Transcript Same Store NOI

First Industrial Realty Trust, Inc.
Mary Voss
December 2, 2004
Our Position
We paid $24.625 for 500 shares and
$24.75 for 500 shares on December 10,
1999
 The current stock price is $40.21
 Comprises approximately 13% of the
portfolio’s market value.
 Recommendation: Hold
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The Business
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Largest provider of diversified industrial real estate in
U.S.
Self-administered real estate investment trust that owns,
manages, acquires, sells and develops industrial real
estate
- Decentralized and locally based property management,
acquisition, sales and development functions
- Claims cost efficiencies of centralized acquisition, sales and
development support, capital markets expertise, asset management
and fiscal control systems
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In order to maintain its status as a REIT under the
Internal Revenue Code
- distributing at least 90% of its REIT taxable income
- $1.87 per share for 2003
Leasing
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57.9 million square feet of gross leasable area (GLA)
located in 22 states
Over 2,400 tenants engaged in different businesses
No one tenant provided for more than 1.7% of the rent
revenues
Most leases are between three and six years
- rent increases based on the Consumer Price Index
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Industrial tenants usually pay their percentage of the
property’s operating costs
- i.e. the costs of common area maintenance, property taxes and
insurance.
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As of December 31, 2003,
- 88% of the GLA of the industrial properties was leased
Integrated Industrial Solutions
Focused on the client’s supply chain
- improve the supply chain’s efficiency
and flexibility
 builds for, purchases from, and leases and
sells industrial properties to the client
 targets large and middle market
companies
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The Properties
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In business parks that have convenient access
to transportation systems
As of December 31, 2003, the Company's
portfolio consisted of:
- 423 light industrial properties
- 163 research and development/flex properties
- 123 bulk warehouse properties
- 92 regional warehouse properties
- 33 manufacturing properties
Weighted average age of properties was 17
years
The Properties
Diversified geographic exposure
- No single market provides more than 10% of its
annual rental income.
 During the third quarter:
- Acquired 2.8 million sq. ft. of properties for
$149.4 million, or approximately $42 per sq. ft.
- Developed 503,156 sq. ft. for $29.5 million or
$59 per sq. ft.
- Dispositions of only $69.1 million
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Financial Performance
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For third quarter:
- Diluted earnings per share was $0.82 compared to
$0.66 per share for the same quarter in 2003
- Increased occupancy 90 basis points, sixth consecutive
quarterly increase
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For the nine months:
- Revenues rose 2% to $242 million
- Net loss from continuing operations totaled $14.2
million
- Due to higher acquisition of properties, lower insurance
costs, higher interest income, absence of loss from early
retirement of debt and higher equity income of Joint
Ventures
Financial Performance
First Industrial had been a net seller of
assets for the past several quarters before
third quarter
 Of debt 87.5% is at a fixed rate
 Average maturity of over ten years.
 Maturing debt is less than $1 million in
2004, which is less than 1% of total debt.
 In 2005 is only 3.4% of debt matures.
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Same Store NOI - Year on Year % change
Stock Price Performance
Financial Analysis
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DCF model returned a price of $32.92
Several variables that can significantly change
this price
- Capital Expenditures
- Revenue Growth Rates
- Net Investment in Real Estate Growth Rates
- Depreciation figures
Lets look at the excel file
Competitors
Competitors
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Centerpoint Properties Trust; industrial properties in
the metropolitan Chicago, Illinois area
- Gross Margin (ttm):58.30%, Net Income (ttm): 35.59M
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EastGroup Properties Inc; industrial properties in
Sunbelt markets
- Gross Margin (ttm):71.61%, Net Income (ttm): 18.24M
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First Industrial
-Gross Margin (ttm):72.48%, Net Income (ttm):14.03M
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First Industrial is very diversified, while these
competitors are not as geographically diversified
REITs by Industry
Industry
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Ruled by general economic factors that govern
the economy
- Low U.S. dollar may increase industrial activity
thus increasing demand for industrial space
A strong private market for industrial real estate
has created a very favorable seller’s market
Redeploying capital has become a problem
Significant Development
October 13, 2004
 Build-to-suit agreement with the Ridge
Tool Company
 Ridge Tool is a subsidiary of Emerson
Electric
 Develop a 129,000-square-foot distribution
facility in Cambridge, Ohio
 Scheduled to be completed in summer
2005.
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More Funding
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October 4, 2004
Sold 1.25 million shares of its common stock at
$37.00 per share
- The sale’s net proceeds were $45.8 million
June 9, 2004
priced $125 million of 5.25% senior unsecured
notes due 2009 at 99.826 percent of par to yield
5.29%
Good News
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December 1, 2004
Board of directors declared a dividend of $0.695 per
share for the quarter ending December 31, 2004,
The new dividend rate ($2.78 annualized) up from
the previous dividend rate of $0.685 ($2.74
annualized)
- 1.5% increase
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"This dividend increase reflects our strong financial
position and positive outlook for our business," said
Michael W. Brennan, president and chief executive
officer.
Summary
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Recommendation: Hold
Good future prospects with the positive outlook
on the U.S. economy
Company is acquiring more funding for growth
Punished a little bit for not reporting according to
NAREIT’s standards
Why not buy more?
- Wait for 2004 fiscal year numbers
- Investigate competitors and the possibility of
investing in them