock options to 14,903 shares of
restricted common stock. These shares of restricted common stock had a fair
value of approximately $9,634 on the date of grant. The restricted common stock
vests over periods from one to ten years. Compensation expense will be charged
to earnings over the respective vesting periods.
Treasury Stock:
In March 2000, the Company's Board of Directors approved the repurchase of
up to $100,000 of the Company's common stock. The Company may make purchases
from time to time, if price levels warrant, in the open market or in privately
negotiated transactions. During the second quarter of 2000, the Company
repurchased 17,500 shares of its common stock at a weighted average price per
share of approximately $27.24.
9
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FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
5. STOCKHOLDERS' EQUITY, continued
Dividends/Distributions:
The following table summarizes dividends/distributions for the six months
ended June 30, 2000:
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 1999 December 31, 1999 January 24, 2000 $ .6200 $ 28,164
First Quarter 2000 March 31, 2000 April 17, 2000 $ .6200 $ 28,462
Second Quarter 2000 June 30, 2000 July 17, 2000 $ .6200 $ 28,601
PREFERRED STOCK
First Quarter: Dividend Total
Record Date Payable Date per Share Dividend
----------------- ------------------ ----------------------- ---------------------
Series A Preferred Stock March 15, 2000 March 31, 2000 $ .59375 $ 980
Series B Preferred Stock March 15, 2000 March 31, 2000 $ 54.68750 $ 2,188
Series C Preferred Stock March 15, 2000 March 31, 2000 $ 53.90600 $ 1,078
Series D Preferred Stock March 15, 2000 March 31, 2000 $ 49.68700 $ 2,485
Series E Preferred Stock March 15, 2000 March 31, 2000 $ 49.37500 $ 1,480
Second Quarter: Dividend Total
Record Date Payable Date per Share Dividend
--------------- ----------------- ----------------------- ---------------------
Series A Preferred Stock June 15, 2000 June 30, 2000 $ .59375 $ 980
Series B Preferred Stock June 15, 2000 June 30, 2000 $ 54.68750 $ 2,188
Series C Preferred Stock June 15, 2000 June 30, 2000 $ 53.90600 $ 1,078
Series D Preferred Stock June 15, 2000 June 30, 2000 $ 49.68700 $ 2,485
Series E Preferred Stock June 15, 2000 June 30, 2000 $ 49.37500 $ 1,480
</TABLE>
6. ACQUISITION AND DEVELOPMENT OF REAL ESTATE
During the six months ended June 30, 2000, the Company acquired 29
industrial properties and several land parcels. The aggregate purchase price for
these acquisitions totaled approximately $100,200, excluding costs incurred in
conjunction with the acquisition of the properties. The Company also completed
the development of 13 industrial properties comprising approximately 2.2 million
square feet of GLA at a cost of approximately $76,323.
7. SALES OF REAL ESTATE
During the six months ended June 30, 2000, the Company sold 35 industrial
properties and several land parcels. Gross proceeds from these sales were
approximately $136,193. The gain on sales of real estate was approximately
$15,931.
10
<PAGE> 12
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
8. REAL ESTATE HELD FOR SALE
The Company has an active sales program through which it is continually
engaged in identifying and evaluating its current portfolio for potential sales
candidates. At June 30, 2000, the Company had 124 properties comprising
approximately 11.0 million square feet of GLA held for sale (of which, 110
properties comprising approximately 10.1 million square feet of GLA are in the
Company's exit markets). All of these properties were identified as held for
sale during the three months ended June 30, 2000. There can be no assurance that
such properties held for sale will be sold.
