FIRST INDUSTRIAL REALTY TRUST, INC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Form 10-Q. Unless stated otherwise or the context otherwise requires, the terms "we," "our" and "us" refer toFirst Industrial Realty Trust, Inc. (the "Company") and its subsidiaries, includingFirst Industrial, L.P. (the "Operating Partnership") and its consolidated subsidiaries. Forward-Looking Statements The following discussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). We intend for such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on certain assumptions and describe our future plans, strategies and expectations, and are generally identifiable by use of the words "believe," "expect," "plan," "intend," "anticipate," "estimate," "project," "seek," "target," "potential," "focus," "may," "will," "should" or similar words. Although we believe the expectations reflected in forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be attained or that results will not materially differ. Important factors that we think could cause our actual results to differ materially from expected results are summarized below. One of the most significant factors, however, is the ongoing impact of the current outbreak of the novel coronavirus (COVID-19), on theU.S. , regional and global economies and the broader financial markets. The outbreak of COVID-19 has also impacted, and is likely to continue to impact, directly or indirectly, many of the other important factors below. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. In particular, it is difficult to fully assess the impact of COVID-19 at this time due to, among other factors, uncertainty regarding the severity and duration of the outbreak domestically and internationally and the effectiveness of federal, state and local governments' efforts to contain the spread of COVID-19 and respond to its direct and indirect impact on theU.S. economy and economic activity. Factors which could have a materially adverse effect on our operations and future prospects include, but are not limited to: •changes in national, international, regional and local economic conditions generally and real estate markets specifically; •changes in legislation/regulation (including changes to laws governing the taxation of real estate investment trusts) and actions of regulatory authorities; •our ability to qualify and maintain our status as a real estate investment trust; •the availability and attractiveness of financing (including both public and private capital) and changes in interest rates; •the availability and attractiveness of terms of additional debt repurchases; •our ability to retain our credit agency ratings; •our ability to comply with applicable financial covenants; •our competitive environment; •changes in supply, demand and valuation of industrial properties and land in our current and potential market areas; •our ability to identify, acquire, develop and/or manage properties on favorable terms; •our ability to dispose of properties on favorable terms; •our ability to manage the integration of properties we acquire; •potential liability relating to environmental matters; •defaults on or non-renewal of leases by our tenants; •decreased rental rates or increased vacancy rates; •higher-than-expected real estate construction costs and delays in development or lease-up schedules; •the uncertainty and economic impact of pandemics, epidemics or other public health emergencies or fear of such events, such as the recent outbreak of COVID-19; •potential natural disasters and other potentially catastrophic events such as acts of war and/or terrorism; •litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; •risks associated with our investments in joint ventures, including our lack of sole decision-making authority; and other risks and uncertainties described in this report, in Item 1A, "Risk Factors" and elsewhere in our annual report on Form 10-K for the year endedDecember 31, 2019 as well as those risks and uncertainties discussed from time to time in our other Exchange Act reports and in our other public filings with theSecurities and Exchange Commission (the "SEC"). 26 -------------------------------------------------------------------------------- We caution you not to place undue reliance on forward-looking statements, which reflect our outlook only and speak only as of the date of this report. We assume no obligation to update or supplement forward-looking statements. General The Company is a self-administered and fully integrated real estate company which owns, manages, acquires, sells, develops and redevelops industrial real estate. The Company is aMaryland corporation organized onAugust 10, 1993 and a real estate investment trust ("REIT") as defined in the Internal Revenue Code of 1986 (the "Code"). We began operations onJuly 1, 1994 . The Company's operations are conducted primarily through theOperating Partnership , of which the Company is the sole general partner (the "General Partner"), with an approximate 97.9% ownership interest ("General Partner Units") atJune 30, 2020 .The Operating Partnership also conducts operations through eight other limited partnerships (the "Other Real Estate Partnerships"), numerous limited liability companies ("LLCs") and certain taxable REIT subsidiaries ("TRSs"), the operating data of which, together with that of theOperating Partnership , is consolidated with that of the Company as presented herein.The Operating Partnership holds at least a 99% limited partnership interest in each of the Other Real Estate Partnerships. The general partners of the Other Real Estate Partnerships are separate corporations, wholly-owned by the Company, each with at least a .01% general partnership interest in the Other Real Estate Partnerships. The Company does not have any significant assets or liabilities other than its investment in theOperating Partnership and its 100% ownership interest in the general partners of the Other Real Estate Partnerships. The noncontrolling interest in theOperating Partnership of approximately 2.1% atJune 30, 2020 represents the aggregate partnership interest held by the limited partners thereof ("Limited Partner Units" and together with the General Partner Units, the "Units"). The limited partners of theOperating Partnership are persons or entities who contributed their direct or indirect interests in properties to theOperating Partnership in exchange for common units of theOperating Partnership and/or recipients of RLP Units of theOperating Partnership (see Note 6) pursuant to the Company's stock incentive plan. We also own a 49% equity interest in, and provide various services to, a joint venture (the "Joint Venture") through a wholly-owned TRS of theOperating Partnership . The Joint Venture is accounted for under the equity method of accounting. The operating data of the Joint Venture is not consolidated with that of theOperating Partnership or the Company as presented herein. See Note 5 to the consolidated financial statements for more information related to the Joint Venture. Profits, losses and distributions of theOperating Partnership , the LLCs, the Other Real Estate Partnerships, the TRSs and the Joint Venture are allocated to the general partner and the limited partners, the members or the shareholders, as applicable, of such entities in accordance with the provisions contained within their respective organizational documents. As ofJune 30, 2020 , we owned 438 industrial properties located in 20 states, containing an aggregate of approximately 63.0 million square feet of gross leasable area ("GLA"). Of the 438 properties owned on a consolidated basis, none of them are directly owned by the Company. Available Information We maintain a website at www.firstindustrial.com. Information on this website shall not constitute part of this Form 10-Q. Copies of our respective annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such reports are available without charge on our website as soon as reasonably practicable after such reports are filed with or furnished to theSEC . You may also read and copy any document filed at the public reference facilities of theSEC at100 F Street, N.E. ,Washington, D.C. 20549. Please call theSEC at (800)SEC -0330 for further information about the public reference facilities. These documents also may be accessed through theSEC's Interactive Data Electronic Application via theSEC's home page on the Internet (www.sec.gov). In addition, the Company's Corporate Governance Guidelines, Code of Business Conduct andEthics, Audit Committee Charter, Compensation Committee Charter and Nominating/Corporate Governance Committee Charter, along with supplemental financial and operating information prepared by us, are all available without charge on the Company's website or upon request to the Company. Amendments to, or waivers from, our Code of Business Conduct and Ethics that apply to our executive officers or directors will also be posted to our website. We also post or otherwise make available on our website from time to time other information that may be of interest to our investors. Please direct requests as follows:First Industrial Realty Trust, Inc. 1 N. Wacker Drive , Suite 4200Chicago, IL 60606 Attention: Investor Relations 27
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Management's Overview
We believe our financial condition and results of operations are, primarily, a
function of our performance in four key areas: leasing of industrial properties,
acquisition and development of additional industrial properties, disposition of
industrial properties and access to external capital.
