Company Quick10K Filing
Quick10K
First Industrial Realty Trust
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$34.48 126 $4,360
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-05-16 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2019-05-08 Shareholder Vote
8-K 2019-04-23 Earnings, Exhibits
8-K 2019-02-13 Earnings, Exhibits
8-K 2018-10-24 Earnings, Exhibits
8-K 2018-07-25 Earnings, Exhibits
8-K 2018-05-14 Shareholder Vote
8-K 2018-04-30 Other Events, Exhibits
8-K 2018-04-24 Earnings, Exhibits
8-K 2018-03-01 Officers
8-K 2018-02-21 Earnings, Exhibits
BP BP 141,270
PYPL PayPal 128,930
ROK Rockwell Automation 20,000
QSR Restaurant Brands 17,010
WAB Westinghouse Air Brake 11,620
SEB Seaboard 4,910
FNHC Fednat Holding 193
KEQU Kewaunee Scientific 62
XSNX Xsunx 0
LEXE Liberty Expedia Holdings 0
FR 2019-03-31
Part I: Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part Ii: Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 fr-2019331xex311.htm
EX-31.2 fr-2019331xex312.htm
EX-31.3 fr-2019331xex313.htm
EX-31.4 fr-2019331xex314.htm
EX-32.1 fr-2019331xex321.htm
EX-32.2 fr-2019331xex322.htm

First Industrial Realty Trust Earnings 2019-03-31

FR 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 fr-2019331x10q.htm 10-Q Document


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _______________________________
Form 10-Q
_______________________________
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2019
or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to            
Commission File Number: 1-13102 (First Industrial Realty Trust, Inc.)
333-21873 (First Industrial, L.P.)
  _______________________________
FIRST INDUSTRIAL REALTY TRUST, INC.
FIRST INDUSTRIAL, L.P.
(Exact name of Registrant as specified in its Charter)
 
Maryland (First Industrial Realty Trust, Inc.)
 
36-3935116 (First Industrial Realty Trust, Inc.)
Delaware (First Industrial, L.P.)
 
36-3924586 (First Industrial, L.P.)
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
1 N. Wacker Drive,
Suite 4200, Chicago, Illinois
 
60606
(Address of principal executive offices)
 
(Zip Code)
(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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
First Industrial Realty Trust, Inc.
Yes þ No o
First Industrial, L.P.
Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
First Industrial Realty Trust, Inc.
Yes þ No o
First Industrial, L.P.
Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
First Industrial Realty Trust, Inc.:
 
 
 
 
 
 
 
Large accelerated filer
 
þ
 
 
Accelerated filer
 
o
Non-accelerated filer
 
o
 
(Do not check if a smaller reporting company)
Smaller reporting company
 
o
Emerging growth company
 
o
 
 
 
 
 
First Industrial, L.P.:
 
 
 
 
 
 
 
Large accelerated filer
 
o
 
 
Accelerated filer
 
þ
Non-accelerated filer
 
o
 
(Do not check if a smaller reporting company)
Smaller reporting company
 
o
Emerging growth company
 
o
 
 
 
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
First Industrial Realty Trust, Inc.
Yes o No o
First Industrial, L.P.
Yes o No o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
First Industrial Realty Trust, Inc.
Yes o No þ
First Industrial, L.P.
Yes o No þ
At April 26, 2019, 126,484,695 shares of First Industrial Realty Trust, Inc.'s Common Stock, $0.01 par value, were outstanding. 
 






EXPLANATORY NOTE
This report combines the Quarterly Reports on Form 10-Q for the period ended March 31, 2019 of First Industrial Realty Trust, Inc., a Maryland corporation (the "Company"), and First Industrial, L.P., a Delaware limited partnership (the "Operating Partnership"). Unless stated otherwise or the context otherwise requires, the terms "we," "our" and "us" refer to the Company and its subsidiaries, including the Operating Partnership and its consolidated subsidiaries.
The Company is a real estate investment trust and the general partner of the Operating Partnership. At March 31, 2019, the Company owned an approximate 97.8% common general partnership interest in the Operating Partnership. The remaining approximate 2.2% common limited partnership interests in the Operating Partnership are owned by limited partners. The limited partners of the Operating Partnership are persons or entities who contributed their direct or indirect interests in properties to the Operating Partnership in exchange for common units of limited partnership interests in the Operating Partnership and/or recipients of LTIP Units (See Note 9) of the Operating Partnership pursuant to the Company's stock incentive plan. As the sole general partner of the Operating Partnership, the Company exercises exclusive and complete discretion over the Operating Partnership's day-to-day management and control and can cause it to enter into certain major transactions, including acquisitions, dispositions and refinancings. The management of the Company consists of the same members as the management of the Operating Partnership.
The Company and the Operating Partnership are managed and operated as one enterprise. The financial results of the Operating Partnership are consolidated into the financial statements of the Company. The Company has no significant assets other than its investment in the Operating Partnership. Substantially all of the Company's assets are held by, and its operations are conducted through, the Operating Partnership and its subsidiaries. Therefore, the assets and liabilities of the Company and the Operating Partnership are substantially the same.
We believe it is important to understand the differences between the Company and the Operating Partnership in the context of how the Company and the Operating Partnership operate as an interrelated, consolidated company. The main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership are:
Stockholders' Equity, Noncontrolling Interest and Partners' Capital. The 2.2% equity interest in the Operating Partnership held by entities other than the Company is classified within partners' capital in the Operating Partnership's financial statements and as a noncontrolling interest in the Company's financial statements.
Relationship to Other Real Estate Partnerships. The Company's operations are conducted primarily through the Operating Partnership and its subsidiaries, although operations are also conducted through eight other limited partnerships, which are referred to as the "Other Real Estate Partnerships." The Operating Partnership is a limited partner, holding at least a 99% interest, and the Company is a general partner, holding at least a .01% general partnership interest through eight separate wholly-owned corporations, in each of the Other Real Estate Partnerships. The Other Real Estate Partnerships are variable interest entities that both the Company and the Operating Partnership consolidate. The Company's direct general partnership interest in the Other Real Estate Partnerships is reflected as noncontrolling interest within the Operating Partnership's financial statements.
Relationship to Service Subsidiary. The Company has a direct wholly-owned subsidiary that does not own any real estate but provides services to various other entities owned by the Company. Since the Operating Partnership does not have an ownership interest in this entity, its operations are reflected in the consolidated results of the Company but not the Operating Partnership. Also, this entity owes certain amounts to the Operating Partnership, for which a receivable is included on the Operating Partnership's balance sheet but is eliminated on the Company's consolidated balance sheet, since both this entity and the Operating Partnership are fully consolidated by the Company.
We believe combining the Company's and Operating Partnership's quarterly reports into this single report results in the following benefits:
enhances investors' understanding of the Company and the Operating Partnership by enabling them to view the business as a whole and in the same manner as management views and operates the business;
creates time and cost efficiencies through the preparation of one combined report instead of two separate reports; and
eliminates duplicative disclosures and provides a more streamlined and readable presentation for our investors to review since a substantial portion of the Company's disclosure applies to both the Company and the Operating Partnership.
To help investors understand the differences between the Company and the Operating Partnership, this report provides the following separate disclosures for each of the Company and the Operating Partnership:
consolidated financial statements;
a single set of consolidated notes to such financial statements that includes separate discussions of each entity's stockholders' equity or partners' capital, as applicable; and
a combined Management's Discussion and Analysis of Financial Condition and Results of Operations section that includes distinct information related to each entity.




This report also includes separate Part I, Item 4, Controls and Procedures sections and separate Exhibit 31 and 32 certifications for the Company and the Operating Partnership in order to establish that the requisite certifications have been made and that the Company and the Operating Partnership are both compliant with Rule 13a-15 and Rule 15d-15 of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350.




FIRST INDUSTRIAL REALTY TRUST, INC. AND FIRST INDUSTRIAL, L.P.
FORM 10-Q
FOR THE PERIOD ENDED MARCH 31, 2019
INDEX
 
 
 
Page
 
First Industrial Realty Trust, Inc.
 
 
 
 
 
 
 
First Industrial, L.P.
 
 
 
 
 
 
 
First Industrial Realty Trust, Inc. and First Industrial, L.P.
 
 



2



PART I: FINANCIAL INFORMATION 
Item 1.
Financial Statements
FIRST INDUSTRIAL REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

 
March 31, 2019
 
December 31, 2018
 
(Unaudited)
 
 
ASSETS
 
 
 
Assets:
 
 
 
Investment in Real Estate:
 
 
 
Land
$
916,235

 
$
909,318

Buildings and Improvements
2,714,983

 
2,704,850

Construction in Progress
93,767

 
59,476

Less: Accumulated Depreciation
(826,048
)
 
(811,784
)
Net Investment in Real Estate
2,898,937

 
2,861,860

Operating Lease Right-of-Use Assets
12,032

 

Cash and Cash Equivalents
20,422

 
43,102

Restricted Cash
10,467

 
7,271

Tenant Accounts Receivable, Net
6,335

 
5,185

Investment in Joint Venture
21,419

 
23,326

Deferred Rent Receivable, Net
74,099

 
71,079

Deferred Leasing Intangibles, Net
28,075

 
29,678

Prepaid Expenses and Other Assets, Net
106,868

 
101,190

Total Assets
$
3,178,654

 
$
3,142,691

LIABILITIES AND EQUITY
 
 
 
Liabilities:
 
 
 
Indebtedness:
 
 
 
Mortgage Loans Payable, Net
$
222,774

 
$
296,470

Senior Unsecured Notes, Net
544,609

 
544,504

Unsecured Term Loans, Net
457,073

 
456,809

Unsecured Credit Facility
102,000

 

Accounts Payable, Accrued Expenses and Other Liabilities
89,576

 
78,665

Operating Lease Liabilities
12,369

 

Deferred Leasing Intangibles, Net
9,185

 
9,560

Rents Received in Advance and Security Deposits
44,965

 
47,927

Dividends and Distributions Payable
30,139

 
28,845

Total Liabilities
1,512,690

 
1,462,780

Commitments and Contingencies

 

Equity:
 
 
 
First Industrial Realty Trust Inc.'s Stockholders' Equity:
 
 
 
Common Stock ($0.01 par value, 225,000,000 shares authorized and 126,484,695 and 126,307,431 shares issued and outstanding)
1,265

 
1,263

Additional Paid-in-Capital
2,127,707

 
2,131,556

Distributions in Excess of Accumulated Earnings
(497,958
)
 
(490,807
)
Accumulated Other Comprehensive (Loss) Income
(2,695
)
 
3,502

Total First Industrial Realty Trust, Inc.'s Stockholders' Equity
1,628,319

 
1,645,514

Noncontrolling Interest
37,645

 
34,397

Total Equity
1,665,964

 
1,679,911

Total Liabilities and Equity
$
3,178,654

 
$
3,142,691

The accompanying notes are an integral part of the consolidated financial statements.