The following table discloses certain information regarding the 124
properties held for sale by the Company.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------------
2000 1999
------------- -------------
<S> <C> <C>
Total Revenues $ 31,706 $ 30,633
Operating Expenses (9,754) (9,756)
Depreciation and Amortization (5,744) (5,226)
------------- -------------
Income from Operations $ 16,208 15,651
============= =============
</TABLE>
9. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
Six Months Ended
--------------------------------------
June 30, June 30,
2000 1999
----------------- ----------------
<S> <C> <C>
Interest paid, net of capitalized interest .................. $ 40,716 $ 40,165
================= ================
Interest capitalized......................................... $ 2,747 $ 2,464
================= ================
Supplemental schedule of noncash investing and financing activities:
Distribution payable on common stock/units................... $ 28,601 $ 27,157
================= ================
Issuance of units in exchange for property...................... $ 869 $ ---
================ =================
Exchange of units for common shares:
Minority interest........................................... $ (2,488) $ (638)
Common stock................................................ 1 ---
Additional paid-in capital.................................. 2,487 638
---------------- -----------------
$ --- $ ---
================ =================
In conjunction with the property and land acquisitions, the
following assets and liabilities were assumed:
Purchase of real estate ..................................... $ 100,200 $ 30,638
Accrued real estate taxes and security deposits ............. (1,014) (44)
----------------- ----------------
$ 99,186 $ 30,594
================= ================
In conjunction with certain property sales, the Company provided
seller financing on behalf of certain buyers:
Notes receivable............................................. $ 5,149 $ 700
================= =================
</TABLE>
11
<PAGE> 13
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
10. EARNINGS PER SHARE
Earnings per share ("EPS") 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 Ended Three Months Ended
--------------------------------- ---------------------------------
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Numerator:
Net Income................................... $ 58,963 $ 55,902 $ 30,624 $ 30,267
Less: Preferred Stock Dividends.............. (16,422) (16,422) (8,211) (8,211)
--------------- -------------- -------------- --------------
Net Income Available to Common Stockholders
-For Basic and Diluted EPS................. $ 42,541 $ 39,480 $ 22,413 $ 22,056
=============== ============== ============== ==============
Denominator:
Weighted Average Shares - Basic.............. 38,559 38,000 38,737 38,037
Effect of Dilutive Securities:
Employee and Director Common Stock Opinions. 195 118 232 151
--------------- -------------- -------------- --------------
Weighted Average Shares- Diluted............. 38,754 38,118 38,969 38,188
=============== ============== ============== ==============
Basic EPS:
Net Income Available to Common Stockholders.. $ 1.10 $ 1.04 $ .58 $ .58
=============== ============== ============== ==============
Diluted EPS:
Net Income Available to Common Stockholders.. $ 1.10 $ 1.04 $ .58 $ .58
=============== ============== ============== ==============
</TABLE>
12
<PAGE> 14
FIRST INDUSTRIAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
11. 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 20 development projects
totaling approximately 2.3 million square feet of GLA for an estimated
investment of approximately $120.7 million. Of this amount, approximately $56.5
million remains to be funded. These developments are expected to be funded with
cash flow from operations, borrowings under the 2000 Unsecured Acquisition
Facility and proceeds from the sale of select properties of the Company.
12. SUBSEQUENT EVENTS
From July 1, 2000 to August 10, 2000, the Company acquired several land
parcels for an aggregate purchase price of approximately $5,278, excluding costs
incurred in conjunction with the acquisition of these land parcels. The Company
also sold 11 industrial properties for approximately $40,693 of gross proceeds.
On July 17, 2000, the Company and the Operating Partnership paid a second
quarter 2000 dividend/distribution of $.62 per common share/Unit, totaling
approximately $28,601.
13
<PAGE> 15
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.
This report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Company intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995, and is including this statement for purposes of complying with
those safe harbor provisions. Forward-looking statements, which are based on
certain assumptions and describe future plans, strategies and expectations of
the Company, are generally identifiable by use of the words "believe", "expect",
"intend", "anticipate", "estimate", "project" or similar expressions. The
Company's ability to predict results or the actual effect of future plans or
strategies is inherently uncertain. Factors which could have a material adverse
affect on the operations and future prospects of the Company on a consolidated
basis include, but are not limited to, changes in: economic conditions generally
and the real estate market specifically, legislative/regulatory changes
(including changes to laws governing the taxation of real estate investment
trusts), availability of capital, interest rates, competition, supply and demand
for industrial properties in the Company's current and proposed market areas and
general accounting principles, policies and guidelines applicable to real estate
investment trusts. These risks and uncertainties should be considered in
evaluating forward-looking statements and undue reliance should not be placed on
such statements. Further information concerning the Company and its business,
including additional factors that could materially affect the Company's
financial results, is included herein and in the Company's other filings with
the Securities and Exchange Commission.