We generate revenue primarily from rental income and tenant recoveries from
operating leases of our industrial properties. Such revenue is offset by certain
property specific operating expenses, such as real estate taxes, repairs and
maintenance, property management, utilities and insurance expenses, along with
certain other costs and expenses, such as depreciation and amortization costs
and general and administrative and interest expenses. Our revenue growth is
dependent, in part, on our ability to: (i) increase rental income, through
increasing either or both occupancy rates and rental rates at our properties;
(ii) maximize tenant recoveries; and (iii) minimize operating and certain other
expenses. Revenues generated from our leases are a significant source of funds,
in addition to income generated from gains on the sale of our properties (as
discussed below), for our liquidity. The leasing of property, in general, and
occupancy rates, rental rates, operating expenses and certain non-operating
expenses, in particular, are impacted, variously, by property specific, market
specific, general economic and other conditions, many of which are beyond our
control. The leasing of property also entails various risks, including the risk
of tenant default. If we were unable to maintain or increase occupancy rates and
rental rates at our properties or to maintain tenant recoveries and operating
and certain other expenses consistent with historical levels and proportions,
our revenue would decline. Further, if a significant number of our tenants were
unable to pay rent (including tenant recoveries) or if we were unable to rent
our properties on favorable terms, our financial condition, results of
operations, cash flow and ability to make distributions to our stockholders and
Unitholders, the market price of the Company's common stock and the market value
of the Units would be adversely affected.
Our revenue growth is also dependent, in part, on our ability to acquire
existing and develop new industrial properties on favorable terms. We seek to
identify opportunities to acquire existing industrial properties on favorable
terms, and, when conditions permit, also seek to acquire and develop new
industrial properties on favorable terms. Existing properties, as they are
acquired, and acquired and developed properties, as they are leased, generate
revenue from rental income, tenant recoveries and fees, which, as discussed
above, are sources of funds for our distributions to our stockholders and
Unitholders. The acquisition and development of properties is impacted,
variously, by property specific, market specific, general economic and other
conditions, many of which are beyond our control. The acquisition and
development of properties also entails various risks, including the risk that
our investments may not perform as expected. For example, acquired existing and
acquired and developed new properties may not sustain and/or achieve anticipated
occupancy and rental rate levels. With respect to acquired and developed new
properties, we may not be able to complete construction on schedule or within
budget, resulting in increased debt service expense and construction costs and
delays in leasing the properties. Also, we face significant competition for
attractive acquisition and development opportunities from other well-capitalized
real estate investors, including publicly-traded REITs and private investors.
Further, as discussed below, we may not be able to finance the acquisition and
development opportunities we identify. If we were unable to acquire and develop
sufficient additional properties on favorable terms, or if such investments did
not perform as expected, our revenue growth would be limited and our financial
condition, results of operations, cash flow and ability to make distributions to
our stockholders and Unitholders, the market price of the Company's common stock
and the market value of the Units would be adversely affected.
We also generate income from the sale of our properties (including existing
buildings, buildings which we have developed or re-developed on a merchant basis
and land). The gain or loss on, and fees from, the sale of such properties are
included in our income and can be a significant source of funds, in addition to
revenues generated from rental income and tenant recoveries. Proceeds from sales
are used to repay outstanding debt and, market conditions permitting, may be
used to fund the acquisition of existing industrial properties, and the
acquisition and development of new industrial properties. The sale of properties
is impacted, variously, by property specific, market specific, general economic
and other conditions, many of which are beyond our control. The sale of
properties also entails various risks, including competition from other sellers
and the availability of attractive financing for potential buyers of our
properties. Further, our ability to sell properties is limited by safe harbor
rules applying to REITs under the Code which relate to the number of properties
that may be disposed of in a year, their tax bases and the cost of improvements
made to the properties, along with other tests which enable a REIT to avoid
punitive taxation on the sale of assets. If we are unable to sell properties on
favorable terms, our income growth would be limited and our financial condition,
results of operations, cash flow and ability to make distributions to our
stockholders and Unitholders, the market price of the Company's common stock and
the market value of the Units could be adversely affected.
28
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We utilize a portion of the net sales proceeds from property sales, borrowings
under our unsecured credit facility (the "Unsecured Credit Facility") and
proceeds from the issuance, when and as warranted, of additional debt and equity
securities to refinance debt and finance future acquisitions and developments.
Access to external capital on favorable terms plays a key role in our financial
condition and results of operations, as it impacts our cost of capital and our
ability and cost to refinance existing indebtedness as it matures and our
ability to fund acquisitions and developments. Our ability to access external
capital on favorable terms is dependent on various factors, including general
market conditions, interest rates, credit ratings on our debt, the market's
perception of our growth potential, our current and potential future earnings
and cash distributions and the market price of the Company's common stock. If we
were unable to access external capital on favorable terms, our financial
condition, results of operations, cash flow and ability to make distributions to
our stockholders and Unitholders, the market price of the Company's common stock
and the market value of the Units could be adversely affected.
29
--------------------------------------------------------------------------------Impact of COVID-19
The following discussion is intended to provide stockholders with certain information regarding the impacts of the COVID-19 pandemic on our business and management's efforts to respond to those impacts. While our results for the first half of 2020 were in line with our expectations, the COVID-19 pandemic and the significant and wide-ranging response of international, federal, state and local public health and governmental authorities in regions acrossthe United States and the world, including quarantines, "stay-at-home" orders and similar mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations, and the volatile economic, business and financial market conditions resulting therefrom, could negatively impact our results of operations during the remainder of 2020 and in future periods. Further discussion of the potential risks facing our business from the COVID-19 pandemic is provided below under Part II, Item 1A - Risk Factors. •As ofJuly 22, 2020 , our monthly rental billing collection rates for the second quarter andJuly 2020 is 98% and 97%, respectively. Such collection rates may not be indicative of collections in any future period. •During the six months endedJune 30, 2020 , we granted rent deferral requests totaling$0.7 million to 14 different tenants at our properties. All of these deferral requests require full repayment byDecember 31, 2020 and do not impact revenue recognition. •During the six months endedJune 30, 2020 , we recognized bad debt expense of$0.8 million relating to cash rents and$1.4 million relating to deferred rent receivables for which our assessment that full collection of future contractual lease payments is no longer probable.
