First Industrial Realty Trust, Inc. (

FR

)

Q1 2011 Earnings Call

April 28, 2011 12:00 pm ET

Executives

Art Harmon – Senior Director, IR

Bruce Duncan – President and CEO

Scott Musil – CFO

Jojo Yap – Chief Investment Officer

Chris Schneider – SVP, Operations

Bob Walter – SVP, Capital Markets

Analysts

Steven Frankel – Green Street

Ki Bin Kim – Macquarie

Suzanne Kim – Credit Suisse

Daniel Donlan – Janney Capital Markets

Mike Gallagher [ph] – RBC Capital Markets

Dave Rogers – RBC Capital Markets

Michael Mueller – JP Morgan

Stuart Hindley [ph]

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Presentation

Operator

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» First Industrial Realty Trust, Inc. Q1 2010 Earnings Call Transcript

Good morning, afternoon. My name is Symond and I will be your conference operator today. At this time, I would like to welcome everyone to the First Industrial first quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) Thank you.

I would now like to turn the call over to Mr. Art Harmon, Senior Director of Investor Relations. Please go ahead, sir.

Art Harmon

Thank you, Symond. Hello, everyone, and welcome to our call. Before we discuss our first quarter 2011 results, let me remind everyone that the speakers on today’s call will make various remarks regarding future expectations, plans and prospects for First Industrial, such as those related to our liquidity, management of our debt maturities, portfolio performance, our overall capital deployment, our planned dispositions, our development and joint venture activities, continued compliance with our financial covenants, and expected earnings.

These remarks constitute forward-looking statements under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. First Industrial assumes no obligation to update or supplement these forward-looking statements. Such forward-looking statements involve important factors that could cause actual results to differ materially from those in forward-looking statements, including those risks discussed in First Industrial’s 10-K for the year ending December 31st, 2010 filed with the SEC and subsequent reports on 10-Q.

Reconciliation from GAAP financial measures to non-GAAP financial measures are provided in our supplemental report available at firstindustrial.com under the Investors Relations tab. Since this call may be accessed via replay for a period of time, it is important to know that today’s call includes time-sensitive information that may be accurate only as of today’s date, April 28, 2011.

Our call will begin with remarks by Bruce Duncan, our President and CEO; to be followed by Scott Musil, our Chief Financial Officer, who will discuss our results, our capital position, and guidance, after which we will open it up for your questions.

Also on the call today are Jojo Yap, our Chief Investment Officer; Chris Schneider, Senior Vice President of Operations; and, Bob Walter, Senior Vice President of Capital Markets.

Now, let me turn the call over to Bruce.

Bruce Duncan

Thanks, Art and thank you to everyone for joining us on our call today. The First Industrial team continued to execute our plans and make progress towards our goal in the first quarter. Our bottom line results were better than expected, primarily benefiting from lower bad debt and landlord expense, as well as lower interest cost.

Our leasing results were in line with our expectations as occupancy was 84.7%, down slightly from 85% at year end, as we telegraphed on our fourth quarter call. However, compared to the year-ago quarter, occupancy is up 330 basis points, indicative of the positive direction of the recovery in the industrial markets.

Factoring in our first quarter results, before the impact of our first quarter equity raise, we are effectively raising full-year guidance for funds from operations before one-time items by $0.03 per share, which offsets the $0.03 per share of net dilution from the equity offering.

So net-net, our full year FFO per share guidance range, before one-time items, is the same as we provided you in the February. Scot will walk you through the details of our guidance. In the quarter, we saw new demand across a spectrum of tenant sizes and industry, including traditional and Internet retailers, consumer products and food related company and 3PLs.

Our forecast continues to be for improved demands and occupancy gains throughout the year, given the expected GDP growth, even if the first quarter was slower than some had forecasted. Part of that growth is being driven by a resurgence in domestic manufacturing. From a fundamental point of view, demand has been helped as companies transition into growth mode, helped by record corporate profits. Businesses have been running with tight inventories and many are looking to gradually increase these levels to meet demand from the US consumer.

These trends are reflected in moderately increasing retail sales and in improving container traffic volume. The consumer is also being helped by the improving employment picture. While demand is positive, continued business and consumer confidence is important for growth in the economy and for industrial real estates. Major events like the unfortunate Japan earthquake, budget uncertainties in the United States, raising fuel costs and the uncertainty around the end of QE2 are a few factors that will weigh in on prospected tenant leasing decisions.

So, we are in the right story, remains the same since we spoke to you at the end of February. Rents have stabilized in most of our markets, but since we are rolling up leases signing better years, we anticipate roll-downs this year. We came in at the better end of our expected range this quarter at minus 10%. This is primarily driven by our tenant retention which is very good at 78%.

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