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 84.3% ownership interest at June 30, 2000.
As of June 30, 2000, the Company owned 975 in-service properties located in 24
states, containing an aggregate of approximately 68.3 million square feet of
gross leasable area ("GLA") and two properties held for redevelopment. Of the
975 in-service properties owned by the Company, 819 are held by the Operating
Partnership, 99 are held by limited partnerships in which the Operating
Partnership is the limited partner and wholly-owned subsidiaries of the REIT are
the general partners, 52 are held by limited liability companies of which the
Operating Partnership is the sole member and five are held by an entity in which
the Operating Partnership owns a 95% economic interest. The Company, through
wholly-owned limited liability companies of which the Operating Partnership is
the sole member, also owns 10% equity interests in, and provides asset and
property management services to, two joint ventures which invest in industrial
properties (the "September 1998 Joint Venture" and the "September 1999 Joint
Venture"). Minority interest in the Company at June 30, 2000 represents the
approximate 15.7% aggregate partnership interest in the Operating Partnership
held by the limited partners thereof.
RESULTS OF OPERATIONS
At June 30, 2000, the Company owned 975 in-service properties with
approximately 68.3 million square feet of GLA, compared to 968 in-service
properties with approximately 67.5 million square feet of GLA at June 30, 1999.
During the period between July 1, 1999 and June 30, 2000, the Company acquired
46 properties containing approximately 3.8 million square feet of GLA, completed
development of 27 properties and expansion of one property totaling
approximately 4.7 million square feet of GLA and sold 65 in-service properties
totaling approximately 7.3 million square feet of GLA and several land parcels.
14
<PAGE> 16
The Company also took one property out of service which was subsequently sold
comprising approximately .4 million square feet of GLA.
The comparison of the six months ended June 30, 2000 to the six months
ended June 30, 1999 and the comparison of the three months ended June 30, 2000
to the three months ended June 30, 1999 is shown net of property acquisitions,
developments placed in service and property dispositions.
COMPARISON OF SIX MONTHS ENDED JUNE 30, 2000 TO SIX MONTHS ENDED JUNE 30, 1999
Rental income and tenant recoveries and other income remained relatively
unchanged. Rental income and tenant recoveries and other income from properties
owned prior to January 1, 1999 increased by approximately $5.7 million or 3.6%
due primarily to general rent increases and an increase in recoverable income
due to an increase in property expenses as discussed below.
Property expenses, which include real estate taxes, repairs and
maintenance, property management, utilities, insurance and other expenses
increased by approximately $1.4 million or 2.6% due primarily to increases in
property management expense and other expenses, offset by a decrease in repairs
and maintenance expense. The increase in property management expense is
primarily due to costs associated with the opening of a regional office in
California during the third quarter of 1999 as well as general pay increases.
Other expenses increased due primarily to an increase in master lease payments
associated with 15 properties during the six months ended June 30, 2000 as
compared to the six months ended June 30, 1999. The decrease in repairs and
maintenance expense is due to a decrease in snow removal and related expenses
incurred during the six months ended June 30, 2000 as compared to the six months
ended June 30, 1999. Property expenses from properties owned prior to January 1,
1999 increased $1.1 million or 2.5% due primarily to an increase in real estate
taxes and property management expense offset by a decrease in repairs and
maintenance.
General and administrative expense increased by approximately $1.7 million
due primarily to general pay increases and additional employees.
Interest expense decreased by approximately $.2 million for the six months
ended June 30, 2000 compared to the six months ended June 30, 1999 due primarily
to a lower average debt balance outstanding and an increase in capitalized
interest for the six months ended June 30, 2000. The increase in capitalized
interest was due to an increase in development activities. This was slightly
offset by an increase in the weighted average interest rate for the six months
ended June 30, 2000 (7.29%) compared to the six months ended June 30, 1999
(7.14%). The average debt balance outstanding for the six months ended June 30,
2000 and 1999 was approximately $1.18 billion and $1.21 billion, respectively.