We have taken a number of proactive measures to maintain the strength of our business and manage the impact of COVID-19 on our operations and liquidity, including the following:
•The health and safety of our employees and their families is a top priority. We have adapted our operations to protect employees, including enabling our IT systems so that employees can work remotely. AtJune 30, 2020 , approximately 60% of our employees continue to work remotely on a full or part time basis. •We have a$200.0 million term loan maturing inJanuary 2021 and approximately$63 million of mortgage debt maturing inOctober 2021 . DuringJuly 2020 , we entered into a new 2020 Unsecured Term Loan agreement for$200.0 million and repaid this maturing term loan (See Subsequent Events). As ofJuly 24, 2020 , we have approximately$50 million in cash and cash equivalents and$404.1 million available under our Unsecured Credit Facility. Additionally, duringJuly 2020 , we entered into a Note and Guaranty Agreement to sell up to$300.0 million of private placement notes. We anticipate funding of the private placement notes on or aboutSeptember 17, 2020 (See Subsequent Events). Our Unsecured Credit Facility matures inOctober 2021 ; however, it is extendable for one year, at our option, which enables us to extend this maturity toOctober 2022 . •We have suspended all new speculative vertical development projects for the foreseeable future other than completing development and redevelopment properties that were in progress as ofMarch 31, 2020 and expenditures required to obtain permits and other horizontal construction work; however, because we entered into a lease inJuly 2020 with a tenant for a 0.2 million square foot build-to-suit development project in the Inland Empire with an estimated total investment cost of approximately$22.4 million ("New BTS Project "), we are commencing with construction of theNew BTS Project . Our total projected costs to complete construction and stabilize the developments and redevelopments under construction (including theNew BTS Project ), developments that are complete but not fully funded as well as to complete ongoing permitting and other planned horizontal construction work at one of our land sites, is approximately$73 million for the remainder of 2020 and approximately$44 million for 2021 and beyond. 30
-------------------------------------------------------------------------------- Summary of Significant Transactions During the Six Months EndedJune 30, 2020 During the six months endedJune 30, 2020 , we completed the following significant real estate transactions and financing activities: •We acquired six industrial properties comprised of approximately 0.9 million square feet of GLA located in theBaltimore ,Los Angeles andNorthern California markets for an aggregate purchase price of$106.8 million , excluding transactions costs. •We acquired approximately 82.1 acres of land for development located in theMiami andSouthern California markets, for an aggregate purchase price of$54.4 million , excluding transaction costs. •We sold 12 industrial properties comprising approximately 0.4 million square feet of GLA for gross sales proceeds of$41.1 million . •We leased 100% of a 0.6 million square foot development forward inBaltimore that was acquired during the three months endedMarch 31, 2020 . •We entered into distribution agreements with certain sales agents to sell up to 14 million shares of our common stock, for up to$500 million aggregate gross sales proceeds, from time to time in "at-the-market" ("ATM") offerings, which replaced our prior ATM program established in 2017. •We paid off$15.1 million in mortgage loans payable. •We declared first and second quarter cash dividends of$0.25 per common share or Unit per quarter, an increase of 8.7% from the 2019 quarterly rate. Results of Operations The tables below summarize our revenues, property expenses and depreciation and other amortization by various categories for the three and six months endedJune 30, 2020 and 2019. Same store properties are properties owned prior toJanuary 1, 2019 and held as an in-service property throughJune 30, 2020 and developments and redevelopments that were placed in service prior toJanuary 1, 2019 . Properties which are at least 75% occupied at acquisition are placed in service, unless we anticipate tenant move-outs within two years of ownership would drop occupancy below 75%. Acquisitions that are less than 75% occupied at the date of acquisition and developments and redevelopments are placed in service as they reach the earlier of a) stabilized occupancy (defined as 90% occupied), or b) one year subsequent to acquisition or development/redevelopment construction completion. Acquired properties with occupancy greater than 75% at acquisition, but with tenants that we anticipate will move out within two years of ownership, will be placed in service upon the earlier of reaching 90% occupancy or twelve months after move out. Properties are moved from the same store classification to the redevelopment classification when capital expenditures for a project are estimated to exceed 25% of the undepreciated gross book value of the property. Acquired properties are properties that were acquired subsequent toDecember 31, 2018 and held as an operating property throughJune 30, 2020 . Sold properties are properties that were sold subsequent toDecember 31, 2018 . (Re)Developments include developments and redevelopments that were not: a) substantially complete 12 months prior toJanuary 1, 2019 ; or b) stabilized prior toJanuary 1, 2019 . Other revenues are derived from the operations of properties not placed in service under one of the categories discussed above, the operations of our maintenance company and other miscellaneous revenues. Other property expenses are derived from the operations of properties not placed in service under one of the categories discussed above, the operations of our maintenance company, vacant land expenses and other miscellaneous regional expenses. Our future financial condition and results of operations, including rental revenues, may be impacted by the future acquisition, (re)development and sale of properties. Our future revenues and expenses may vary materially from historical rates. 