3



FIRST INDUSTRIAL REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except per share data)

 
Three Months Ended March 31, 2019
 
Three Months Ended March 31, 2018
Revenues:
 
 
 
Lease Revenue
$
103,638

 
$
99,040

Other Revenue
903

 
731

Total Revenues
104,541

 
99,771

Expenses:
 
 
 
Property Expenses
30,168

 
29,411

General and Administrative
6,802

 
8,143

Impairment of Real Estate

 
2,756

Depreciation and Other Amortization
30,055

 
28,315

Total Expenses
67,025

 
68,625

Other (Expense) Income:
 
 
 
(Loss) Gain on Sale of Real Estate
(208
)
 
20,089

Interest Expense
(12,767
)
 
(12,791
)
Amortization of Debt Issuance Costs
(831
)
 
(855
)
Loss from Retirement of Debt

 
(39
)
Total Other (Expense) Income
(13,806
)
 
6,404

Income from Operations Before Equity in Income of Joint Venture and Income Tax Provision
23,710

 
37,550

Equity in Income of Joint Venture
844

 

Income Tax Provision
(214
)
 
(86
)
Net Income
24,340

 
37,464

Less: Net Income Attributable to the Noncontrolling Interest
(537
)
 
(1,172
)
Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders and Participating Securities
$
23,803

 
$
36,292

Basic and Diluted Earnings Per Share:
 
 
 
Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders
$
0.19

 
$
0.30

Weighted Average Shares Outstanding - Basic
126,194

 
119,846

Weighted Average Shares Outstanding - Diluted
126,456

 
120,211

The accompanying notes are an integral part of the consolidated financial statements.


4



FIRST INDUSTRIAL REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited; in thousands)

 
Three Months Ended March 31, 2019
 
Three Months Ended March 31, 2018
Net Income
$
24,340

 
$
37,464

Mark-to-Market (Loss) Gain on Derivative Instruments
(6,354
)
 
6,525

Amortization of Derivative Instruments
24

 
24

Comprehensive Income
18,010

 
44,013

Comprehensive Income Attributable to Noncontrolling Interest
(397
)
 
(1,378
)
Comprehensive Income Attributable to First Industrial Realty Trust, Inc.
$
17,613

 
$
42,635

The accompanying notes are an integral part of the consolidated financial statements.


5



FIRST INDUSTRIAL REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited; in thousands)




Three Months Ended March 31, 2019:

Common
Stock
 
Additional
Paid-in-
Capital
 
Distributions
in Excess of
Accumulated
Earnings
 
Accumulated
Other
Comprehensive
(Loss) Income
 
Noncontrolling
Interest
 
Total
Balance as of December 31, 2018
$
1,263

 
$
2,131,556

 
$
(490,807
)
 
$
3,502

 
$
34,397

 
$
1,679,911

Net Income

 

 
23,803

 

 
537

 
24,340

Other Comprehensive Loss

 

 

 
(6,190
)
 
(140
)
 
(6,330
)
Stock Based Compensation Activity
2

 
(611
)
 
(1,696
)
 

 
270

 
(2,035
)
Common Stock Dividends and Unit Distributions

 

 
(29,258
)
 

 
(664
)
 
(29,922
)
Reallocation - Additional Paid-in-Capital

 
(3,238
)
 

 

 
3,238

 

Reallocation - Other Comprehensive Income

 

 

 
(7
)
 
7

 

Balance as of March 31, 2019
$
1,265

 
$
2,127,707

 
$
(497,958
)
 
$
(2,695
)
 
$
37,645

 
$
1,665,964


Three Months Ended March 31, 2018:

 
 
 
 
 
 
 
 
 
 
 
Balance as of December 31, 2017
$
1,199

 
$
1,967,110

 
$
(541,847
)
 
$
1,338

 
$
48,077

 
$
1,475,877

Net Income

 

 
36,292

 

 
1,172

 
37,464

Other Comprehensive Income

 

 

 
6,366

 
183

 
6,549

Stock Based Compensation Activity
3

 
(1,106
)
 
(3,282
)
 

 

 
(4,385
)
Common Stock Dividends and Unit Distributions

 

 
(26,332
)
 

 
(775
)
 
(27,107
)
Conversion of Limited Partner Units to Common Stock
4

 
5,005

 

 

 
(5,009
)
 

Retirement of Limited Partner Units

 

 

 

 
(934
)
 
(934
)
Reallocation - Additional Paid-in-Capital

 
(292
)
 

 

 
292

 

Balance as of March 31, 2018
$
1,206

 
$
1,970,717

 
$
(535,169
)
 
$
7,704

 
$
43,006

 
$
1,487,464

The accompanying notes are an integral part of the consolidated financial statements.

6



FIRST INDUSTRIAL REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)
 
Three Months Ended March 31, 2019
 
Three Months Ended March 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net Income
$
24,340

 
$
37,464

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
 
 
 
Depreciation
24,376

 
22,953

Amortization of Debt Issuance Costs
831

 
855

Other Amortization, including Stock Based Compensation
7,022

 
6,626

Impairment of Real Estate

 
2,756

Provision for Bad Debt

 
88

Equity in Income of Joint Venture
(844
)
 

Distributions from Joint Venture
568

 

Loss (Gain) on Sale of Real Estate
208

 
(20,089
)
Loss from Retirement of Debt

 
39

Increase in Tenant Accounts Receivable, Prepaid Expenses and Other Assets, Net and Operating Lease Right-of-Use Assets
(18,421
)
 
(6,706
)
Increase in Deferred Rent Receivable, Net
(3,028
)
 
(713
)
Increase (Decrease) in Accounts Payable, Accrued Expenses, Other Liabilities, Rents Received in Advance and Security Deposits and Operating Lease Liabilities
6,677

 
(6,249
)
Net Cash Provided by Operating Activities
41,729

 
37,024

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Acquisitions of Real Estate
(18,499
)
 
(49,865
)
Additions to Investment in Real Estate and Non-Acquisition Tenant Improvements and Lease Costs
(43,402
)
 
(63,994
)
Net Proceeds from Sales of Investments in Real Estate
9,793

 
41,691

Distributions from Joint Venture
2,175

 

Other Investing Activity
(7,048
)
 
(3,053
)
Net Cash Used in Investing Activities
(56,981
)
 
(75,221
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Financing and Equity Issuance Costs

 
(2,676
)
Tax paid on Shares Withheld
(4,384
)
 
(6,020
)
Common Stock Dividends and Unit Distributions Paid
(28,042
)
 
(26,565
)
Repayments on Mortgage Loans Payable
(73,806
)
 
(160,163
)
Proceeds from Senior Unsecured Notes

 
300,000

Proceeds from Unsecured Credit Facility
121,000

 
162,000

Repayments on Unsecured Credit Facility
(19,000
)
 
(206,500
)
Net Cash (Used in) Provided by Financing Activities
(4,232
)
 
60,076

Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash
(19,484
)
 
21,879

Cash, Cash Equivalents and Restricted Cash, Beginning of Year
50,373

 
46,482

Cash, Cash Equivalents and Restricted Cash, End of Period
$
30,889

 
$
68,361

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FIRST INDUSTRIAL REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited; in thousands)
 
Three Months Ended March 31, 2019
 
Three Months Ended March 31, 2018
SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS:
 
 
 
Interest Expense Capitalized in Connection with Development Activity
$
944

 
$
1,602

Cash Paid for Operating Lease Liabilities
$
268

 
$

Supplemental Schedule of Non-Cash Operating Activities:
 
 
 
Operating Lease Liabilities Arising from Obtaining Right-of-Use Assets
$
12,400

 
$

Supplemental Schedule of Non-Cash Investing and Financing Activities:
 
 
 
Common Stock Dividends and Unit Distributions Payable
$
30,139

 
$
27,558

Exchange of Limited Partnership Units for Common Stock:
 
 
 
Noncontrolling Interest
$

 
$
(5,009
)
Common Stock

 
4

Additional Paid-in-Capital

 
5,005

Total
$

 
$

Assumption of Indebtedness and Other Liabilities in Connection with the Acquisition of Real Estate
$

 
$
11,724

Accounts Payable Related to Construction in Progress and Additions to Investment in Real Estate
$
43,002

 
$
32,006

Write-off of Fully Depreciated Assets
$
(11,176
)
 
$
(13,663
)
The accompanying notes are an integral part of the consolidated financial statements.

