First Industrial Cuts Workers, Stock Rises

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.