Amortization of deferred financing costs increased by approximately $.3
million due primarily to amortization of additional deferred financing costs
relating to the Company's $300.0 million unsecured line of credit (the "1997
Unsecured Acquisition Facility").
Depreciation and other amortization increased by approximately $.8 million
due primarily to depreciation and amortization related to tenant improvements
incurred subsequent to December 31, 1998.
Equity in income of joint ventures remained relatively unchanged.
The $15.9 million gain on sales of properties for the six months ended June
30, 2000 resulted from the sale of 35 industrial properties and several land
parcels. Gross proceeds from these sales were approximately $136.2 million.
The $8.3 million gain on sales of properties for the six months ended June
30, 1999 resulted from the sale of 24 existing industrial properties, one
property under development and one land parcel. Gross proceeds from these sales
were approximately $84.0 million.
COMPARISON OF THREE MONTHS ENDED JUNE 30, 2000 TO THREE MONTHS ENDED JUNE 30,
1999
Rental income and tenant recoveries and other income remained relatively
unchanged. Rental income and tenant recoveries and other income from properties
owned prior to April 1, 1999 increased by approximately $2.9 million or 3.6% due
primarily to general rent increases and an increase in recoverable income due to
an increase in property expenses as discussed below.
15
<PAGE> 17
Property expenses, which include real estate taxes, repairs and
maintenance, property management, utilities, insurance and other expenses
increased by approximately $1.5 million or 5.9% due primarily to an increase in
property management expense and other expenses. The increase in property
management expense is primarily due to costs associated with the opening of a
regional office in California during the third quarter of 1999 as well as
general pay increases. Other expenses increased due primarily to an increase in
master lease payments associated with 12 properties during the three months
ended June 30, 2000 as compared to the three months ended June 30, 1999.
Property expenses from properties owned prior to April 1, 1999 increased
approximately $.4 million or 1.9% due primarily to an increase in repairs
and maintenance, property management expense and utilities expense.
General and administrative expense increased by approximately $1.2 million
due primarily to general pay increases and additional employees.
Interest expense remained relatively unchanged.
Amortization of deferred financing costs increased by approximately $.1
million due primarily to amortization of additional deferred financing costs
relating to the 1997 Unsecured Acquisition Facility.
Depreciation and other amortization increased by approximately $.2 million
due primarily to depreciation and amortization related to tenant improvements
incurred subsequent to March 31, 1999.
Equity in income of joint ventures remained relatively unchanged.
The $10.1 million gain on sales of properties for the three months ended
June 30, 2000 resulted from the sale of 24 industrial properties and several
land parcels. Gross proceeds from these sales were approximately $81.1 million.
The $6.8 million gain on sales of properties for the three months ended
June 30, 1999 resulted from the sale of 14 existing industrial properties and
one property under development. Gross proceeds from these sales were
approximately $60.1 million.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2000, the Company's cash and cash equivalents was approximately
$5.5 million and restricted cash was approximately $28.3 million. Included in
restricted cash are approximately $1.4 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 $26.9 million of gross proceeds from the sales of certain
properties. These sales proceeds will be disbursed as the Company exchanges into
properties under Section 1031 of the Internal Revenue Code.
SIX MONTHS ENDED JUNE 30, 2000
Net cash provided by operating activities of approximately $68.9 million
for the six months ended June 30, 2000 was comprised primarily of net income
before minority interest of approximately $67.1 million and adjustments for
non-cash items of approximately $20.8 million, offset by the net change in
operating assets and liabilities of approximately $19.0 million. The adjustments
for the non-cash items of approximately $20.8 million are primarily comprised of
depreciation and amortization of approximately $37.4 million and a provision for
bad debts of approximately $.1 million, offset by the gain on sales of
16
<PAGE> 18
properties of approximately $15.9 million and the effect of the straight-lining
of rental income of approximately $.8 million.
Net cash used in investing activities of approximately $62.3 million for
the six months ended June 30, 2000 was comprised primarily of the acquisition of
real estate, development of real estate, capital expenditures related to the
expansion and improvement of existing real estate and an increase in restricted
cash from sales proceeds deposited with an intermediary for Section 1031
exchange purposes, offset by the net proceeds from the sales of real estate,
distributions from the September 1998 Joint Venture and the repayment of
mortgage loans receivable.