31 -------------------------------------------------------------------------------- Comparison of Six Months EndedJune 30, 2020 to Six Months EndedJune 30, 2019 Our net income was$78.0 million and$65.1 million for the six months endedJune 30, 2020 and 2019, respectively. For the six months endedJune 30, 2020 and 2019, the average daily occupancy rate of our same store properties was 97.3% and 97.5%, respectively. Six Months Ended June 30, 2020 2019 $ Change % Change ($ in 000's) REVENUES Same Store Properties$ 191,621 $ 187,648 $ 3,973 2.1 % Acquired Properties 2,484 144 2,340 1,625.0 % Sold Properties 3,058 17,584 (14,526) (82.6) % (Re)Developments 17,760 939 16,821 1,791.4 % Other 4,622 2,321 2,301 99.1 % Total Revenues$ 219,545 $ 208,636 $ 10,909 5.2 % Revenues from same store properties increased$4.0 million primarily due to an increase in rental rates, offset by an increase in reserves taken on tenant accounts receivable and deferred rent receivable amounts for tenants due to our assessment that full collection of future contractual lease payments is no longer probable and a decrease in occupancy. Revenues from acquired properties increased$2.3 million due to the 15 industrial properties acquired subsequent toDecember 31, 2018 totaling approximately 1.4 million square feet of GLA. Revenues from sold properties decreased$14.5 million due to the 52 industrial properties sold subsequent toDecember 31, 2018 totaling approximately 6.3 million square feet of GLA. Revenues from (re)developments increased$16.8 million due to an increase in occupancy and other revenue of$1.1 million related to a final insurance settlement for a property that was destroyed by fire in 2016. Revenues from other increased$2.3 million primarily due to the acquisition of partially occupied properties during 2018 that were not yet stabilized atDecember 31, 2018 and therefore are not yet included in the same store pool as well as the acquisition of a land site during 2019 for which we intend to develop industrial buildings in the future but currently we are leasing to tenants and collecting ground lease rent. Six Months Ended June 30, 2020 2019 $ Change % Change ($ in 000's) PROPERTY EXPENSES Same Store Properties$ 46,128 $ 46,921 $ (793) (1.7) % Acquired Properties 805 194 611 314.9 % Sold Properties 848 5,117 (4,269) (83.4) % (Re)Developments 4,262 862 3,400 394.4 % Other 5,089 4,453 636 14.3 % Total Property Expenses$ 57,132 $ 57,547 $ (415) (0.7) % Property expenses include real estate taxes, repairs and maintenance, property management, utilities, insurance and other property related expenses. Property expenses from same store properties decreased$0.8 million primarily due to a decrease in repairs and maintenance and snow removal costs, offset by an increase in real estate taxes and insurance. Property expenses from acquired properties increased$0.6 million due to properties acquired subsequent toDecember 31, 2018 . Property expenses from sold properties decreased$4.3 million due to properties sold subsequent toDecember 31, 2018 . Property expenses from (re)developments increased$3.4 million primarily due to the substantial completion of developments. Property expenses from other increased by$0.6 million due to an increase in real estate tax expense on developable land and certain miscellaneous expenses, offset by a decrease in maintenance company expenses. General and administrative expense increased by$3.9 million , or 28.7% primarily due to severance expense ($0.9 million ) associated with the closing of ourIndianapolis regional office during the six months endedJune 30, 2020 , accelerated stock based compensation expense ($0.3 million ) incurred during the six months endedJune 30, 2020 related to a new retirement benefit that results in awards becoming non-forfeitable upon grant to qualifying employees as well as an increase in incentive compensation during the six months endedJune 30, 2020 as compared to the six months endedJune 30, 2019 . 32 --------------------------------------------------------------------------------
Six Months Ended June 30,
2020 2019 $ Change % Change
($ in 000's)
DEPRECIATION AND OTHER AMORTIZATION
Same Store Properties $ 52,674 $ 52,537 $ 137 0.3 %
Acquired Properties 1,934 135 1,799 1,332.6 %
Sold Properties 160 4,534 (4,374) (96.5) %
(Re) Developments 6,442 1,211 5,231 432.0 %
Corporate Furniture , Fixtures and Equipment and
Other 1,953 1,412 541 38.3 %
Total Depreciation and Other Amortization $ 63,163 $ 59,829 $ 3,334 5.6 %
Depreciation and other amortization from same store properties remained
relatively unchanged. Depreciation and other amortization from acquired
properties increased $1.8 million due to properties acquired subsequent to
December 31, 2018 . Depreciation and other amortization from sold properties
decreased $4.4 million due to properties sold subsequent to December 31, 2018 .
Depreciation and other amortization from (re)developments increased $5.2 million
primarily due to an increase in depreciation and amortization related to
completed developments. Depreciation from corporate furniture, fixtures and
equipment and other increased $0.5 million primarily due to depreciation related
to properties acquired during 2018 that were not yet stabilized at December 31,
2018 and therefore are not yet included in the same store pool.
For the six months ended June 30, 2020 , we recognized $23.1 million of gain on
sale of real estate related to the sale of 12 industrial properties comprised of
approximately 0.4 million square feet of GLA. For the six months ended June 30,
2019 , we recognized $0.9 million of gain on sale of real estate related to the
sale of two industrial properties comprised of approximately 0.1 million square
feet of GLA.
Interest expense remained relatively unchanged; however, the small decrease was
caused by a decrease in the weighted average interest rate for the six months
ended June 30, 2020 (3.64%) as compared to the six months ended June 30, 2019
(4.12%) and an increase in capitalized interest of $1.1 million caused by an
increase in development costs eligible for capitalization during the six months
ended June 30, 2020 as compared to the six months ended June 30, 2019 ,
substantially offset by an increase in the weighted average debt balance
outstanding for the six months ended June 30, 2020 ($1,578.8 million ) as
compared to the six months ended June 30, 2019 ($1,342.5 million ).
Amortization of debt issuance costs remained relatively unchanged.
Equity in loss of Joint Venture for the six months ended June 30, 2020 was not
significant. Equity in income of Joint Venture for the six months ended June 30,
2019 of $16.4 million includes our pro-rata share of gain related to a sale of
land by the Joint Venture and $4.9 million of accrued incentive fees.
Income tax expense decreased by $3.0 million , or 95.4%, during the six months
ended June 30, 2020 as compared to the six months ended June 30, 2019 , primarily
due to a decrease in our pro-rata share of gain from the sale of land by the
Joint Venture as well as accrued incentive fees we earned from the Joint
Venture.
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Comparison of Three Months Ended June 30, 2020 to Three Months Ended June 30,
2019
Our net income was $36.4 million and $40.7 million for the three months ended
June 30, 2020 and 2019, respectively.
For the three months ended June 30, 2020 and 2019, the average daily occupancy
rate of our same store properties was 97.2% and 97.5%, respectively.
