First Industrial recently broke ground on the First Northwest Commerce Center in Houston

CHICAGO—The investment bank and institutional broker MLV & Co. LLC just released its latest earnings review of First Industrial Realty Trust, Inc. and decided to maintain its BUY rating for the Chicago-based operator and developer of industrial properties. MLV researchers found that its internal fundamentals remain strong and expects that a “recent S&P upgrade to investment grade will be followed by the other ratings agencies.”

First Industrial did miss, by a slight amount, MLV’s estimate of its cash flow. The trust reported a first quarter “core FFO/share of $0.26, which was below our estimate of $0.28 and consensus of $0.27,” the researchers noted. However, same-store NOI increased by 2.3% and trust has also seen an increase in occupancy, which went up 280 bps since the first quarter of 2013. MLV also increased its price target for the trust from $21 to $22. As of April 25, its price on the NYSE was $18.56.

“U.S. industrial market fundamentals are strong, demonstrated by 15 consecutive quarters of positive net absorption, as well as measured new supply and improving market rental rates,” said Bruce W. Duncan, First Industrial’s president and chief executive officer, last week after it released its earnings report. “We are positioned to grow cash flow as we increase occupancy in our existing portfolio and lease-up our new investments.”

First Industrial made several major acquisitions in the first quarter. For example, as reported in, it bought the Rivertown Distribution Center, a 251,968-square-foot warehouse and distribution facility in the Twin Cities for $13.4 million. Furthermore, it just started development of the 351,000-square-foot First Northwest Commerce Center in Houston with an estimated investment of $19.7 million.

MLV found that First Industrial has had an impressive turnaround in the last four years. The occupancy rate in its portfolio, which now stands at 92.4%, has increased 1,100 bps since the first quarter of 2010 and “is nearing stabilization.” And although its occupancy still lags a bit behind its peers, by about 200 to 300 bps, MLV judged that it is “laser focused on leasing-up vacancy and has more to work with than its peers, which creates an opportunity to report above-average NOI growth.”