CHICAGO—First Industrial Realty Trust, Inc., a Chicago-based owner, operator and developer of industrial properties, recently released results for the fourth quarter that show both a boost in occupancy and strong same store NOI growth. Occupancy was 94.3% at the end of the fourth quarter, compared to 93.9% at the end of the third quarter of 2014, and 92.9% at the end of the fourth quarter of 2013, the data show. Same property cash basis net operating income increased 6.2% and rental rates increased 3.1% on a cash basis.
The results are not really a surprise. As the US economy continued to pick up steam in 2014, industrial demand intensified, pushing down vacancy rates and exerting upward pressure on rental rates. And according to experts, 2015 promises more of the same. David Egan, head of industrial research, CBRE Americas, told GlobeSt.com that “developers will be able to comfortably underwrite new development” and kick-start “a really strong renaissance in the industrial market.”
"The First Industrial team enjoyed another good year,” said Bruce W. Duncan, First Industrial's president and chief executive officer. "We also continued to make progress on our investment and divestment programs, using our platform to enhance our portfolio to deliver long-term cash flow growth to shareholders."
The board of directors declared a common dividend of $0.1275 per share/unit for the quarter ending on March 31, a 24.4% increase from the prior rate of $0.1025 per share.
"On the strength of our performance and outlook for 2015, we increased the dividend which is aligned with our expected growth in cash flow," added Duncan. "We are maintaining a conservative AFFO payout ratio of 50% to 60% that enables us to retain proceeds to help fund new investments or other business needs."
In the fourth quarter, the company was also active on the acquisition and development fronts. It acquired a 71% leased three-building portfolio in Phoenix totaling 220,000-square-feet, a 100% leased 200,000-square-foot distribution center in Minneapolis, a 100% leased 133,000-square-foot facility in the Inland Empire, and a land parcel in Atlanta for a total combined investment of $42.8 million.
Furthermore, it started the development of the two-building, 585,000-square-foot First 33 Commerce Center in the Lehigh Valley in Eastern Pennsylvania with an estimated investment of $43.8 million. It also started the 153,000-square-foot First Arlington Commerce Center @ I-20 in Dallas. The project was 41% pre-leased and the company estimated its investment was $9.5 million.
"In 2015, we expect to grow FFO and overall cash flow as we drive towards our year-end occupancy goal of 95% and increase rents in the portfolio,” Duncan said.
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