7



FIRST INDUSTRIAL, L.P.
CONSOLIDATED BALANCE SHEETS
(In thousands, except Unit data)

 
March 31, 2019
 
December 31, 2018
 
(Unaudited)
 
 
ASSETS
 
 
 
Assets:
 
 
 
Investment in Real Estate:
 
 
 
Land
$
916,235

 
$
909,318

Buildings and Improvements
2,714,983

 
2,704,850

Construction in Progress
93,767

 
59,476

Less: Accumulated Depreciation
(826,048
)
 
(811,784
)
Net Investment in Real Estate (including $258,041 and $260,528 related to consolidated variable interest entities, see Note 5)
2,898,937

 
2,861,860

Operating Lease Right-of-Use Assets
12,032

 

Cash and Cash Equivalents
20,422

 
43,102

Restricted Cash
10,467

 
7,271

Tenant Accounts Receivable, Net
6,335

 
5,185

Investment in Joint Venture
21,419

 
23,326

Deferred Rent Receivable, Net
74,099

 
71,079

Deferred Leasing Intangibles, Net
28,075

 
29,678

Prepaid Expenses and Other Assets, Net
116,933

 
111,298

Total Assets
$
3,188,719

 
$
3,152,799

LIABILITIES AND PARTNERS' CAPITAL
 
 
 
Liabilities:
 
 
 
Indebtedness:
 
 
 
Mortgage Loans Payable, Net (including $13,251 and $20,497 related to consolidated variable interest entities, see Note 5)
$
222,774

 
$
296,470

Senior Unsecured Notes, Net
544,609

 
544,504

Unsecured Term Loans, Net
457,073

 
456,809

Unsecured Credit Facility
102,000

 

Accounts Payable, Accrued Expenses and Other Liabilities
89,576

 
78,665

Operating Lease Liabilities
12,369

 

Deferred Leasing Intangibles, Net
9,185

 
9,560

Rents Received in Advance and Security Deposits
44,965

 
47,927

Distributions Payable
30,139

 
28,845

Total Liabilities
1,512,690

 
1,462,780

Commitments and Contingencies

 

Partners' Capital:
 
 
 
First Industrial, L.P.'s Partners' Capital:
 
 
 
General Partner Units (126,484,695 and 126,307,431 units outstanding)
1,611,556

 
1,619,342

Limited Partners Units (2,906,225 and 2,624,167 units outstanding)
66,389

 
66,246

Accumulated Other Comprehensive (Loss) Income
(2,756
)
 
3,574

Total First Industrial L.P.'s Partners' Capital
1,675,189

 
1,689,162

Noncontrolling Interest
840

 
857

Total Partners' Capital
1,676,029

 
1,690,019

Total Liabilities and Partners' Capital
$
3,188,719

 
$
3,152,799

The accompanying notes are an integral part of the consolidated financial statements.

8



FIRST INDUSTRIAL L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except per Unit data)

 
Three Months Ended March 31, 2019
 
Three Months Ended March 31, 2018
Revenues:
 
 
 
Lease Revenue
103,638

 
$
99,040

Other Revenue
903

 
731

Total Revenues
104,541

 
99,771

Expenses:
 
 
 
Property Expenses
30,168

 
29,411

General and Administrative
6,802

 
8,143

Impairment of Real Estate

 
2,756

Depreciation and Other Amortization
30,055

 
28,315

Total Expenses
67,025

 
68,625

Other (Expense) Income:
 
 
 
(Loss) Gain on Sale of Real Estate
(208
)
 
20,089

Interest Expense
(12,767
)
 
(12,791
)
Amortization of Debt Issuance Costs
(831
)
 
(855
)
Loss from Retirement of Debt

 
(39
)
Total Other (Expense) Income
(13,806
)
 
6,404

Income from Operations Before Equity in Income of Joint Venture and Income Tax Provision
23,710

 
37,550

Equity in Income of Joint Venture
844

 

Income Tax Provision
(214
)
 
(86
)
Net Income
24,340

 
37,464

Less: Net Income Attributable to the Noncontrolling Interest
(26
)
 
(21
)
Net Income Available to Unitholders and Participating Securities
$
24,314

 
$
37,443

Basic and Diluted Earnings Per Unit:
 
 

Net Income Available to Unitholders
$
0.19

 
$
0.30

Weighted Average Units Outstanding - Basic
128,818

 
123,729

Weighted Average Units Outstanding - Diluted
129,178

 
124,094

The accompanying notes are an integral part of the consolidated financial statements.



9



FIRST INDUSTRIAL L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited; in thousands)

 
Three Months Ended March 31, 2019
 
Three Months Ended March 31, 2018
Net Income
$
24,340

 
$
37,464

Mark-to-Market (Loss) Gain on Derivative Instruments
(6,354
)
 
6,525

Amortization of Derivative Instruments
24

 
24

Comprehensive Income
$
18,010

 
$
44,013

Comprehensive Income Attributable to Noncontrolling Interest
(26
)
 
(21
)
Comprehensive Income Attributable to Unitholders
$
17,984

 
$
43,992

The accompanying notes are an integral part of the consolidated financial statements.


10



FIRST INDUSTRIAL, L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(Unaudited; in thousands)




Three Months Ended March 31, 2019:

General
Partner
Units
 
Limited
Partner
Units
 
Accumulated
Other
Comprehensive
(Loss) Income
 
Noncontrolling Interest
 
Total
Balance as of December 31, 2018
$
1,619,342

 
$
66,246

 
$
3,574

 
$
857

 
$
1,690,019

Net Income
23,777

 
537

 

 
26

 
24,340

Other Comprehensive Loss

 

 
(6,330
)
 

 
(6,330
)
Stock Based Compensation Activity
(2,305
)
 
270

 

 

 
(2,035
)
Unit Distributions
(29,258
)
 
(664
)
 

 

 
(29,922
)
Distributions to Noncontrolling Interest

 

 

 
(43
)
 
(43
)
Balance as of March 31, 2019
$
1,611,556

 
$
66,389

 
$
(2,756
)
 
$
840

 
$
1,676,029


Three Months Ended March 31, 2018:

 
 
 
 
 
 
 
 
 
Balance as of December 31, 2017
$
1,401,583

 
$
82,251

 
$
1,382

 
$
779

 
$
1,485,995

Net Income
36,271

 
1,172

 

 
21

 
37,464

Other Comprehensive Income

 

 
6,549

 

 
6,549

Stock Based Compensation Activity
(4,385
)
 

 

 

 
(4,385
)
Unit Distributions
(26,332
)
 
(775
)
 

 

 
(27,107
)
Conversion of Limited Partner Units to General Partner Units
5,009

 
(5,009
)
 

 

 

Retirement of Limited Partner Units

 
(934
)
 

 

 
(934
)
Contributions from Noncontrolling Interest

 

 

 
116

 
116

Distributions to Noncontrolling Interest

 

 

 
(21
)
 
(21
)
Balance as of March 31, 2018
$
1,412,146

 
$
76,705

 
$
7,931

 
$
895

 
$
1,497,677

The accompanying notes are an integral part of the consolidated financial statements.


11



FIRST INDUSTRIAL, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)
 
Three Months Ended March 31, 2019
 
Three Months Ended March 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net Income
$
24,340

 
$
37,464

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
 
 
 
Depreciation
24,376

 
22,953

Amortization of Debt Issuance Costs
831

 
855

Other Amortization, including Stock Based Compensation
7,022

 
6,626

Impairment of Real Estate

 
2,756

Provision for Bad Debt

 
88

Equity in Income of Joint Venture
(844
)
 

Distributions from Joint Venture
568

 

Loss (Gain) on Sale of Real Estate
208

 
(20,089
)
Loss from Retirement of Debt

 
39

Increase in Tenant Accounts Receivable, Prepaid Expenses and Other Assets, Net and Operating Lease Right-of-Use Assets
(18,378
)
 
(6,801
)
Increase in Deferred Rent Receivable, Net
(3,028
)
 
(713
)
Increase (Decrease) in Accounts Payable, Accrued Expenses, Other Liabilities, Rents Received in Advance and Security Deposits and Operating Lease Liabilities
6,677

 
(6,249
)
Net Cash Provided by Operating Activities
41,772

 
36,929

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Acquisitions of Real Estate
(18,499
)
 
(49,865
)
Additions to Investment in Real Estate and Non-Acquisition Tenant Improvements and Lease Costs
(43,402
)
 
(63,994
)
Net Proceeds from Sales of Investments in Real Estate
9,793

 
41,691

Distributions from Joint Venture
2,175

 

Other Investing Activity
(7,048
)
 
(3,053
)
Net Cash Used in Investing Activities
(56,981
)
 
(75,221
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Financing and Equity Issuance Costs

 
(2,676
)
Tax Paid on Units Withheld
(4,384
)
 
(6,020
)
Unit Distributions Paid
(28,042
)
 
(26,565
)
Contributions from Noncontrolling Interests

 
116

Distributions to Noncontrolling Interests
(43
)
 
(21
)
Repayments on Mortgage Loans Payable
(73,806
)
 
(160,163
)
Proceeds from Senior Unsecured Notes

 
300,000

Proceeds from Unsecured Credit Facility
121,000

 
162,000

Repayments on Unsecured Credit Facility
(19,000
)
 
(206,500
)
Net Cash (Used in) Provided by Financing Activities
(4,275
)
 
60,171

Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash
(19,484
)
 
21,879

Cash, Cash Equivalents and Restricted Cash, Beginning of Year
50,373

 
46,482

Cash, Cash Equivalents and Restricted Cash, End of Period
$
30,889

 
$
68,361

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

12



FIRST INDUSTRIAL, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited; in thousands)
 
Three Months Ended March 31, 2019
 
Three Months Ended March 31, 2018
SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS:
 
 
 
Interest Expense Capitalized in Connection with Development Activity
$
944

 
$
1,602

Cash Paid for Operating Lease Liabilities
$
268

 
$

Supplemental Schedule of Non-Cash Operating Activities:
 
 
 
Operating Lease Liabilities Arising from Obtaining Right-of-Use Assets
$
12,400

 
$

Supplemental Schedule of Non-Cash Investing and Financing Activities:
 
 
 
General and Limited Partner Unit Distributions Payable
$
30,139

 
$
27,558

Exchange of Limited Partner Units for General Partner Units:
 
 
 
Limited Partner Units
$

 
$
(5,009
)
General Partner Units

 
5,009

Total
$

 
$

Assumption of Indebtedness and Other Liabilities in Connection with the Acquisition of Real Estate
$

 
$
11,724

Accounts Payable Related to Construction in Progress and Additions to Investment in Real Estate
$
43,002

 
$
32,006

Write-off of Fully Depreciated Assets
$
(11,176
)
 
$
(13,663
)
The accompanying notes are an integral part of the consolidated financial statements.