Three Months Ended June 30,
2020 2019 $ Change % Change
($ in 000's)
REVENUES
Same Store Properties $ 95,602 $ 93,374 $ 2,228 2.4 %
Acquired Properties 1,441 144 1,297 900.7 %
Sold Properties 1,235 8,451 (7,216) (85.4) %
(Re)Developments 8,603 891 7,712 865.5 %
Other 2,321 1,235 1,086 87.9 %
Total Revenues $ 109,202 $ 104,095 $ 5,107 4.9 %
Revenues from same store properties increased $2.2 million primarily due to an
increase in rental rates, offset by an increase in reserves taken on tenant
accounts receivable and deferred rent receivable amounts for tenants in which
our assessment that full collection of future contractual lease payments is no
longer probable and a decrease in occupancy. Revenues from acquired properties
increased $1.3 million due to the 15 industrial properties acquired subsequent
to December 31, 2018 totaling approximately 1.4 million square feet of GLA.
Revenues from sold properties decreased $7.2 million due to the 52 industrial
properties sold subsequent to December 31, 2018 totaling approximately 6.3
million square feet of GLA. Revenues from (re)developments increased $7.7
million due to an increase in occupancy. Revenues from other increased $1.1
million primarily due to the acquisition of partially occupied properties during
2018 that were not yet stabilized at December 31, 2018 and therefore are not yet
included in the same store pool as well as the acquisition of a land site during
2019 for which we intend to develop industrial buildings in the future, but
currently we are leasing to tenants and collecting ground lease rent.
Three Months Ended June 30,
2020 2019 $ Change % Change
($ in 000's)
PROPERTY EXPENSES
Same Store Properties $ 22,690 $ 22,608 $ 82 0.4 %
Acquired Properties 452 143 309 216.1 %
Sold Properties 328 2,407 (2,079) (86.4) %
(Re)Developments 2,161 335 1,826 545.1 %
Other 2,420 1,886 534 28.3 %
Total Property Expenses $ 28,051 $ 27,379 $ 672 2.5 %
Property expenses include real estate taxes, repairs and maintenance, property
management, utilities, insurance and other property related expenses. Property
expenses from same store properties remained relatively unchanged; however,
property expenses increased due to increases in real estate taxes and insurance,
substantially offset by a decrease in repairs and maintenance. Property expenses
from acquired properties increased $0.3 million due to properties acquired
subsequent to December 31, 2018 . Property expenses from sold properties
decreased $2.1 million due to properties sold subsequent to December 31, 2018 .
Property expenses from (re)developments increased $1.8 million primarily due to
the substantial completion of developments. Property expenses from other
increased by $0.5 million due to an increase in real estate tax expense on
developable land and certain miscellaneous expenses, offset by a decrease in
maintenance company expenses.
General and administrative expense increased by $1.5 million , or 21.4% primarily
due to an increase in incentive compensation during the three months ended June
30, 2020 as compared to the three months ended June 30, 2019 .
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Three Months Ended June 30,
2020 2019 $ Change % Change
($ in 000's)
DEPRECIATION AND OTHER AMORTIZATION
Same Store Properties $ 26,722 $ 26,268 $ 454 1.7 %
Acquired Properties 1,196 88 1,108 1,259.1 %
Sold Properties - 2,193 (2,193) (100.0) %
(Re) Developments 3,339 575 2,764 480.7 %
Corporate Furniture , Fixtures and Equipment and
Other 975 650 325 50.0 %
Total Depreciation and Other Amortization $ 32,232 $ 29,774 $ 2,458 8.3 %
Depreciation and other amortization from same store properties remained
relatively unchanged. Depreciation and other amortization from acquired
properties increased $1.1 million due to properties acquired subsequent to
December 31, 2018 . Depreciation and other amortization from sold properties
decreased $2.2 million due to properties sold subsequent to December 31, 2018 .
Depreciation and other amortization from (re)developments increased $2.8 million
primarily due to an increase in depreciation and amortization related to
completed developments. Depreciation from corporate furniture, fixtures and
equipment and other increased $0.3 million primarily due to depreciation related
to properties acquired during 2018 that were not yet stabilized at December 31,
2018 and therefore are not yet included in the same store pool.
For the three months ended June 30, 2020 , we recognized $9.1 million of gain on
sale of real estate related to the sale of three industrial properties comprised
of approximately 0.2 million square feet of GLA. For the three months ended June
30, 2019 , we recognized $1.1 million of gain on sale of real estate related to
the sale of one industrial property comprised of approximately 0.01 million
square feet of GLA.
Interest expense remained relatively unchanged; however, the small decrease was
caused by a decrease in the weighted average interest rate for the three months
ended June 30, 2020 (3.48%) as compared to the three months ended June 30, 2019
(4.02%) and an increase in capitalized interest of $0.5 million caused by an
increase in development costs eligible for capitalization during the three
months ended June 30, 2020 as compared to the three months ended June 30, 2019 ,
substantially offset by an increase in the weighted average debt balance
outstanding for the three months ended June 30, 2020 ($1,637.2 million ) as
compared to the three months ended June 30, 2019 ($1,367.7 million ).
Amortization of debt issuance costs remained relatively unchanged.
Equity in loss of Joint Venture for the three months ended June 30, 2020 was not
significant. Equity in income of Joint Venture for the three months ended June
30, 2019 of $15.5 million includes our pro-rata share of gain related to a sale
of real estate by the Joint Venture and $4.9 million of accrued incentive fees.
Income tax expense decreased by $2.7 million , or 92.5% during the three months
ended June 30, 2020 as compared to the three months ended June 30, 2019
primarily due to a decrease in our pro-rata share of gain from the sale of real
estate by the Joint Venture as well as accrued incentive fees we earned from the
Joint Venture.
