First Industrial's 3Q Predicts More Growth

CHICAGO-First Industrial Realty Trust Inc. saw diluted net income available to common stockholders grow 8% to 54 cents per share in the third quarter from last year's numbers, and FFO grew to $1 per share/unit on a diluted basis from 95 cents per share/unit from a year ago, said company officials in a recent third quarter report. Mike Brennan, president and chief executive officer, said net operating income grew 13% , largely due to higher occupancy and rental rates, as well as an increase in the size of the portfolio. "During the quarter, we placed in service more than 3 million square feet of new industrial space for our customers in eight facilities," he said. "We plan to ramp up our development activity even further as demand for industrial real estate rises with increasing imports of containerized cargo."

The company said other numbers were good during the quarter as well. Occupancy rose to 93.1%, up 90 basis points from 92.2% in second quarter 2006; the company retained tenants in 85.7% of square footage up for renewal during the quarter; same property NOI increased 3.1% on a cash basis, rental rates turned positive in the quarter, increasing 1.5%; and the company leased 8.7 million square feet.

So far in the fourth quarter, $84 million of acquisitions have already been completed by the company, which combined with developments currently under construction and under agreement/letter of intent of $603 million and acquisitions under agreement/letter of intent of $772 million, total $1.5 billion. "We expect a majority of our investments to be in major coastal and inland ports and markets that are projected to have above average population growth," said Johannson Yap, chief investment officer.

The company's guidance range for 2006 FFO per share/unit is $4.07 to $4.17 and for 2006 diluted net income available to common stockholders per share is $2.04 to $2.14 per share/unit. Book gains from property sales/fees are estimated to be $175 million to $180 million. The assumption for net economic gains in 2006 is between $115 million and $120 million, Brennan said. "Our estimate for FFO from joint ventures in 2006 is between $47 million and $52 million," Brennan said.

He said the expectation for next year is even more aggressive. The guidance for 2007 FFO per share/unit is in the range of $4.40 to $4.60, and for 2007 diluted net income available to common stockholders per share is in the range of $2.30 to $2.50. Book gains from property sales/fees are estimated to be $170 million to $180 million. The assumption for net economic gains in 2007 is between $120 million and $130 million, Brennan said. "Our assumption for FFO from joint ventures in 2007 is between $50 million and $55 million," he said. The company owns, operates and has under development more than 100 million square feet of industrial real estate in markets throughout the United States.