13



FIRST INDUSTRIAL REALTY TRUST, INC. AND FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; dollars in thousands, except per share and Unit data)
1. Organization
First Industrial Realty Trust, Inc. (the "Company") is a self-administered and fully integrated real estate company which owns, manages, acquires, sells, develops and redevelops industrial real estate. The Company is a Maryland corporation organized on August 10, 1993 and a real estate investment trust ("REIT") as defined in the Internal Revenue Code of 1986 (the "Code"). Unless stated otherwise or the context otherwise requires, the terms "we," "our" and "us" refer to the Company and its subsidiaries, including its operating partnership, First Industrial, L.P. (the "Operating Partnership"), and its consolidated subsidiaries.
We began operations on July 1, 1994. The Company's operations are conducted primarily through the Operating Partnership, of which the Company is the sole general partner (the "General Partner"), with an approximate 97.8% ownership interest ("General Partner Units") at March 31, 2019. The Operating Partnership also conducts operations through eight other limited partnerships (the "Other Real Estate Partnerships"), numerous limited liability companies ("LLCs") and certain taxable REIT subsidiaries ("TRSs"), the operating data of which, together with that of the Operating Partnership, is consolidated with that of the Company as presented herein. The Operating Partnership holds at least a 99% limited partnership interest in each of the Other Real Estate Partnerships. The general partners of the Other Real Estate Partnerships are separate corporations, wholly-owned by the Company, each with at least a .01% general partnership interest in the Other Real Estate Partnerships. The Company does not have any significant assets or liabilities other than its investment in the Operating Partnership and its 100% ownership interest in the general partners of the Other Real Estate Partnerships. The Company's noncontrolling interest in the Operating Partnership of approximately 2.2% at March 31, 2019 represents the aggregate partnership interest held by the limited partners thereof ("Limited Partner Units" and together with the General Partner Units, the "Units"). The limited partners of the Operating Partnership are persons or entities who contributed their direct or indirect interests in properties to the Operating Partnership in exchange for common Limited Partner Units of the Operating Partnership and/or recipients of LTIP Units of the Operating Partnership pursuant to the Company's stock incentive plan. See Note 9 for more information.
We also own a 49% equity interest in, and provide various services to, a joint venture (the "Joint Venture") through a wholly- owned subsidiary of the Operating Partnership. The Joint Venture is accounted for under the equity method of accounting. The operating data of the Joint Venture is not consolidated with that of the Company or the Operating Partnership as presented herein. See Note 5 for more information related to the Joint Venture.
Profits, losses and distributions of the Operating Partnership, the LLCs, the Other Real Estate Partnerships, the TRSs and the Joint Venture are allocated to the general partner and the limited partners, the members or the shareholders, as applicable, of such entities in accordance with the provisions contained within their respective organizational documents.
As of March 31, 2019, we owned 458 industrial properties located in 21 states, containing an aggregate of approximately 63.2 million square feet of gross leasable area ("GLA"). Of the 458 properties owned on a consolidated basis, none of them are directly owned by the Company.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the accounting policies described in the consolidated financial statements and related notes included in our annual report on Form 10-K for the year ended December 31, 2018 ("2018 Form 10-K") and should be read in conjunction with such consolidated financial statements and related notes. The 2018 year end consolidated balance sheet data included in this Form 10-Q filing was derived from the audited consolidated financial statements in our 2018 Form 10-K, but does not include all disclosures required by accounting principles generally accepted in the United States of America ("GAAP"). The following notes to these interim consolidated financial statements highlight significant changes to the notes included in the December 31, 2018 audited consolidated financial statements included in our 2018 Form 10-K and present interim disclosures as required by the Securities and Exchange Commission.

14



Use of Estimates
In order to conform with GAAP, in preparation of our consolidated financial statements we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of March 31, 2019 and December 31, 2018, and the reported amounts of revenues and expenses for the three months ended March 31, 2019 and 2018. Actual results could differ from those estimates. In our opinion, the accompanying unaudited interim consolidated financial statements reflect all adjustments necessary for a fair statement of our financial position as of March 31, 2019 and December 31, 2018, the results of our operations and comprehensive income for each of the three months ended March 31, 2019 and 2018, and our cash flows for each of the three months ended March 31, 2019 and 2018. All adjustments are of a normal recurring nature.
Reclassifications
We adopted Financial Accounting Standards Board ("FASB") Accounting Standards Codification 842 Leases effective January 1, 2019. Upon adoption of the new standard, tenant recovery revenue and fee revenue collected for delinquent lease payments for 2018 has been reclassified to the Lease Revenue line item in the Consolidated Statements of Operations to conform to the 2019 financial statement presentation. This reclassification had no impact to the 2018 results of operations.
Recent Accounting Pronouncements
In February 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842), which amended the existing accounting standards for lease accounting to increase transparency and comparability among organizations by requiring the recognition of right-of-use assets and lease liabilities on the balance sheet.
We adopted the standard effective January 1, 2019 and have elected to use January 1, 2019 as our date of initial application. Consequently, financial information will not be updated and disclosures required under the new standard will not be provided for periods presented before January 1, 2019 as these prior periods conform to the Accounting Standards Codification 840. We elected the package of practical expedients permitted under the transition guidance within the new standard. By adopting these practical expedients, we were not required to reassess (1) whether an existing contract meets the definition of a lease; (2) the lease classification for existing leases; or (3) costs previously capitalized as initial direct costs.
As a lessor, our rental revenue remained mainly consistent with previous guidance, apart from the narrower definition of initial direct costs that can be capitalized. The new standard defines initial direct costs as only the incremental costs of signing a lease. As such, certain compensation and certain external legal fees related to the execution of successful lease agreements no longer meet the definition of initial direct costs under the new standard and will be accounted for in the line item General and Administrative Expense. However, the adoption of the standard, along with the adoption of ASU No. 2018-11, Leases - Targeted Improvements which the FASB issued in July 2018, did change our presentation of our results from operations in the Consolidated Statements of Operations. The main changes caused by the adoption of the standards are:
The new standard provided a practical expedient, which allows lessors to combine non-lease components with the related lease components if both the timing and pattern of transfer are the same for the non-lease components(s) and the related lease component, and the lease component would be classified as an operating lease. Lessors are permitted to apply the practical expedient to all existing leases on a retrospective or prospective basis. We elected the practical expedient to combine our lease and non-lease components that meet the defined criteria. The non-lease components of our leases primarily consist of common area maintenance reimbursements from our tenants.
The new standard also requires lessors to exclude from variable payments certain lessor costs, such as real estate taxes, that the lessor contractually requires the lessee to pay directly to a third party on its behalf. Several of our leases require tenants to pay real estate taxes directly to taxing authorities. For periods prior to January 1, 2019, we recorded these payments in the line item Property Expenses with an offset in the line item Lease Revenue. For the three months ended March 31, 2018, $1,886 of these payments are included in the aforementioned line items.
The new standard requires our expected credit loss related to the collectability of lease receivables to be reflected as an adjustment to the line item Lease Revenue. For the three months ended March 31, 2018, the credit loss related to the collectibility of lease receivables was recognized in the line item Property Expenses and was not significant.

15



We are a lessee on a limited number of ground and office leases. Under the new standard, the expense pattern for these leases is generally consistent with that of our historical recognition; however, we are required to record right-of-use assets and lease liabilities on our Consolidated Balance Sheets. Operating lease right-of-use assets and liabilities are recognized at commencement of the lease based on the present value of the lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on information available at lease commencement to determine the present value of lease payments. For leases that commenced prior to the effective date of the standard, we recognized right-of-use assets and lease liabilities based on the present value of remaining lease payments and the incremental borrowing rate on the date of adoption. We have elected the short term lease exemption for certain qualifying leases with lease terms of twelve months or less and, accordingly, did not record right-of-use assets and lease liabilities. We have also elected the practical expedient to not separate lease and non-lease components. For additional disclosures related to leases, refer to Note 13.
In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeting Improvements to Accounting for Hedging Activities" ("ASU 2017-12"). ASU 2017-12 is intended to better align financial reporting for hedging activities with the economic objectives of those activities. We adopted ASU 2017-02 effective January 1, 2019, and the adoption did not impact our financial condition or results of operations.

3. Investment in Real Estate
Acquisitions
During the three months ended March 31, 2019, we acquired one industrial property comprised of approximately 0.2 million square feet of GLA and two land parcels. We considered these properties asset acquisitions and therefore capitalized acquisition costs to the basis of the acquired assets. The following table summarizes the amounts recognized for each major asset class for the industrial property and land parcels acquired during the three months ended March 31, 2019:
 
Purchase Price
Land
$
8,388

Building and Improvements
9,880

Total Purchase Price
$
18,268

The revenue and net income associated with the acquisition of the industrial property and land parcels, since their respective acquisition dates, are not significant for the three months ended March 31, 2019.
Sales
During the three months ended March 31, 2019, we sold one industrial property comprised of approximately 0.1 million square feet of GLA. Gross proceeds from the sale were $10,467. The loss on sale of real estate attributable to this sale was $208.