Net cash used in financing activities of approximately $3.7 million for the
six months ended June 30, 2000 was comprised primarily of repayments on mortgage
loans payable, the purchase of treasury shares, the purchase of U.S. Government
securities used as substitute collateral to execute a legal defeasance of a
portion of the 1995 Mortgage Loan (the "1995 Defeased Mortgage Loan"), common
and preferred stock dividends and unit distributions and debt issuance costs
incurred in conjunction with the 2000 Unsecured Acquisition Facility (defined
below), offset by the net borrowings under the Company's 1997 Unsecured
Acquisition Facility and 2000 Unsecured Acquisition Facility (defined below) and
net proceeds from the exercise of employee stock options.
SIX MONTHS ENDED JUNE 30, 1999
Net cash provided by operating activities of approximately $74.1 million
for the six months ended June 30, 1999 was comprised primarily of net income
before minority interest of approximately $63.6 million and adjustments for
non-cash items of approximately $24.3 million, offset by the net change in
operating assets and liabilities of approximately $13.8 million. The adjustments
for the non-cash items of approximately $24.3 million are primarily comprised of
depreciation and amortization of approximately $35.1 million, offset by the gain
on sales of real estate of approximately $8.3 million and the effect of the
straight-lining of rental income of approximately $2.5 million.
Net cash used in investing activities of approximately $40.3 million for
the six months ended June 30, 1999 was comprised primarily of the acquisition of
real estate, development of real estate, capital expenditures related to the
expansion and improvement of existing real estate, investment in the September
1998 Joint Venture and an increase in restricted cash from sales proceeds
deposited with an intermediary for Section 1031 exchange purposes, offset by the
net proceeds from the sales of real estate, distributions from the September
1998 Joint Venture and the repayment of mortgage loans receivable.
Net cash used in financing activities of approximately $49.0 million for
the six months ended June 30, 1999 was comprised primarily of repayments on
mortgage loans payable and common and preferred stock dividends and
distributions, offset by the net borrowings under the Company's 1997 Unsecured
Acquisition Facility.
17
<PAGE> 19
MARKET RISK
The following discussion about the Company's risk-management activities
includes "forward-looking statements" that involve risk and uncertainties.
Actual results could differ materially from those projected in the
forward-looking statements.
This analysis presents the hypothetical gain or loss in earnings, cash
flows or fair value of the financial instruments and derivative instruments
which are held by the Company at June 30, 2000 that are sensitive to changes in
the interest rates. While this analysis may have some use as a benchmark, it
should not be viewed as a forecast.
In the normal course of business, the Company also faces risks that are
either non-financial or non-quantifiable. Such risks principally include credit
risk and legal risk and are not represented in the following analysis.
At June 30, 2000, $161.8 million (approximately 13.3% of total debt at June
30, 2000) of the Company's debt was variable rate debt (all of the variable rate
debt relates to the Company's 2000 Unsecured Acquisition Facility (defined
below)) and $1,052.5 million (approximately 86.7% of total debt at June 30,
2000) was fixed rate debt. The Company also had outstanding a written put and a
written call option (collectively, the "Written Options") which were issued in
conjunction with the initial offering of two tranches of unsecured debt. The
Company's past practice has been to lock into fixed interest rates at issuance
or fix the rate of variable rate debt through the use of interest rate
protection agreements when interest rate market conditions dictate it is
advantageous to do so. Currently, the Company does not enter into financial
instruments for trading or other speculative purposes.
18
<PAGE> 20
For fixed rate debt, changes in interest rates generally affect the fair
value of the debt, but not earnings or cash flows of the Company. Conversely,
for variable rate debt, changes in the interest rate generally do not impact the
fair value of the debt, but would affect the Company's future earnings and cash
flows. The interest rate risk and changes in fair market value of fixed rate
debt generally do not have a significant impact on the Company until the Company
is required to refinance such debt. See Note 4 to the consolidated financial
statements for a discussion of the maturity dates of the Company's various fixed
rate debt.