35-------------------------------------------------------------------------------- Leasing Activity The following table provides a summary of our commenced leases for the three and six months endedJune 30, 2020 . The table does not include month-to-month leases or leases with terms less than twelve months. Number of Square Feet Weighted Lease Costs Weighted Leases CommencedNet Rent Per Straight Line Basis Average LeasePer Square Average Tenant Three Months Ended Commenced (in 000's) Square Foot (A) Rent Growth (B) Term (C) Foot (D) Retention (E) New Leases 19 621 $ 5.88 37.5 % 4.1$ 2.56 N/A Renewal Leases 36 1,560 $ 5.99 30.6 % 7.8$ 2.44 88.7 % Development / Acquisition Leases 3 697 $ 7.38 N/A 10.1 N/A N/A Total / Weighted Average 58 2,878 $ 6.30 32.4 % 7.5$ 2.48 88.7 % Six Months Ended New Leases 42 1,080 $ 6.40 31.2 % 4.6$ 3.85 N/A Renewal Leases 70 2,814 $ 6.34 28.9 % 6.9$ 2.09 78.4 % Development / Acquisition Leases 7 1,622 $ 6.46 N/A 10.2 N/A N/A Total / Weighted Average 119 5,516 $ 6.39 29.5 % 7.4$ 2.58 78.4 % _______________ (A) Net rent is the average base rent calculated in accordance with GAAP, over the term of the lease. (B) Straight Line basis rent growth is a ratio of the change in net rent (including straight line rent adjustments) on a new or renewal lease compared to the net rent (including straight line rent adjustments) of the comparable lease. New leases where there were no prior comparable leases are excluded. (C) The lease term is expressed in years. Assumes no exercise of lease renewal options, if any. (D) Lease costs are comprised of the costs incurred or capitalized for improvements of vacant and renewal spaces, as well as the commissions paid and costs capitalized for leasing transactions. Lease costs per square foot represent the total turnover costs expected to be incurred on the leases that commenced during the period and do not reflect actual expenditures for the period. (E) Represents the weighted average square feet of tenants renewing their respective leases. The following table provides a summary of our leases that commenced during the three and six months endedJune 30, 2020 , which included rent concessions during the lease term. Number of Leases With Rent Square Feet Rent Concessions Three Months Ended Concessions (in 000's) ($) New Leases 13 342$ 593 Renewal Leases 4 321 277 Development / Acquisition Leases 3 697 711 Total 20 1,360$ 1,581 Six Months Ended New Leases 30 690$ 1,078 Renewal Leases 6 380 321 Development / Acquisition Leases 6 1,521 2,537 Total 42 2,591$ 3,936 36
-------------------------------------------------------------------------------- Liquidity and Capital Resources AtJune 30, 2020 , our cash and cash equivalents and restricted cash were approximately$95.0 million and$5.9 million , respectively. We also had$404.1 million available for additional borrowings under our Unsecured Credit Facility as ofJune 30, 2020 . We have considered our short-term (throughJune 30, 2021 ) liquidity needs and the adequacy of our estimated cash flow from operations and other expected liquidity sources to meet these needs. We have a$200.0 million term loan maturing inJanuary 2021 . OnJuly 15, 2020 , we repaid this$200.0 million term loan by entering into a new$200.0 million term loan (See Subsequent Events). With the exception of this payment obligation, we believe that our principal short-term liquidity needs are to fund normal recurring expenses, property acquisitions, developments, renovations, expansions and other nonrecurring capital improvements, debt service requirements, the minimum distributions required to maintain the Company's REIT qualification under the Code and distributions approved by the Company's Board of Directors. We anticipate that these needs will be met with cash flows provided by operating activities as well as the disposition of select assets. These needs may also be met by the issuance of additional equity or debt securities, subject to market condition and contractual restrictions, including the issuance of$300.0 million of private placement notes that we are anticipating closing on or aboutSeptember 17, 2020 (See Subsequent Events), or borrowings under our Unsecured Credit Facility. We expect to meet long-term (afterJune 30, 2021 ) liquidity requirements such as property acquisitions, developments, scheduled debt maturities, major renovations, expansions and other nonrecurring capital improvements through the disposition of select assets, long-term unsecured and secured indebtedness and the issuance of additional equity securities, subject to market conditions. AtJune 30, 2020 , borrowings under our Unsecured Credit Facility bore interest at a weighted average interest rate of 1.39%. As ofJuly 24, 2020 , we had approximately$404.1 million available for additional borrowings under our Unsecured Credit Facility. Our Unsecured Credit Facility contains certain financial covenants including limitations on incurrence of debt and debt service coverage. Our access to borrowings may be limited if we fail to meet any of these covenants. We believe that we were in compliance with our financial covenants as ofJune 30, 2020 , and we anticipate that we will be able to operate in compliance with our financial covenants for the next twelve months. As discussed above, the COVID-19 pandemic outbreak has adversely impacted states and cities where our tenants operate their businesses and where our properties are located. The COVID-19 pandemic could have a material adverse effect on our financial condition, results of operations and cash flows as the reduced economic activity severely impacts certain of our tenants' business, financial condition and liquidity and may cause certain tenants to be unable to meet their obligations to us in full. To be judicious with our capital, with a near-term emphasis on maintaining liquidity, we have suspended all new speculative vertical development projects for the foreseeable future other than completing development and redevelopment properties that were in progress as ofMarch 31, 2020 and expenditures required to obtain permits and other horizontal construction work; however, because we entered into a lease inJuly 2020 with a tenant for a 0.2 million square foot build-to-suit development project in the Inland Empire with an estimated total investment cost of approximately$22.4 million ("New BTS Project "), we are commencing with construction of theNew BTS Project . Our total projected costs to complete construction and stabilize the developments and redevelopments under construction (including theNew BTS Project ), developments that are complete but not fully funded as well as to complete ongoing permitting and other planned horizontal construction work at one of our land sites, is approximately$73 million for the remainder of 2020 and approximately$44 million for 2021 and beyond. Our senior unsecured notes have been assigned credit ratings fromStandard & Poor's , Moody's and Fitch Ratings of BBB/Stable, Baa2/Stable and BBB/Stable, respectively. In the event of a downgrade, we believe we would continue to have access to sufficient capital; however, our cost of borrowing would increase and our ability to access certain financial markets may be limited. 37 -------------------------------------------------------------------------------- Cash Flow Activity The following table summarizes our cash flow activity for the Company for the six months endedJune 30, 2020 and 2019: 2020
2019
(In thousands)
Net cash provided by operating activities
Net cash used in investing activities (245,772) (157,562)
Net cash provided by financing activities 76,440 20,516
The following table summarizes our cash flow activity for the
2020 2019
(In thousands)
Net cash provided by operating activities
(245,772) (157,562)
Net cash provided by financing activities 76,026 20,457