16



4. Indebtedness
The following table discloses certain information regarding our indebtedness: 
 
Outstanding Balance at
 
Interest
Rate at
March 31, 2019
 
Effective
Interest
Rate at
Issuance
 
Maturity
Date
 
March 31, 2019
 
December 31, 2018
 
Mortgage Loans Payable, Gross
$
223,804

 
$
297,610

 
4.03% – 8.26%
 
4.03% – 8.26%
 
December 2019 –
August 2028
Unamortized Debt Issuance Costs
(1,030
)
 
(1,246
)
 
 
 
 
 
 
Unamortized Premiums

 
106

 
 
 
 
 
 
Mortgage Loans Payable, Net
$
222,774

 
$
296,470

 
 
 
 
 
 
Senior Unsecured Notes, Gross
 
 
 
 
 
 
 
 
 
2027 Notes
6,070

 
6,070

 
7.15%
 
7.11%
 
5/15/2027
2028 Notes
31,901

 
31,901

 
7.60%
 
8.13%
 
7/15/2028
2032 Notes
10,600

 
10,600

 
7.75%
 
7.87%
 
4/15/2032
2027 Private Placement Notes
125,000

 
125,000

 
4.30%
 
4.30%
 
4/20/2027
2028 Private Placement Notes
150,000

 
150,000

 
3.86%
 
3.86%
 
2/15/2028
2029 Private Placement Notes
75,000

 
75,000

 
4.40%
 
4.40%
 
4/20/2029
2030 Private Placement Notes
150,000

 
150,000

 
3.96%
 
3.96%
 
2/15/2030
Subtotal
$
548,571

 
$
548,571

 
 
 
 
 
 
Unamortized Debt Issuance Costs
(3,886
)
 
(3,990
)
 
 
 
 
 
 
Unamortized Discounts
(76
)
 
(77
)
 
 
 
 
 
 
Senior Unsecured Notes, Net
$
544,609

 
$
544,504

 
 
 
 
 
 
Unsecured Term Loans, Gross
 
 


 
 
 
 
 
 
2014 Unsecured Term Loan (A)
$
200,000

 
$
200,000

 
3.39%
 
N/A
 
1/29/2021
2015 Unsecured Term Loan (A)
260,000

 
260,000

 
2.89%
 
N/A
 
9/12/2022
Subtotal
$
460,000

 
$
460,000

 

 

 

Unamortized Debt Issuance Costs
(2,927
)
 
(3,191
)
 
 
 
 
 
 
Unsecured Term Loans, Net
$
457,073

 
$
456,809

 
 
 
 
 
 
Unsecured Credit Facility (B)
$
102,000

 
$

 
3.59%
 
N/A
 
10/29/2021
_______________
(A) The interest rate at March 31, 2019 also reflects the derivative instruments we entered into to effectively convert the variable rate to a fixed rate. See Note 10.
(B) The maturity date may be extended an additional year at our election, subject to certain restrictions. Amounts exclude unamortized debt issuance costs of $3,241 and $3,554 as of March 31, 2019 and December 31, 2018, respectively, which are included in the line item Prepaid Expenses and Other Assets, Net.
Mortgage Loans Payable, Net
During the three months ended March 31, 2019, we paid off mortgage loans in the amount of $72,073.
As of March 31, 2019, mortgage loans payable are collateralized, and in some instances cross-collateralized, by industrial properties with a net carrying value of $338,533. We believe the Operating Partnership and the Company were in compliance with all covenants relating to mortgage loans as of March 31, 2019.

17



Indebtedness
The following is a schedule of the stated maturities and scheduled principal payments of our indebtedness, exclusive of premiums, discounts and debt issuance costs, for the next five years as of March 31, and thereafter: 
 
Amount
Remainder of 2019
$
5,794

2020
59,046

2021
369,113

2022
341,552

2023
321

Thereafter
558,549

Total
$
1,334,375

Our unsecured credit facility (the "Unsecured Credit Facility"), the Unsecured Term Loans, the Private Placement Notes and the indentures governing our senior unsecured notes contain certain financial covenants, including limitations on incurrence of debt and debt service coverage. Under the Unsecured Credit Facility and the Unsecured Term Loans an event of default can occur if the lenders, in their good faith judgment, determine that a material adverse change has occurred which could prevent timely repayment or materially impair our ability to perform our obligations under the loan agreements. We believe the Operating Partnership and the Company were in compliance with all covenants relating to the Unsecured Credit Facility, the Unsecured Term Loans, the Private Placement Notes and the indentures governing our senior unsecured notes as of March 31, 2019. However, these financial covenants are complex and there can be no assurance that these provisions would not be interpreted by our lenders and noteholders in a manner that could impose and cause us to incur material costs.
Fair Value
At March 31, 2019 and December 31, 2018, the fair value of our indebtedness was as follows: 
 
March 31, 2019
 
December 31, 2018
 
Carrying
Amount (A)
 
Fair
Value
 
Carrying
Amount (A)
 
Fair
Value
Mortgage Loans Payable, Net
$
223,804

 
$
228,554

 
$
297,716

 
$
304,508

Senior Unsecured Notes, Net
548,495

 
567,889

 
548,494

 
546,607

Unsecured Term Loans
460,000

 
461,210

 
460,000

 
461,317

Unsecured Credit Facility
102,000

 
102,126

 

 

Total
$
1,334,299

 
$
1,359,779

 
$
1,306,210

 
$
1,312,432

_______________
(A) The carrying amounts include unamortized premiums and discounts and exclude unamortized debt issuance costs.
The fair values of our mortgage loans payable were determined by discounting the future cash flows using the current rates at which similar loans would be made based upon similar remaining maturities. The current market rates we utilized were internally estimated. The fair value of the senior unsecured notes were determined by using rates, as advised by our bankers, that are based upon recent trades within the same series of the senior unsecured notes, recent trades for senior unsecured notes with comparable maturities, recent trades for fixed rate unsecured notes from companies with profiles similar to ours, as well as overall economic conditions. The fair value of the Unsecured Credit Facility and the Unsecured Term Loans was determined by discounting the future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining term, assuming no repayment until maturity. We have concluded that our determination of fair value for each of our mortgage loans payable, senior unsecured notes, the Unsecured Term Loans and the Unsecured Credit Facility was primarily based upon Level 3 inputs.


18



5. Variable Interest Entities
Other Real Estate Partnerships
The Other Real Estate Partnerships are variable interest entities ("VIEs") of the Operating Partnership and the Operating Partnership is the primary beneficiary, thus causing the Other Real Estate Partnerships to be consolidated by the Operating Partnership. In addition, the Operating Partnership is a VIE of the Company and the Company is the primary beneficiary.
The following table summarizes the assets and liabilities of the Other Real Estate Partnerships included in our consolidated balance sheets, net of intercompany amounts:
 
March 31, 2019
 
December 31, 2018
ASSETS
 
 
 
Assets:
 
 
 
Net Investment in Real Estate
$
258,041

 
$
260,528

Other Assets, Net
24,433

 
25,059

Total Assets
$
282,474

 
$
285,587

LIABILITIES AND PARTNERS' CAPITAL
 
 
 
Liabilities:
 
 
 
Mortgage Loans Payable, Net
$
13,251

 
$
20,497

Other Liabilities, Net
8,348

 
9,045

Partners' Capital
260,875

 
256,045

Total Liabilities and Partners' Capital
$
282,474

 
$
285,587

Joint Venture
During the second quarter 2018, we entered into the Joint Venture with a third party partner for the purpose of developing, leasing, operating and potentially selling approximately 532 net developable acres of land located in the Phoenix, Arizona metropolitan area. The purchase price of the land was $49,000 and was acquired by the Joint Venture via cash equity contributions from us and our joint venture partner. Through a wholly-owned subsidiary of the Operating Partnership, we own a 49% interest in the Joint Venture.
During the three months ended March 31, 2019, the Joint Venture sold one land parcel for gross proceeds of $10,130. The gain on sale of real estate attributable to this sale was $1,974.
Under the Joint Venture's operating agreement, we act as the managing member of the Joint Venture and are entitled to receive fees for providing management, leasing, development, construction supervision, disposition and asset management services to the Joint Venture. In addition, the Joint Venture's operating agreement provides us the ability to earn an incentive fee based on the ultimate financial performance of the Joint Venture.
As part of our assessment of the appropriate accounting treatment for the Joint Venture, we reviewed the operating agreement of the Joint Venture in order to determine our rights and the rights of our joint venture partner, including whether those rights are protective or participating. We found that the operating agreement contains certain protective rights, such as the requirement of both member's approval to sell, finance or refinance the property and to pay capital expenditures and operating expenditures outside of the approved budget. However, we also found that we and our Joint Venture partner jointly (i) approve the annual budget, (ii) approve certain expenditures, (iii) review and approve the Joint Venture's tax return before filing and (iv) approve each lease at a developed property. We consider the latter rights substantive participation rights that result in shared, joint power over the activities that most significantly impact the performance of the Joint Venture. As such, we concluded to account for our investment in the Joint Venture under the equity method of accounting.