Based upon the amount of variable rate debt outstanding at June 30, 2000, a
10% increase or decrease in the interest rate on the Company's variable rate
debt would decrease or increase, respectively, future net income and cash flows
by approximately $1.2 million per year. A 10% increase in interest rates would
decrease the fair value of the fixed rate debt at June 30, 2000 by approximately
$48.6 million to $941.8 million. A 10% decrease in interest rates would increase
the fair value of the fixed rate debt at June 30, 2000 by approximately $54.0
million to $1,044.4 million. A 10% increase in interest rates would decrease the
fair value of the Written Options at June 30, 2000 by approximately $2.1 million
to $3.1 million. A 10% decrease in interest rates would increase the fair value
of the Written Options at June 30, 2000 by approximately $3.5 million to $8.7
million.
INVESTMENT IN REAL ESTATE, DEVELOPMENT OF REAL ESTATE AND SALES OF REAL ESTATE
During the six months ended June 30, 2000, the Company purchased 29
industrial properties and several land parcels, for an aggregate purchase price
of approximately $100.2 million, excluding costs incurred in conjunction with
the acquisition of the properties. The Company also completed the development of
13 industrial properties comprising approximately 2.2 million square feet of GLA
at a cost of approximately $76.3 million.
During the six months ended June 30, 2000, the Company sold 35 industrial
properties and several land parcels. Gross proceeds from these sales were
approximately $136.2 million.
The Company has committed to the construction of 20 development projects
totaling approximately 2.3 million square feet of GLA for an estimated
investment of approximately $120.7 million. Of this amount, approximately $56.5
million remains to be funded. These developments are expected to be funded with
cash flows from operations, borrowings under the Company's 2000 Unsecured
Acquisition Facility and proceeds from the sale of select properties of the
Company.
REAL ESTATE HELD FOR SALE
The Company has an active sales program through which it is continually
engaged in identifying and evaluating its current portfolio for potential sales
candidates. At June 30, 2000, the Company had 124 properties comprising
approximately 11.0 million square feet of GLA held for sale (of which, 110
properties comprising approximately 10.1 million square feet of GLA are in the
Company's exit markets). Income from operations of the 124 properties held for
sale for the six months ended June 30, 2000 and 1999 is approximately $16.2
million and $15.7 million, respectively. Net carrying value of the 124
properties held for sale at June 30, 2000 is approximately $390.2 million. All
of these properties were identified as held for sale during the three months
ended June 30, 2000. There can be no assurance that such properties held for
sale will be sold.
INVESTMENTS IN JOINT VENTURES
During the six months ended June 30, 2000, the Company, through
wholly-owned limited liability companies in which the Operating Partnership is
the sole member, received, in the aggregate, approximately $1.4 million in asset
management and property management fees from the September 1998 Joint Venture
and the September 1999 Joint Venture. The Company, through a wholly-owned
limited liability company in which the Operating Partnership is the sole member,
received distributions of approximately $.5 million from the September 1998
Joint Venture. As of June 30, 2000, the September 1998
19
<PAGE> 21
Joint Venture owned 146 industrial properties comprising approximately 7.5
million square feet of GLA and the September 1999 Joint Venture owned 39
industrial properties comprising approximately 1.2 million square feet of GLA.
MORTGAGE LOANS
On December 29, 1995, the Company, through an entity in which the Operating
Partnership is the sole limited partner and a wholly-owned subsidiary of the
Company is the general partner, entered into a $40.2 million mortgage loan (the
"1995 Mortgage Loan"). In June 2000, the Company purchased approximately $1.2
million of U.S. Government securities as substitute collateral to execute a
legal defeasance of approximately $1.2 million of the 1995 Mortgage Loan (the
"1995 Defeased Mortgage Loan"). The 1995 Defeased Mortgage Loan requires monthly
principal and interest payments based upon a 28-year amortization schedule. The
interest rate under the 1995 Defeased Mortgage Loan is fixed at 7.22% per annum.
