Nov. 4, 2009 (PR Newswire) -- CHICAGO, Nov. 4 /PRNewswire-FirstCall/ -- First Industrial Realty Trust, Inc. (NYSE: FR), a leading provider of industrial real estate supply chain solutions, today announced results for the quarter ended September 30, 2009. Diluted net income (loss) available to common stockholders per share (EPS) was $(0.04), compared to $0.08 in third quarter 2008. For the third quarter 2009, funds from operations (FFO) were $0.57 per share/unit on a diluted basis, up from $0.44 per share/unit a year ago. EPS and FFO results for the third quarter of 2009 reflect several one-time items including a $0.36 per share gain on retirement of debt, an income tax benefit of $0.13 per share, a non-cash loss of $0.14 per share related to an impairment charge for real estate and an $0.11 per share impairment charge related to certain of the Company's joint ventures.

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"We made further progress during the quarter on our plan to reduce total leverage with a focus on our 2011 and 2012 maturities," said Bruce W. Duncan, president and CEO. "With the new equity capital we successfully raised, along with proceeds from additional secured financing transactions and asset sales, we will continue to execute on our deleveraging plan."

Mr. Duncan added, "Our portfolio performance in the quarter reflected the competitive industry and economic conditions, as the level of vacancies relative to customer demand continued to impact our occupancy and rental rates. We are encouraged, however, by the level of interest in our available space in virtually all of our markets, and our regional teams are squarely focused on improving our portfolio occupancy over time."

Portfolio Performance for On Balance Sheet Properties

--  In-service occupancy was 81.7%, compared to 82.1% in the second quarter
--  Retained tenants in 82.4% of square footage up for renewal, up from an
average of 61.3% for the first half of 2009
--  Excluding lease termination fees, same property cash basis net operating
income (NOI) declined 7.8%.  Including lease termination fees, same
property NOI declined 7.7%

--  Rental rates decreased 9.4%; leasing costs were $2.20 per square foot

Capital Markets Activities and Financial Position (Balance Sheet Information)

--  Closed five secured financing transactions in the third quarter totaling
$47.1 million secured by 21 properties totaling approximately 1.6
million square feet with a 6.99% weighted average interest rate with
maturities ranging from five to seven years
--  Closed three secured financing transactions in the fourth quarter to
date totaling $54.0 million, secured by 14 properties totaling
approximately 1.9 million square feet with a weighted average interest
rate of 7.32% and maturities averaging five years
--  Completed the issuance of 3.0 million shares of the Company's common
stock, generating approximately $15.9 million in net proceeds, under the
direct stock purchase component of the Company's dividend reinvestment
and direct stock purchase plan
--  Completed common stock offering of 13.6 million shares in October for
net proceeds of approximately $68.3 million
--  Repurchased a total of approximately $123.7 million of senior unsecured
debt in the third quarter at an average purchase price of 84% of par,
consisting of:
--  $44.1 million of its 7.375% March 2011 senior notes
--  $1.0 million of its 4.625% September 2011 exchangeable notes
--  $40.2 million of its 6.875% April 2012 senior notes; and
--  $38.4 million of senior notes with maturities beyond 2012
--  Repurchased an additional $12.6 million of senior unsecured debt in the
fourth quarter to date
--  Less than $19 million of debt maturing and principal payments due
through the end of 2010
--  85% of real estate assets are unencumbered by mortgages

--  7.5 years weighted average maturity of permanent debt

"We generated additional capital for our deleveraging plan using a three-pronged approach of secured financings, asset sales and equity issuances," said Scott Musil, acting chief financial officer. "During the third quarter, we repurchased $124 million of senior unsecured debt at a 16% discount to par, with an additional $12.6 million repurchased in the fourth quarter to date. Since June 30, 2009, we have reduced the amounts due on our 2011 and 2012 senior unsecured notes by a combined $90 million."

Asset Sales

Balance Sheet

    --  Sold seven facilities totaling 307,000 square feet, including five
vacant facilities, plus three land parcels, for a total of $25.2 million

Joint Ventures

    --  Sold one building totaling 157,000 square feet and one land parcel for a
total of $12.0 million

Common Dividend Policy

As previously announced, First Industrial's dividend policy is to distribute the minimum amount required to maintain its REIT status. If required to pay common stock dividends in 2009, depending on its taxable income, the Company may elect to satisfy this obligation by distributing a combination of cash and common shares. The Company will make a determination regarding its 2009 dividend at year-end.

Anticipated Tax Refund

During the third quarter, as previously announced, First Industrial significantly restructured the operations of a taxable REIT subsidiary after receiving a favorable private letter ruling from the Internal Revenue Service (IRS). As a result of the restructuring, the subsidiary recognized tax losses on a number of properties and investments in certain of its joint ventures whose tax basis was greater than fair market value. Under federal income tax rules, the Company believes that the subsidiary is able to carry back these tax losses to offset taxable income it had previously recognized. Consequently, the Company expects to apply for and receive a federal income tax refund of approximately $27.0 million before the end of the first quarter of 2010. However, the tax refund could be challenged by the IRS, or delayed by the Company's filing of the necessary tax returns on a date that is later than anticipated, or by other reasons that the Company does not foresee, any of which may result in a delay or a diminution of the expected tax refund.