19



6. Stockholders' Equity of the Company and Partners' Capital of the Operating Partnership
Noncontrolling Interest of the Company

The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for Limited Partner Units, as well as the equity positions of the holders of LTIP Units, are collectively referred to as the “Noncontrolling Interests.”  Subject to vesting and other certain exceptions (including the “book-up” requirements of LTIP Units - See Note 9 for additional detail), the holders of Noncontrolling Interests may convert their Units into an equal number of shares of Common Stock, or a cash equivalent, at the Company's election.  Net income is allocated to the Noncontrolling Interests based on the weighted average ownership percentage during the period.
The following table summarizes the changes in noncontrolling interest for the Company for the three months ended March 31, 2019 and 2018:
 
2019
 
2018
Balance as of December 31
$
34,397

 
$
48,077

    Net Income
537

 
1,172

    Amortization of Unearned Compensation related to the Issuance of LTIP Units (A)
270

 

    Other Comprehensive (Loss) Income
(140
)
 
183

    Unit Distributions
(664
)
 
(775
)
    Conversion of Limited Partner Units to Common Stock (B)

 
(5,009
)
    Retirement of Limited Partner Units (C)

 
(934
)
    Reallocation - Additional Paid-in-Capital
3,238

 
292

    Reallocation - Other Comprehensive Income
7

 

Balance as of March 31
$
37,645

 
$
43,006

_______________
(A) During the three months ended March 31, 2019, 286,986 LTIP Units were issued to certain employees.  
(B) During the three months ended March 31, 2018, 410,781 Limited Partner Units, were converted into an equivalent number of shares of common stock of the Company.
(C) During the three months ended March 31, 2018, 33,333 Limited Partner Units were forfeited by a unitholder and were retired by the Operating Partnership.
Noncontrolling Interest of the Operating Partnership
The following table summarizes the changes in noncontrolling interest for the Operating Partnership for the three months ended March 31, 2019 and 2018:
 
2019
 
2018
Balance as of December 31
$
857

 
$
779

    Net Income
26

 
21

    Contributions

 
116

    Distributions
(43
)
 
(21
)
Balance as of March 31
$
840

 
$
895

Dividends/Distributions
During the three months ended March 31, 2019, we declared $29,922 common stock dividends and Unit distributions.


20



7. Accumulated Other Comprehensive Income
The following table summarizes the changes in accumulated other comprehensive income by component for the Company and the Operating Partnership for the three months ended March 31, 2019:
 
Derivative Instruments
 
Accumulated Other Comprehensive Income (Loss) of the Operating Partnership
 
Comprehensive (Income) Loss Attributable to Noncontrolling Interest of the Company
 
Accumulated Other Comprehensive Income (Loss) of the Company
Balance as of December 31, 2018
$
3,574

 
$
3,574

 
$
(72
)
 
$
3,502

Other Comprehensive Loss Before Reclassifications
(5,778
)
 
(5,778
)
 
133

 
(5,645
)
Amounts Reclassified from Accumulated Other Comprehensive (Loss) Income
(552
)
 
(552
)
 

 
(552
)
Net Current Period Other Comprehensive Loss
(6,330
)
 
(6,330
)
 
133

 
(6,197
)
Balance as of March 31, 2019
$
(2,756
)
 
$
(2,756
)
 
$
61

 
$
(2,695
)
The following table summarizes the reclassifications out of accumulated other comprehensive income for both the Company and the Operating Partnership for the three months ended March 31, 2019 and 2018:
 
 
Amounts Reclassified from Accumulated
Other Comprehensive (Loss) Income
 
 
Details about Accumulated
Other Comprehensive Income Components
 
Three Months Ended March 31, 2019
 
Three Months Ended March 31, 2018
 
Affected Line Items in the
Consolidated Statements of Operations
Derivative Instruments:
 
 
 
 
 
 
Amortization of Previously Settled Derivative Instruments
 
$
24

 
$
24

 
Interest Expense
Net Settlement (Receipts) Payments to our Counterparties
 
(576
)
 
463

 
Interest Expense
Total
 
$
(552
)
 
$
487

 
 
The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in other comprehensive income and is subsequently reclassified to earnings through interest expense over the life of the derivative or over the life of the debt. In the next 12 months, we expect to amortize approximately $96 into net income by increasing interest expense for derivative instruments we settled in previous periods. Additionally, recurring settlement amounts on the 2014 Swaps and 2015 Swaps (as defined in Note 10) will also be reclassified to net income. See Note 10 for more information about our derivative instruments.

21


8. Earnings Per Share and Earnings Per Unit ("EPS"/"EPU")
The computation of basic and diluted EPS of the Company is presented below: 
 
Three Months Ended March 31, 2019
 
Three Months Ended March 31, 2018
Numerator:
 
 
 
Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders and Participating Securities
$
23,803

 
$
36,292

Net Income Allocable to Participating Securities
(60
)
 
(97
)
Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders
$
23,743

 
$
36,195

Denominator (In Thousands):
 
 
 
Weighted Average Shares - Basic
126,194

 
119,846

Effect of Dilutive Securities:
 
 
 
        Performance units (See Note 9)
262

 
365

Weighted Average Shares - Diluted
126,456

 
120,211

Basic and Diluted EPS:
 
 
 
Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders
$
0.19

 
$
0.30

The computation of basic and diluted EPU of the Operating Partnership is presented below:
 
Three Months Ended March 31, 2019
 
Three Months Ended March 31, 2018
Numerator:
 
 
 
Net Income Available to Unitholders and Participating Securities
$
24,314

 
$
37,443

Net Income Allocable to Participating Securities
(76
)
 
(97
)
Net Income Available to Unitholders
$
24,238

 
$
37,346

Denominator (In Thousands):
 
 
 
Weighted Average Units - Basic
128,818

 
123,729

Effect of Dilutive Securities that Result in the Issuance of General Partner Units:
 
 
 
       Performance units and certain Performance LTIP Units (See Note 9)
360

 
365

Weighted Average Units - Diluted
129,178

 
124,094

Basic and Diluted EPU:
 
 
 
Net Income Available to Unitholders
$
0.19

 
$
0.30

At March 31, 2019 and 2018, participating securities for the Company include 287,273 and 410,132, respectively, of restricted stock, which participate in non-forfeitable distributions. At March 31, 2019 and 2018, participating securities for the Operating Partnership include 407,457 and 410,132, respectively, of restricted Unit awards and certain LTIP Units, which participate in non-forfeitable distributions. Under the two class method, participating security holders are allocated income, in proportion to total weighted average shares or Units outstanding, based upon the greater of net income or common stock dividends or Unit distributions declared.

22



9. Long-Term Compensation
Awards of LTIP Units
During 2018, the Company modified its stock incentive program to allow for the granting of awards to certain officers, certain employees and directors in the form of LTIP units ("LTIP Units"). An LTIP Unit is a class of limited partnership interest of the Operating Partnership that is structured as a “profits interest” for U.S. federal income tax purposes. Generally, LTIP Units entitle the holder to receive distributions from the Operating Partnership that are equivalent to the dividends and distributions that would be made with respect to the number of shares of Common Stock underlying such LTIP Units, though receipt of such distributions may be delayed or made contingent on vesting. Once an LTIP Unit has vested and received allocations of book income sufficient to increase the book capital account balance associated with such LTIP Unit (which will initially be zero) to equal, on a per-unit basis, the book capital account balance associated with a “common” Limited Partner Unit of the Operating Partnership, it automatically becomes a common Limited Partner Unit that is convertible by the holder into one share of Common Stock or a cash equivalent, at the Company’s option.
Awards with Performance Measures
During the three months ended March 31, 2019, the Company granted 36,064 performance units and 166,942 LTIP Units, based on performance-based criteria ("Performance LTIP Units" and collectively the "Performance Awards") to officers and certain employees, which had a fair value of $2,527 on the grant date as determined by a lattice-binomial option-pricing model based on a Monte Carlo simulation. The Performance Awards vest based upon the relative total shareholder return ("TSR") of the Company's common stock compared to a weighted average TSR of the MSCI US REIT Index and the NAREIT Industrial Index over a performance period of three years. Compensation expense is charged to earnings over the vesting periods for both the performance units and the Performance LTIP Units.
Service Based Awards
For the three months ended March 31, 2019, the Company awarded 82,494 shares of restricted stock awards and 102,198 of LTIP Units based on service-based criteria ("Service LTIP Units") to officers and certain employees, which had an aggregate fair value of $6,202 on the date such awards were approved by the Compensation Committee of the Board of Directors. Both the restricted stock awards and Service LTIP Units were granted based upon the prior achievement of certain corporate performance goals and will vest ratably over a period of three years based on continued employment. The Operating Partnership issued restricted Unit awards to the Company in the same amount for the restricted stock awards. Compensation expense is charged to earnings over the vesting periods for both the restricted stock or restricted Unit awards and the Service LTIP Units.
Outstanding Restricted Stock or Restricted Unit Awards and LTIP Units
We recognized $1,762 and $1,689 for the three months ended March 31, 2019 and 2018, respectively, in compensation expense related to the amortization of restricted stock or restricted Unit awards, performance units, and LTIP Units. Restricted stock or restricted Unit award, performance unit and LTIP Unit amortization capitalized in connection with development activities was not significant. At March 31, 2019, we had $14,923 in unrecognized compensation related to unvested restricted stock or restricted Unit awards, performance units and LTIP Units. The weighted average period that the unrecognized compensation is expected to be recognized is 1.13 years.
10. Derivatives
Our objectives in using derivatives are to add stability to interest expense and to manage our cash flow volatility and exposure to interest rate movements. To accomplish these objectives, we primarily use derivative instruments as part of our interest rate risk management strategy. Derivative instruments designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
Fair Value Hedges

During December 2018, in anticipation of issuing long-term debt in the future, we entered into two treasury locks with an aggregate notional value of $100,000 to manage our exposure to changes in the ten-year U.S. Treasury rate (the "2018 Treasury Locks"). The 2018 Treasury Locks fix the ten-year U.S. Treasury rate at a weighted average of 2.93% and cash settle on or before April 30, 2019. We designated the 2018 Treasury Locks as cash flow hedges.