The terms of the legal defeasance require the Company to use the gross proceeds
from the maturities of the U.S. Government securities to paydown and
subsequently retire the 1995 Defeased Mortgage Loan in January 2003. Upon the
execution of the legal defeasance, one of the 23 properties collateralizing the
1995 Mortgage Loan was released and subsequently sold .
ACQUISITION FACILITY PAYABLE
In June 2000, the Company amended and restated the 1997 Unsecured
Acquisition Facility and entered into a $300.0 million unsecured revolving
credit facility (the "2000 Unsecured Acquisition Facility") which initially
bears interest at LIBOR plus .80% or the Prime Rate at the Company's election,
and provides for interest only payments until maturity. Under the 2000 Unsecured
Acquisition Facility, the Company has the right, subject to certain conditions,
to increase the aggregate commitment under the 2000 Unsecured Acquisition
Facility up to $400.0 million. The Company may borrow under the 2000 Unsecured
Acquisition Facility to finance the acquisition and development of additional
properties and for other corporate purposes, including to obtain additional
working capital. The 2000 Unsecured Acquisition Facility contains certain
financial covenants relating to debt service coverage, market value net worth,
dividend payout ratio and total funded indebtedness. The 2000 Unsecured
Acquisition Facility matures on June 30, 2003.
ISSUANCE OF RESTRICTED STOCK
During the six months ended June 30, 2000, the Company awarded 355,139
shares of restricted common stock to certain employees and 1,833 shares of
restricted common stock to certain Directors. Other employees of the Company
converted certain in-the-money employee stock options to 14,903 shares of
restricted common stock. These shares of restricted common stock had a fair
value of approximately $9.6 million on the date of grant. The restricted common
stock vests over periods from one to ten years. Compensation expense will be
charged to earnings over the respective vesting periods.
TREASURY STOCK
In March 2000, the Company's Board of Directors approved the repurchase of
up to $100.0 million of the Company's common stock. The Company may make
purchases from time to time, if price levels warrant, in the open market or in
privately negotiated transactions. During the second quarter of 2000, the
Company repurchased 17,500 shares of its common stock at a weighted average
price per share of approximately $27.24.
DIVIDENDS/DISTRIBUTIONS
On January 24, 2000, the Company and the Operating Partnership paid a
fourth quarter 1999 distribution of $.62 per common share/Unit, totaling
approximately $28.2 million. On April 17, 2000, the Company and the Operating
Partnership paid a first quarter 2000 distribution of $.62 per common
share/Unit, totaling approximately $28.5 million.
20
<PAGE> 22
On March 31, 2000, the Company paid first quarter preferred stock dividends
of $.59375 per share on its Series A Preferred Stock, $54.688 per share
(equivalent to $.54688 per Depositary Share) on its Series B Preferred Stock,
$53.906 per share (equivalent to $.53906 per Depositary Share) on its Series C
Preferred Stock, $49.687 per share (equivalent to $.49687 per Depositary Share)
on its Series D Preferred Stock and $49.375 per share (equivalent to $.49375 per
Depositary Share) on its Series E Preferred Stock. The preferred stock dividends
paid on March 31, 2000 totaled, in the aggregate, approximately $8.2 million.
On June 30, 2000, the Company paid second quarter preferred stock dividends
of $.59375 per share on its Series A Preferred Stock, $54.688 per share
(equivalent to $.54688 per Depositary Share) on its Series B Preferred Stock,
$53.906 per share (equivalent to $.53906 per Depositary Share) on its Series C
Preferred Stock, $49.687 per share (equivalent to $.49687 per Depositary Share)
on its Series D Preferred Stock and $49.375 per share (equivalent to $.49375 per
Depositary Share) on its Series E Preferred Stock. The preferred stock dividends
paid on June 30, 2000 totaled, in the aggregate, approximately $8.2 million.
SUBSEQUENT EVENTS
From July 1, 2000 to August 10, 2000, the Company acquired several land
parcels for an aggregate purchase price of approximately $5.3 million, excluding
costs incurred in conjunction with the acquisition of these land parcels. The
Company also sold 11 industrial properties for approximately $40.7 million of
gross proceeds.
On July 17, 2000, the Company and the Operating Partnership paid a second
quarter 2000 dividend/distribution of $.62 per common share/Unit, totaling
approximately $28.6 million.