Changes in cash flow for the six months endedJune 30, 2020 , compared to the prior year comparable period are described as follows: Operating Activities: Cash provided by operating activities decreased$2.7 million for the Company (decreased$2.3 million for theOperating Partnership ), primarily due to the following: •decrease in accounts payable, accrued expenses, other liabilities, rents received in advance and security deposits due to timing of cash payments; and •decrease in distributions from our Joint Venture of$16.1 million in 2020 as compared to 2019; offset by •decrease in tenant accounts receivable, prepaid expenses and other assets due to timing of cash receipts; and •decrease in payments to settle derivative instruments of$3.1 million ; and •increase in NOI from same store properties, acquired properties and recently developed properties of$19.9 million offset by a decrease in NOI due to the disposition of real estate of$10.3 million . Investing Activities: Cash used in investing activities increased$88.2 million , primarily due to the following: •increase of$102.4 million related to the acquisition and development of real estate as well as payments for improvements and leasing commissions in 2020 as compared to 2019; •increase of$12.5 million related to net contributions made to our Joint Venture in 2020 as compared to 2019; and •increase of$4.4 million related to a decrease in certain escrow balances; offset by: •increase of$29.4 million in net proceeds received from the disposition of real estate in 2020 as compared to 2019; Financing Activities: Cash provided by financing activities increased$55.9 million for the Company (increased$55.6 million for theOperating Partnership ), primarily due to the following: •decrease in repayments of Mortgage Loans Payable of$57.8 million in 2020 compared to 2019; •increase in net proceeds from the Unsecured Credit Facility of$4.0 million in 2020 compared to 2019; offset by: •increase in dividend and unit distributions of$4.3 million due to the Company increasing the dividend rate in 2020. 38 -------------------------------------------------------------------------------- Market Risk The following discussion about our risk-management activities includes "forward-looking statements" that involve risk and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. Our business subjects us to market risk from interest rates, as described below. Interest Rate Risk The following analysis presents the hypothetical gain or loss in earnings, cash flows or fair value of the financial instruments and derivative instruments which are held by us atJune 30, 2020 that are sensitive to changes in interest rates. While this analysis may have some use as a benchmark, it should not be viewed as a forecast. In the normal course of business, we also face risks that are either non-financial or non-quantifiable. Such risks principally include credit risk and legal risk and are not represented in the following analysis. AtJune 30, 2020 ,$1,465.4 million or 89.6% of our total debt, excluding unamortized debt issuance costs, was fixed rate debt. As of the same date,$170.0 million or 10.4% of our total debt, excluding unamortized debt issuance costs, was variable rate debt. AtDecember 31, 2019 ,$1,332.9 million or 89.4% of our total debt, excluding unamortized debt issuance costs, was fixed rate debt. As of the same date,$158.0 million or 10.6% of our total debt, excluding unamortized debt issuance costs, was variable rate debt. AtJune 30, 2020 andDecember 31, 2019 , a portion of our fixed rate debt, in the amounts of$610.0 million and$460.0 million , respectively, includes variable-rate debt that has been effectively swapped to a fixed rate through the use of derivative instruments that mitigate our exposure to variable interest rates. AtJune 30, 2020 , the variable rate debt includes$460.0 million of our Unsecured Term Loans and$150.0 million of our outstanding balance on the Unsecured Credit Facility, which are each based upon LIBOR, as defined in the loan agreements, and atDecember 31, 2019 , the variable rate debt that was swapped included$460.0 million of the Unsecured Term Loans. The use of derivative financial instruments allows us to manage the risks increases in interest rates would have on our earnings and cash flows. Currently, we do not enter into financial instruments for trading or other speculative purposes. For fixed rate debt, changes in interest rates generally affect the fair value of the debt, but not our earnings or cash flows. Conversely, for variable rate debt, changes in the base interest rate used to calculate the all-in interest rate generally do not impact the fair value of the debt, but would affect our future earnings and cash flows. The interest rate risk and changes in fair market value of fixed rate debt generally do not have a significant impact on us until we are required to refinance such debt. See Note 4 to the Consolidated Financial Statements for a discussion of the maturity dates of our various fixed rate debt. Our variable rate debt is subject to risk based upon prevailing market interest rates. If the LIBOR rates relevant to our variable rate debt were to have increased 10%, we estimate that our interest expense during the six months endedJune 30, 2020 would have increased by approximately$0.08 million based on our average outstanding floating-rate debt during the six months endedJune 30, 2020 . Additionally, if weighted average interest rates on our weighted average fixed rate debt during the six months endedJune 30, 2020 were to have increased by 10% due to refinancing, interest expense would have increased by approximately$2.7 million during the six months endedJune 30, 2020 . As ofJune 30, 2020 , the estimated fair value of our debt was approximately$1,723.5 million based on our estimate of the then-current market interest rates. During the six months endedJune 30, 2020 , we entered into a one-year interest rate swap with a notional value of$150 million to manage our exposure to changes in the one-month LIBOR rate (the "2020 Swap"). The 2020 Swap, which commencedApril 1, 2020 , fixes the one month LIBOR rate component on$150.0 million of our outstanding balance on our Unsecured Credit Facility at 0.42%. Additionally, during the six months endedJune 30, 2020 , in anticipation of refinancing our$200.0 million Unsecured Term Loan maturing inJanuary 2021 (See Subsequent Events), we entered into interest rate swaps (the "2021 Swaps") with an aggregate notional value of$200.0 million which fix the one-month LIBOR rate at 0.99%. The 2021 Swap's effective period commencesFebruary 1, 2021 . We designated both the 2020 Swap and the 2021 Swaps as cash flow hedges. 39
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Supplemental Earnings Measure
Investors in and industry analysts following the real estate industry utilize
funds from operations ("FFO") and net operating income ("NOI") as supplemental
operating performance measures of an equity REIT. Historical cost accounting for
real estate assets in accordance with accounting principles generally accepted
in the United States of America ("GAAP") implicitly assumes that the value of
real estate assets diminishes predictably over time through depreciation. Since
real estate values instead have historically risen or fallen with market
conditions, many industry analysts and investors prefer to supplement operating
results that use historical cost accounting with measures such as FFO and NOI,
among others. We provide information related to FFO and same store NOI ("SS
NOI") both because such industry analysts are interested in such information,
and because our management believes FFO and SS NOI are important performance
measures. FFO and SS NOI are factors used by management in measuring our
performance, including for purposes of determining the compensation of our
executive officers under our 2020 incentive compensation plan.
Neither FFO nor SS NOI should be considered as a substitute for net income, or
any other measures derived in accordance with GAAP. Neither FFO nor SS NOI
represents cash generated from operating activities in accordance with GAAP and
neither should be considered as an alternative to cash flow from operating
activities as a measure of our liquidity, nor is either indicative of funds
available for our cash needs, including our ability to make cash distributions.