23



In connection with the originations of the Unsecured Term Loans (see Note 4), we entered into interest rate swaps to manage our exposure to changes in the one month LIBOR rate. The four interest rate swaps, which fix the variable rate of the 2014 Unsecured Term Loan, have an aggregate notional value of $200,000, mature on January 29, 2021 and fix the LIBOR rate at a weighted average rate of 2.29% (the "2014 Swaps"). The six interest rate swaps, which fix the variable rate of the 2015 Unsecured Term Loan, have an aggregate notional value of $260,000, mature on September 12, 2022 and fix the LIBOR rate at a weighted average rate of 1.79% (the "2015 Swaps"). We designated the 2014 Swaps and 2015 Swaps as cash flow hedges.
Our agreements with our derivative counterparties contain provisions where if we default on any of our indebtedness, then we could also be declared in default on our derivative obligations subject to certain thresholds. As of March 31, 2019, we had not posted any collateral related to these agreements and were not in breach of any of the provisions of these agreements. If we had breached these agreements, we could have been required to settle our obligations under the agreements at their termination value.
The following table sets forth our financial assets and liabilities related to the 2015 Swaps, the 2014 Swaps and the 2018 Treasury Locks, which are included in the line items Prepaid Expenses and Other Assets, Net or Accounts Payable, Accrued Expenses and Other Liabilities and are accounted for at fair value on a recurring basis as of March 31, 2019:
 
 
 
 
Fair Value Measurements:
Description
 
Fair Value
 
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Unobservable
Inputs
(Level 3)
Derivatives designated as a hedging instrument:
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
2015 Swaps
 
$
3,171

 

 
$
3,171

 

 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
2014 Swaps
 
$
(118
)
 

 
$
(118
)
 

2018 Treasury Locks
 
$
(4,925
)
 

 
$
(4,925
)
 

There was no ineffectiveness recorded on the 2014 Swaps, the 2015 Swaps and the 2018 Treasury Locks during the three months ended March 31, 2019. See Note 7 for more information regarding our derivatives.
The estimated fair value of the 2014 Swaps, the 2015 Swaps and the 2018 Treasury Locks was determined using the market standard methodology of netting the discounted fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of interest rates (forward curves) derived from observable market interest rate curves. In addition, credit valuation adjustments are incorporated in the fair value to account for potential non-performance risk, including our own non-performance risk and the respective counterparty's non-performance risk. We determined that the significant inputs used to value the 2014 Swaps, the 2015 Swaps and the 2018 Treasury Locks fell within Level 2 of the fair value hierarchy.
11. Related Party Transactions
During the three months ended March 31, 2019, we recognized fees of $74 from the Joint Venture related to asset management and development services provided to the Joint Venture. At March 31, 2019, we had a receivable from the Joint Venture of $83 related to the asset management and development fees. See Note 5 for more information on the Joint Venture.
 At March 31, 2019 and December 31, 2018, the Operating Partnership had receivable balances of $10,075 and $10,118, respectively, from a direct wholly-owned subsidiary of the Company.
12. Commitments and Contingencies
In the normal course of business, we are involved in legal actions arising from the ownership of our industrial properties. In our opinion, the liabilities, if any, that may ultimately result from such legal actions are not expected to have a materially adverse effect on our consolidated financial position, operations or liquidity.
In conjunction with the development of industrial properties, we have entered into agreements with general contractors for the construction of industrial properties. At March 31, 2019, we had 14 industrial properties totaling approximately 3.9 million square feet of GLA under construction. The estimated total investment as of March 31, 2019 is approximately $297,500. Of this amount, approximately $193,800 remains to be funded. There can be no assurance that the actual completion cost will not exceed the estimated total investment.

24



13. Leases
Lessee Disclosures
We are a lessee on a limited number of ground and office leases (the "Operating Leases"). Our office leases have remaining lease terms of less than one year to seven years and our ground leases have remaining terms of 35 years to 53 years. For the three months ended March 31, 2019, we recognized $448 of operating lease expense, inclusive of short-term and variable lease costs which are not significant.
The following is a schedule of the maturities of operating lease liabilities for the next five years as of March 31, 2019, and thereafter:
Remainder of 2019
$
1,095

2020
1,536

2021
1,503

2022
1,465

2023
1,329

Thereafter
29,025

Total Lease Payments
35,953

Less Imputed Interest (A)
23,584

Total
$
12,369

(A) Calculated using the discount rate for each lease.
As of March 31, 2019, our weighted average remaining lease term for the Operating Leases is 34.4 years and the weighted average discount rate is 7.4%.
Future minimum rental payments for the Operating Leases as of December 31, 2018 are as follows:
2019
$
1,464

2020
1,536

2021
1,503

2022
1,465

2023
1,329

Thereafter
29,025

Total
$
36,322

A number of the Operating Leases include options to extend the lease term. For purposes of determining our lease term, we excluded periods covered by an option since it was not reasonably certain at lease commencement that we would exercise.

25



Lessor Disclosures
Our properties and certain land parcels are leased to tenants and classified as operating leases. Future minimum rental receipts, excluding variable payments and tenant reimbursements of expenses, under non-cancelable operating leases executed as of March 31, 2019 are approximately as follows:
Remainder of 2019
$
234,032

2020
297,322

2021
254,001

2022
214,069

2023
177,644

Thereafter
467,827

Total
$
1,644,895

Future minimum rental receipts, excluding tenant reimbursements of expenses, under non-cancelable operating leases executed as of December 31, 2018 were approximately as follows:
2019
$
305,689

2020
288,817

2021
244,743

2022
205,097

2023
169,243

Thereafter
451,151

Total
$
1,664,740

Several of our operating leases include options to extend the lease term. For purposes of determining the lease term, we exclude these option periods unless it is reasonably certain at lease commencement that the option will be exercised.     Also, five leases include options that grant the lessee a right to purchase the property at various times at appraised fair market value or at a fixed price. For purposes of determining lease term, we exclude the impact of a purchase option unless it is reasonably certain at lease commencement that the lessee will exercise the option.

14. Subsequent Events
From April 1, 2019 to April 26, 2019, we acquired one land parcel for a purchase price of approximately $7,400, excluding costs incurred in conjunction with the acquisition. In addition, we sold part of one industrial property for approximately $1,145 excluding closing costs.
From April 1, 2019 to April 26, 2019, the Joint Venture sold one land parcel for gross proceeds of $37,113.



26



Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Form 10-Q. Unless stated otherwise or the context otherwise requires, the terms "we," "our" and "us" refer to First Industrial Realty Trust, Inc. (the "Company") and its subsidiaries, including First Industrial, L.P. (the "Operating Partnership") and its consolidated subsidiaries.
Forward-Looking Statements
The following discussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). We intend for 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. Forward-looking statements are based on certain assumptions and describe our future plans, strategies and expectations, and are generally identifiable by use of the words "believe," "expect," "plan," "intend," "anticipate," "estimate," "project," "seek," "target," "potential," "focus," "may," "will," "should" or similar words. Although we believe the expectations reflected in forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be attained or that results will not materially differ. Factors which could have a materially adverse effect on our operations and future prospects include, but are not limited to:
changes in national, international, regional and local economic conditions generally and real estate markets specifically;
changes in legislation/regulation (including changes to laws governing the taxation of real estate investment trusts) and actions of regulatory authorities;
our ability to qualify and maintain our status as a real estate investment trust;
the availability and attractiveness of financing (including both public and private capital) and changes in interest rates;
the availability and attractiveness of terms of additional debt repurchases;
changes in our credit agency ratings;
our ability to comply with applicable financial covenants;
our competitive environment;
changes in supply, demand and valuation of industrial properties and land in our current and potential market areas;
difficulties in identifying and consummating acquisitions and dispositions;
our ability to manage the integration of properties we acquire;
potential liability relating to environmental matters;
defaults on or non-renewal of leases by our tenants;
decreased rental rates or increased vacancy rates;
higher-than-expected real estate construction costs and delays in development or lease-up schedules;
changes in general accounting principles, policies and guidelines applicable to real estate investment trusts; and
other risks and uncertainties described in this report, in Item 1A, "Risk Factors" and elsewhere in our annual report on Form 10-K for the year ended December 31, 2018 as well as those risks and uncertainties discussed from time to time in our other Exchange Act reports and in our other public filings with the Securities and Exchange Commission (the "SEC").
We caution you not to place undue reliance on forward-looking statements, which reflect our outlook only and speak only as of the date of this report. We assume no obligation to update or supplement forward-looking statements.

27



General
The Company is a self-administered and fully integrated real estate company which owns, manages, acquires, sells, develops and redevelops industrial real estate. The Company is a Maryland corporation organized on August 10, 1993 and a real estate investment trust ("REIT") as defined in the Internal Revenue Code of 1986 (the "Code").
We began operations on July 1, 1994. The Company's operations are conducted primarily through the Operating Partnership, of which the Company is the sole general partner (the "General Partner"), with an approximate 97.8% ownership interest ("General Partner Units") at March 31, 2019. The Operating Partnership also conducts operations through eight other limited partnerships (the "Other Real Estate Partnerships"), numerous limited liability companies ("LLCs") and certain taxable REIT subsidiaries ("TRSs"), the operating data of which, together with that of the Operating Partnership, is consolidated with that of the Company as presented herein. The Operating Partnership holds at least a 99% limited partnership interest in each of Other Real Estate Partnerships. The general partners of the Other Real Estate Partnerships are separate corporations, wholly-owned by the Company, each with at least a .01% general partnership interest in the Other Real Estate Partnerships. The Company does not have any significant assets or liabilities other than its investment in the Operating Partnership and its 100% ownership interest in the general partners of the Other Real Estate Partnerships. The Company's noncontrolling interest in the Operating Partnership of approximately 2.2% at March 31, 2019 represents the aggregate partnership interest held by the limited partners thereof ("Limited Partner Units" and together with the General Partner Units, the "Units"). The limited partners of the Operating Partnership are persons or entities who contributed their direct or indirect interests in properties to the Operating Partnership in exchange for common units of the Operating Partnership and/or recipients of LTIP Units of the Operating Partnership pursuant to the Company's stock incentive plan.
We also own a 49% equity interest in, and provide various services to, a joint venture (the "Joint Venture") through a wholly-owned subsidiary of the Operating Partnership. The Joint Venture is accounted for under the equity method of accounting. The operating data of the Joint Venture is not consolidated with that of the Operating Partnership or the Company as presented herein. See Note 5 to the Consolidated Financial Statements for more information related to the Joint Venture.
Profits, losses and distributions of the Operating Partnership, the LLCs, the Other Real Estate Partnerships, the TRSs and the Joint Venture are allocated to the general partner and the limited partners, the members or the shareholders, as applicable, of such entities in accordance with the provisions contained within their respective organizational documents.
As of March 31, 2019, we owned 458 industrial properties located in 21 states, containing an aggregate of approximately 63.2 million square feet of gross leasable area ("GLA"). Of the 458 properties owned on a consolidated basis, none of them are directly owned by the Company.
Available Information
We maintain a website at www.firstindustrial.com. Information on this website shall not constitute part of this Form 10-Q. Copies of our respective annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such reports are available without charge on our website as soon as reasonably practicable after such reports are filed with or furnished to the SEC. You may also read and copy any document filed at the public reference facilities of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at (800) SEC-0330 for further information about the public reference facilities. These documents also may be accessed through the SEC's Interactive Data Electronic Application via the SEC's home page on the Internet (www.sec.gov). In addition, the Company's Corporate Governance Guidelines, Code of Business Conduct and Ethics, Audit Committee Charter, Compensation Committee Charter and Nominating/Corporate Governance Committee Charter, along with supplemental financial and operating information prepared by us, are all available without charge on the Company's website or upon request to the Company. Amendments to, or waivers from, our Code of Business Conduct and Ethics that apply to our executive officers or directors will also be posted to our website. We also post or otherwise make available on our website from time to time other information that may be of interest to our investors. Please direct requests as follows:
First Industrial Realty Trust, Inc.
1 N. Wacker Drive, Suite 4200
Chicago, IL 60606
Attention: Investor Relations


