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CHICAGO-First Industrial shares received a significant boost Thursday afternoon, following the company’s Q3 earnings conference call. Shares increased by $3.23, or 51%, to $9.54 in the second half of the day’s trading. During the earnings report, released on the heels of last week’s resignation of the company’s CEO, the REIT announced plans to cut its dividend and layoff 120 employees to reduce costs.

The company announced plans to reduce its Q4 dividend to 25 cents–a reduction of about 65%, or 47 cents. “A change to our regular dividend reflects our decision to align our dividend more closely with our portfolio income,” says interim CEO Ed Tyler. In the face of decreased demand for the company’s services, the REIT has announced further cost-cutting tactics in the form of a 20% staff reduction, which results in 120 job losses. “Of course, we did not take that decision lightly to reduce our staffing levels,” says Michael J. Havala, CFO. “An important consideration was to make sure that we could continue to provide the industry leading service levels that we’ve been known for by our customers and our partners. We built a very valuable platform and we want to make sure we preserve its value, and at the same time we of course need to make sure our expenses are appropriate for the more difficult environment that we are in.”

Last week, the company announced the resignation of former First Industrial president and CEO Mike Brennan. He had been with the REIT since its creation in 1994. Tyler, a member of the company’s board of directors, has stepped into the role of lead director and will act as interim CEO until a search for Brennan’s successor is complete. The search will be conducted by a committee of Board.

“Brennan contributed greatly to the building of First Industrial’s real estate platform, and the company appreciates his dedication and leadership for more than 20 years,” Tyler said during the Q3 earnings conference call Thursday. “The board, however, believes this is the right time to install new leadership at the CEO level and to move the company forward in improving its valuation and achieving its full potential. We are moving quickly to identify the next CEO and the Board will be considering internal and external candidates.” Tyler would not specify a timetable for the replacement.

Havala says though they expect the company portfolio to weaken somewhat in 2009, to this point it has continued to perform well. Occupancy increased in Q3 by 20 basis points to 93.7%, he says, exceeding the national average around 89%. Tenant retention was around 87%, leasing costs remained low near $1.53 per sf, and rental rates grew by more than 3%. “This is a company with a strong backbone, and while we’re faced with a tough environment we’re making tough decisions,” Havala says. “By doing this, we will be one of the survivors and likely better for it, and this isn’t just wishful thinking.”

Tyler echoed comments of the company’s strength in the face of economic challenges, and offered investors a positive outlook on the strength of the company and its positive performance in the future. “Our balance sheet capital position is solid with a very manageable debt maturity schedule,” Tyler says. “Our portfolio, our primary income source, continues to deliver a solid performance. We have undertaken significant actions to align our costs with the current transaction and economic environment, and we have in place institutional investment capacity to take advantage of attractive investment opportunities.”

The Midwest trust is mostly known for its strong holdings and development of industrial properties around the world. Just a few months ago, the trust announced it was expanding its presence further into European markets, opening offices in Paris and Dusseldorf. Last month, the company also extended its $5-billion joint ventures with California State Teachers’ Retirement System through the end of 2018. The ventures mostly had 10-year terms and were started at various times throughout the past few years, with industrial properties spread throughout the US, Canada and Europe.

However, after hitting almost $35 per share in mid-September, the stock started falling along with the rest of the market, closing at $9.54 per share at the close Thursday. Analysts panned the stock earlier this month when Brennan, claiming that the credit crunch and economic downturn had hurt sales and gains, downgraded the REIT’s earnings projections for 2008 and 2009.

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