Expense Reduction Actions

As announced on September 29, 2009, First Industrial undertook further organizational and overhead cost reductions as part of its plan to align its cost structure with industry conditions and its level of business activity. These actions are expected to result in annualized savings in the range of approximately $8.0 million to $8.4 million. As a result of these actions, the Company incurred a pre-tax restructuring charge to earnings in the third quarter of $1.4 million, in addition to the $4.8 million of charges recorded in the first half of 2009, consisting primarily of one-time termination benefits and including office closing and other costs.

Joint Venture Activity

As previously disclosed, on September 18, 2009, First Industrial received a notice from the counterparty in the 2006 Net Lease Co-Investment Program that such counterparty is exercising the buy/sell provision in the program's governing agreement to either purchase our 15% interests in the real property assets currently owned by the program or sell to us its interests in some or all of such assets, along with an additional real property asset in another program which we manage but in which we have no ownership interest. Under that buy/sell provision, the Company has a 60 day period during which to respond. The Company is currently evaluating its alternatives, but now anticipates that it will accept the counterparty's offered price to purchase the Company's interests in all of the program's real property assets. As a result, the Company recognized an impairment charge of approximately $5.6 million as a result of the difference between its basis in its joint venture interest and the offered price. The purchasing party for each asset in the program will be required to pay within six months, or other mutually agreed upon time. First Industrial's fees from this program and from its management of the additional asset were approximately $0.5 million in the third quarter of 2009.

Also as previously announced, effective September 2, 2009, First Industrial no longer serves as asset, property and leasing manager for two properties in another net lease program with the same counterparty and in which the Company has no equity investment. The Company's fees from this contract were approximately $0.1 million in the third quarter of 2009. The Company received a one-time termination fee of approximately $0.9 million in the third quarter from the termination of this management agreement.

Balance Sheet Property Impairment Charge

First Industrial recognized a non-cash impairment charge of $6.9 million for the third quarter with respect to one balance sheet property comprised of 212,545 square feet located in the Inland Empire. Based on the Company's leasing assumptions for its intended holding period for the property, the Company determined the property's book value was impaired. As a result, the Company recognized a non-cash impairment charge based on the difference between the fair value of the property and its carrying value.

Outlook

Mr. Duncan stated, "We believe the picture for customer demand has improved since last quarter based on the heightened level of leasing interest in our available properties, although this activity has yet to manifest itself through increased lease signings. We expect new supply in the market to be limited for the next several quarters, which could benefit our portfolio if the economic recovery continues to gain traction."

Low End of      High End of
Guidance for     Guidance for
2009            2009
(Per share/unit) (Per share/unit)
---------------- ----------------

Net Loss Available to Common Stockholders         $(0.90)          $(0.80)
Add: Real Estate Depreciation/Amortization          2.85             2.85
Gain from Sale of Depreciated Properties
YTD 2009                                          (0.37)           (0.37)
-----            -----
FFO (NAREIT Definition)                            $1.58            $1.68
=====            =====

FFO Excluding Restructuring Charges                $1.71            $1.81
=====            =====

The following assumptions were used:

--  Average in-service occupancy for 2009 of 82.0% to 83.0%, representing a
tightening of the range by 0.5% at both ends
--  Same-store NOI of -4% to -5% for the full year, representing a
tightening of the prior range of -4% to -6%.
--  JV FFO of $10 million to $12 million, representing a reduction of $3.5
million at the midpoint, primarily due to the impairment charge related
to 2006 Net Lease Co-Investment Program, partially offset by the
one-time termination fee from a net lease program as discussed above
--  General and administrative expense of approximately $39.5 million to
$40.5 million, a reduction from prior guidance due to the additional
expense reduction actions in the quarter
--  Restructuring charges of $7.2 million ($4.2 million cash, $3.0 million
non-cash)
--  The Company has repurchased $12.6 million of debt since September 30,
2009.  Included in FFO and EPS guidance is approximately $0.02 per share
of gain related to the repurchase of this debt.  The Company is
targeting additional debt repurchases in 2009; however, the impact of
any future repurchases is not reflected in the FFO and EPS guidance
above.

--  The Company plans to sell additional properties in 2009 depending upon
market conditions, including previously depreciated assets, the impact
of which is not included in FFO under the NAREIT definition.  The impact
of future sales is also excluded from our EPS guidance above.

A number of factors could impact our ability to deliver results in line with our assumptions, such as interest rates, the economies of the United States and Canada, the supply and demand of industrial real estate, the availability and terms of financing to potential acquirers of real estate, the timing and yields for divestment and investment, and numerous other variables. There can be no assurance that First Industrial can achieve such results.

FFO Definition

First Industrial reports FFO in accordance with the NAREIT definition to provide a comparative measure to other REITs. NAREIT recommends that REITs define FFO as net income, excluding gains (or losses) from the sale of previously depreciated property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.

First Industrial Realty Trust, Inc. (NYSE: FR) provides industrial real estate solutions for every stage of a customer's supply chain, no matter how large or complex. Across major markets in North America, our local market experts manage, lease, buy, (re)develop, and sell industrial properties, including all of the major facility types - bulk and regional distribution centers, light industrial, manufacturing, and R&D/flex.