28



Management's Overview
We believe our financial condition and results of operations are, primarily, a function of our performance in four key areas: leasing of industrial properties, acquisition and development of additional industrial properties, disposition of industrial properties and access to external capital.
We generate revenue primarily from rental income and tenant recoveries from operating leases of our industrial properties. Such revenue is offset by certain property specific operating expenses, such as real estate taxes, repairs and maintenance, property management, utilities and insurance expenses, along with certain other costs and expenses, such as depreciation and amortization costs and general and administrative and interest expenses. Our revenue growth is dependent, in part, on our ability to: (i) increase rental income, through increasing either or both occupancy rates and rental rates at our properties; (ii) maximize tenant recoveries; and (iii) minimize operating and certain other expenses. Revenues generated from our leases are a significant source of funds, in addition to income generated from gains on the sale of our properties (as discussed below), for our liquidity. The leasing of property, in general, and occupancy rates, rental rates, operating expenses and certain non-operating expenses, in particular, are impacted, variously, by property specific, market specific, general economic and other conditions, many of which are beyond our control. The leasing of property also entails various risks, including the risk of tenant default. If we were unable to maintain or increase occupancy rates and rental rates at our properties or to maintain tenant recoveries and operating and certain other expenses consistent with historical levels and proportions, our revenue would decline. Further, if a significant number of our tenants were unable to pay rent (including tenant recoveries) or if we were unable to rent our properties on favorable terms, our financial condition, results of operations, cash flow and ability to make distributions to our stockholders and Unitholders, the market price of the Company's common stock and the market value of the Units would be adversely affected.
Our revenue growth is also dependent, in part, on our ability to acquire existing, and develop new industrial properties on favorable terms. We seek to identify opportunities to acquire existing industrial properties on favorable terms, and, when conditions permit, also seek to acquire and develop new industrial properties on favorable terms. Existing properties, as they are acquired, and acquired and developed properties, as they are leased, generate revenue from rental income, tenant recoveries and fees, which, as discussed above, are sources of funds for our distributions to our stockholders and Unitholders. The acquisition and development of properties is impacted, variously, by property specific, market specific, general economic and other conditions, many of which are beyond our control. The acquisition and development of properties also entails various risks, including the risk that our investments may not perform as expected. For example, acquired existing and acquired and developed new properties may not sustain and/or achieve anticipated occupancy and rental rate levels. With respect to acquired and developed new properties, we may not be able to complete construction on schedule or within budget, resulting in increased debt service expense and construction costs and delays in leasing the properties. Also, we face significant competition for attractive acquisition and development opportunities from other well-capitalized real estate investors, including publicly-traded REITs and private investors. Further, as discussed below, we may not be able to finance the acquisition and development opportunities we identify. If we were unable to acquire and develop sufficient additional properties on favorable terms, or if such investments did not perform as expected, our revenue growth would be limited and our financial condition, results of operations, cash flow and ability to make distributions to our stockholders and Unitholders, the market price of the Company's common stock and the market value of the Units would be adversely affected.
We also generate income from the sale of our properties (including existing buildings, buildings which we have developed or re-developed on a merchant basis and land). The gain or loss on, and fees from, the sale of such properties are included in our income and can be a significant source of funds, in addition to revenues generated from rental income and tenant recoveries. Proceeds from sales are used to repay outstanding debt and, market conditions permitting, may be used to fund the acquisition of existing industrial properties, and the acquisition and development of new industrial properties. The sale of properties is impacted, variously, by property specific, market specific, general economic and other conditions, many of which are beyond our control. The sale of properties also entails various risks, including competition from other sellers and the availability of attractive financing for potential buyers of our properties. Further, our ability to sell properties is limited by safe harbor rules applying to REITs under the Code which relate to the number of properties that may be disposed of in a year, their tax bases and the cost of improvements made to the properties, along with other tests which enable a REIT to avoid punitive taxation on the sale of assets. If we are unable to sell properties on favorable terms, our income growth would be limited and our financial condition, results of operations, cash flow and ability to make distributions to our stockholders and Unitholders, the market price of the Company's common stock and the market value of the Units could be adversely affected.

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We utilize a portion of the net sales proceeds from property sales, borrowings under our unsecured credit facility (the "Unsecured Credit Facility") and proceeds from the issuance, when and as warranted, of additional debt and equity securities to refinance debt and finance future acquisitions and developments. Access to external capital on favorable terms plays a key role in our financial condition and results of operations, as it impacts our cost of capital and our ability and cost to refinance existing indebtedness as it matures and our ability to fund acquisitions and developments. Our ability to access external capital on favorable terms is dependent on various factors, including general market conditions, interest rates, credit ratings on our debt, the market's perception of our growth potential, our current and potential future earnings and cash distributions and the market price of the Company's common stock. If we were unable to access external capital on favorable terms, our financial condition, results of operations, cash flow and ability to make distributions to our stockholders and Unitholders, the market price of the Company's common stock and the market value of the Units could be adversely affected.

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Summary of Significant Transactions During the Three Months Ended March 31, 2019
During the three months ended March 31, 2019, we completed the following significant real estate transactions and financing activities:
We acquired one industrial property comprised of approximately 0.2 million square feet of GLA located in our Chicago market for a purchase price of $12.3 million, excluding costs incurred in conjunction with the acquisition.
We acquired 26 acres of land for development located in our Phoenix and Southern California markets for an aggregate purchase price of $6.0 million, excluding costs incurred in conjunction with these acquisitions.
We sold one industrial property comprised of approximately 0.1 million square feet of GLA for gross sales proceeds of $10.5 million.
We paid off $72.1 million in mortgage loans payable.
We declared a first quarter cash dividend of $0.23 per common share or Unit per quarter, an increase of 5.7% from the 2018 quarterly rate.
Results of Operations
The tables below summarize our revenues, property expenses and depreciation and other amortization by various categories for the three months ended March 31, 2019 and 2018. Same store properties are properties owned prior to January 1, 2018 and held as an in-service property through March 31, 2019 and developments and redevelopments that were placed in service prior to January 1, 2018. Properties which are at least 75% occupied at acquisition are placed in service, unless we anticipate tenant move-outs within two years of ownership would drop occupancy below 75%. Acquisitions that are less than 75% occupied at the date of acquisition and developments and redevelopments are placed in service as they reach the earlier of a) stabilized occupancy (generally defined as 90% occupied), or b) one year subsequent to acquisition or development/redevelopment construction completion. Acquired properties with occupancy greater than 75% at acquisition, but with tenants that we anticipate will move out in the first year of ownership, will be placed in service upon the earlier of reaching 90% occupancy or twelve months after move out. Properties are moved from the same store classification to the redevelopment classification when capital expenditures for a project are estimated to exceed 25% of the undepreciated gross book value of the property. Acquired properties are properties that were acquired subsequent to December 31, 2017 and held as an operating property through March 31, 2019. Sold properties are properties that were sold subsequent to December 31, 2017. (Re)Developments include developments and redevelopments that were not: a) substantially complete 12 months prior to January 1, 2018; or b) stabilized prior to January 1, 2018. Other revenues are derived from the operations of properties not placed in service under one of the categories discussed above, the operations of our maintenance company and other miscellaneous revenues. Other property expenses are derived from the operations of properties not placed in service under one of the categories discussed above, the operations of our maintenance company, vacant land expenses and other miscellaneous regional expenses.
During the three months ended March 31, 2018, one industrial property, comprising approximately 0.1 million square feet of GLA, was taken out of service for redevelopment. As a result of taking this industrial property out of service, the results of operations attributable to such property were reclassified from the same store property classification to the re(development) classification. During the year ended December 31, 2018, we completed the redevelopment of this property and the property is 100% occupied. This property will return to the same store classification in the first quarter of 2020.
Our future financial condition and results of operations, including rental revenues, may be impacted by the future acquisition, (re)development and sale of properties. Our future revenues and expenses may vary materially from historical rates.

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Comparison of Three Months Ended March 31, 2019 to Three Months Ended March 31, 2018
Our net income was $24.3 million and $37.5 million for the three months ended March 31, 2019 and 2018, respectively.
For the three months ended March 31, 2019 and 2018, the average occupancy rate of our same store properties was 97.1%, for both periods.
 
Three Months Ended March 31,
 
 
 
 
 
2019
 
2018
 
$ Change
 
% Change
 
($ in 000's)
REVENUES