Funds From Operations
The National Association of Real Estate Investment Trusts ("NAREIT") has
recognized and defined for the real estate industry a supplemental measure of
REIT operating performance, FFO, that excludes historical cost depreciation,
among other items, from net income determined in accordance with GAAP. FFO is a
non-GAAP financial measure. FFO is calculated by us in accordance with the
definition adopted by the Board of Governors of NAREIT and may not be comparable
to other similarly titled measures of other companies. In accordance with the
restated NAREIT definition of FFO, we calculate FFO to be equal to net income
available to First Industrial Realty Trust, Inc.'s common stockholders and
participating securities, plus depreciation and other amortization of real
estate, plus impairment of real estate, minus gain or plus loss on sale of real
estate, net of any income tax provision or benefit associated with the sale of
real estate. We also exclude the same adjustments from our share of net income
from an unconsolidated joint venture.
Management believes that the use of FFO available to common stockholders and
participating securities, combined with net income (which remains the primary
measure of performance), improves the understanding of operating results of
REITs among the investing public and makes comparisons of REIT operating results
more meaningful. Management believes that, by excluding gains or losses related
to sales of real estate assets, impairment of real estate assets and real estate
asset depreciation and amortization, investors and analysts are able to identify
the operating results of the long-term assets that form the core of a REIT's
activity and use these operating results for assistance in comparing these
operating results between periods or to those of different companies.
The following table shows a reconciliation of net income available to common
stockholders and participating securities to the calculation of FFO available to
common stockholders and participating securities for the three and six months
ended June 30, 2020 and 2019.
Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
(In thousands) (In thousands)
Net Income Available to First Industrial Realty
Trust, Inc.'s Common Stockholders and
Participating Securities $ 35,669
29,603 62,769 59,458
Gain on Sale of Real Estate (9,076) (1,097) (23,069) (889)
Gain on Sale of Real Estate from Joint Venture - (15,747) - (16,714)
Income Tax Provision - Gain on Sale of Real Estate from Joint Venture
- 2,877 - 3,095
Noncontrolling Interest Share of Adjustments (484) (344) (848) (992)
Funds from Operations Available to First
Industrial Realty Trust, Inc.'s Common
Stockholders and Participating Securities $ 58,141 $ 55,092 $ 115,155 $ 107,561
40
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Same Store Net Operating Income
SS NOI is a non-GAAP financial measure that provides a measure of rental
operations and, as calculated by us, that does not factor in depreciation and
amortization, general and administrative expense, interest expense, income tax
benefit and expense, and equity in income or loss from our joint venture. We
define SS NOI as revenues minus property expenses such as real estate taxes,
repairs and maintenance, property management, utilities, insurance and other
expenses, minus the NOI of properties that are not same store properties and
minus the impact of straight-line rent, above and below market rent amortization
and lease termination fees. We exclude straight-line rent and above (below)
market rent in calculating SS NOI because we believe it provides a better
measure of actual cash basis rental growth for a year-over-year comparison. As
so defined, SS NOI may not be comparable to same store net operating income or
similar measures reported by other REITs that define same store properties or
NOI differently. The major factors influencing SS NOI are occupancy levels,
rental rate increases or decreases and tenant recoveries increases or decreases.
Our success depends largely upon our ability to lease space and to recover the
operating costs associated with those leases from our tenants.
The following table shows a reconciliation of the same store revenues and
property expenses disclosed in the results of operations (and reconciled to
revenues and expenses reflected on the statements of operations) to SS NOI for
the three and six months ended June 30, 2020 and 2019.
Three Months Ended June 30, Six Months Ended June 30,
2020 2019 % Change 2020 2019 % Change
(In thousands) (In thousands)
Same Store Revenues $ 95,602 $ 93,374 $ 191,621 $ 187,648
Same Store Property Expenses (22,690) (22,608) (46,128) (46,921)
Same Store Net Operating Income
Before Same Store Adjustments $ 72,912 $ 70,766 3.0% $ 145,493 $ 140,727 3.4%
Same Store Adjustments:
Straight-line Rent (180) (1,990) (28) (4,768) Above / Below Market Rent Amortization (224) (264) (481) (524) Lease Termination Fees (86) (413) (702) (985) Same Store Net Operating Income$ 72,422 $ 68,099 6.3%$ 144,282 $ 134,450 7.3% 41
-------------------------------------------------------------------------------- Subsequent Events FromJuly 1, 2020 toJuly 24, 2020 , we acquired one industrial property for a purchase price of$6.1 million , excluding transaction costs. OnJuly 7, 2020 , we entered into a Note and Guaranty Agreement to sell up to$100.0 million of 2.74% Series F Guaranteed Senior Notes dueSeptember 17, 2030 (the "2030 II Private Placement Notes") and up to$200.0 million of 2.84% Series G Guaranteed Senior Notes dueSeptember 17, 2032 (the "2032 Private Placement Notes") issued by theOperating Partnership in a private placement. The issuance and sale of the 2030 II Private Placement Notes and the 2032 Private Placement Notes is anticipated to occur on or aboutSeptember 17, 2020 . Upon issuance, the 2030 II Private Placement Notes and the 2032 Private Placement Notes will require semi-annual interest payments with principal due onSeptember 17, 2030 , with respect to the 2030 II Private Placements Notes, andSeptember 17, 2032 , with respect to the 2032 Private Placement Notes. OnJuly 15, 2020 , we entered into a$200.0 million unsecured term loan (the "2020 Unsecured Term Loan"). The 2020 Unsecured Term Loan was used to repay the 2014 Unsecured Term Loan that was previously scheduled to mature inJanuary 2021 . The 2020 Unsecured Term Loan allows us to request incremental term loans in an aggregate amount equal to$100.0 million and provides for interest-only payments initially at LIBOR plus 150 basis points. The rate is subject to adjust based on our investment grade rating. As noted above, we entered into the 2021 Swaps to effectively convert the rate applicable under the 2020 Unsecured Term Loan to a fixed interest rate of approximately 2.49% per annum based on the current LIBOR spread beginning inFebruary 2021 . The 2020 Unsecured Term Loan matures onJuly 15, 2021 ; however, we have two, one-year extension options at our election, subject to the satisfaction of certain conditions. As previously disclosed, onJune 29, 2020 ,Bruce W. Duncan , the Chairman of the Board of Directors of the Company, announced his retirement from the Board of Directors. The effective date ofMr. Duncan's retirement wasJuly 15, 2020 .Matthew S. Dominski , who has served as aFirst Industrial director since 2010, has been appointed to the role of chairman of the board. 42
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