SHORT-TERM AND LONG-TERM LIQUIDITY NEEDS
The Company has considered its short-term (one year or less) liquidity
needs and the adequacy of its estimated cash flow from operations and other
expected liquidity sources to meet these needs. The Company believes that its
principal short-term liquidity needs are to fund normal recurring expenses, 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, developments, scheduled debt
maturities, major renovations, expansions and other nonrecurring capital
improvements through the disposition of select assets, long-term secured and
unsecured indebtedness and the issuance of additional equity securities. As of
June 30, 2000 and August 10, 2000, $589.2 million of common stock, preferred
stock and depositary shares and $100.0 million of debt securities were
registered and unissued under the Securities Act of 1933, as amended. The
Company also may finance the development or acquisition of additional properties
through borrowings under the 2000 Unsecured Acquisition Facility. At June 30,
2000, borrowings under the 2000 Unsecured Acquisition Facility bore interest at
a weighted average interest rate of 7.54%. As of August 10, 2000, the Company
had approximately $104.1 million available for additional borrowings under the
2000 Unsecured Acquisition Facility.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Response to this item is included in Item 2. "Management's Discussion
and Analysis of Financial Condition and Results of Operations" above.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 17, 2000, First Industrial Realty Trust, Inc. ("the Company") held its
Annual Meeting of Stockholders. At the meeting, three Class III directors of
the Company were elected to serve until the 2003 Annual Meeting of
Stockholders and until their respective successors are duly elected and
qualified. The votes cast for each director were as follows:
For election of John Rau
Votes for: 33,653,780
Votes withheld: 155,628
For election of Robert J. Slater
Votes for: 33,651,009
Votes withheld: 158,399
For election of W. Ed Tyler
Votes for: 33,649,839
Votes withheld: 159,569
In addition, the appointment of PricewaterhouseCoopers LLP, as independent
auditors of the Company for the fiscal year ending December 31, 2000 was
ratified at the meeting with 33,431,622 shares voting in favor, 45,434 shares
voting against and 332,352 shares abstaining.
Jay H. Shidler, John L. Lesher and J. Steven Wilson continue to serve as
Class I directors until their present terms expire in 2001 and their
successors are duly elected. Michael W. Brennan, Michael G. Damone and Kevin
W. Lynch continue to serve as Class II directors until their present terms
expire in 2002 and their successors are duly elected.
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS AND REPORT ON FORM 8-K
Exhibit No. Description
10.1* Amended and restated Unsecured Revolving Credit Agreement,
dated as of June 30, 2000 among First Industrial, L.P., First
Industrial Realty Trust, Inc. and Bank One, N.A., UBS AG, Stamford
Branch, Bank of America, N.A. and certain other banks
10.2 * Twelfth Amendment, dated as of June 27, 2000, to Sixth
Amended and Restated Limited Partnership Agreement of First
Industrial, L.P., dated March 18, 1998
10.3 * Employment Agreement , dated July 19, 2000, between First
Industrial Realty Trust, Inc. and Michael J. Havala
10.4 * Employment Agreement , dated July 26, 2000, between First
Industrial Realty Trust, Inc. and Johannson L. Yap
27 * Financial Data Schedule
* Filed herewith.
Report on Form 8-K
None
22
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--------------------------------------------------------------------------------
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
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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 10, 2000 By: /s/ Michael J. Havala
--------------------------------------------
Michael J. Havala
Chief Financial Officer
(Principal Financial and Accounting Officer)
24
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EXHIBIT INDEX
Exhibit No. Description
10.1* Amended and restated Unsecured Revolving Credit Agreement,
dated as of June 30, 2000 among First Industrial, L.P., First
Industrial Realty Trust, Inc. and Bank One, N.A., UBS AG, Stamford
Branch, Bank of America, N.A. and certain other banks
10.2 * Twelfth Amendment, dated as of June 27, 2000, to Sixth
Amended and Restated Limited Partnership Agreement of First
Industrial, L.P., dated March 18, 1998
10.3 * Employment Agreement , dated July 19, 2000, between First
Industrial Realty Trust, Inc. and Michael J. Havala
10.4 * Employment Agreement , dated July 26, 2000, between First
Industrial Realty Trust, Inc. and Johannson L. Yap
27 * Financial Data Schedule
* Filed herewith.
25
