First Industrial Realty Trust Inc.
04/24/2026 | Press release | Distributed by Public on 04/24/2026 12:43
Quarterly Report for Quarter Ending 3/31/2026 (Form 10-Q)
| Management's Discussion and Analysis of Financial Condition and Results of Operations |
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 to First Industrial Realty Trust, Inc. (the "Company") and its subsidiaries, including First 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.
Factors that 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, including impacts and uncertainties arising from trade disputes and tariffs on goods imported to or exported from the United States;
•changes in legislation/regulation (including 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, cost and attractiveness of financing (including both public and private capital), increases in or prolonged periods of elevated interest rates, and our ability to raise equity capital on attractive terms;
•the availability and attractiveness of terms of debt repurchases;
•our ability to retain our credit agency ratings;
•our ability to comply with applicable financial covenants;
•changes in the competitive environment in which we operate, including changes in supply, demand and valuation of industrial properties and land in our current and potential markets;
•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 successfully integrate acquired properties;
•potential liability relating to environmental matters;
•defaults on or non-renewal of leases by our tenants;
•decreases in rental rates or increases in vacancy rates;
•higher-than-expected real estate construction costs and delays in development or lease-up timelines;
•uncertainty and economic impacts of pandemics, epidemics or other public health emergencies or fear of such events;
•risks associated with cybersecurity breaches, cyberattacks, intrusions or other significant disruptions of our information technology networks or systems;
•potential natural disasters and other catastrophic events, including acts of war or terrorism;
•insufficient or unavailable insurance coverage;
•technological developments, particularly those affecting supply chains and logistics;
•litigation risks, including costs associated with prosecuting or defending claims and potential 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 Item 1A, "Risk Factors" and elsewhere in our annual report on Form 10-K for the year ended December 31, 2025 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 the Securities and Exchange Commission (the "SEC").
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 except as may be required by law.
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 a Maryland corporation organized on August 10, 1993 and a real estate investment trust ("REIT") as defined in the Internal Revenue Code of 1986 (the "Code"). As of March 31, 2026, we owned 420 industrial properties located in 19 states, containing an aggregate of approximately 70.9 million square feet of gross leasable area ("GLA"). Of the 420 properties owned on a consolidated basis, none of them are directly owned by the Company.
We began operations on July 1, 1994. The Company's operations are conducted primarily through the Operating Partnership, of which the Company is the sole general partner (the "General Partner"), with an approximate 96.8% ownership interest ("General Partner Units") at March 31, 2026. The Operating Partnership also conducts operations through several 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 the Operating 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 the Operating Partnership and its 100% ownership interest in the general partners of the Other Real Estate Partnerships. The noncontrolling interest in the Operating Partnership of approximately 3.2% at March 31, 2026 represents the aggregate partnership interest held by the limited partners thereof ("Limited Partner Units" and together with the General Partner Units, the "Units").
Through a wholly-owned TRS of the Operating Partnership, we own an equity interest in a joint venture (the "Joint Venture"). We also provide various services to the Joint Venture. 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 the Operating Partnership or the Company as presented herein. During the year ended December 31, 2025, the Joint Venture sold its remaining real estate assets.
Available Information
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to these reports are available without charge on our website at www.firstindustrial.com. These reports can also be accessed through the SEC's website at www.sec.gov. In addition, our Corporate Governance Guidelines, Code of Business Conduct and Ethics, charters of each committee of the Board of Directors, and supplemental financial and operating information are all available without charge on our website or upon request. Amendments to, or waivers from, our Code of Business Conduct and Ethics that apply to our executive officers or directors will also be posted on our website. The information found on, or otherwise accessible through our website, is not incorporated into, and does not form a part of, this report or any other report or document we file with or furnish to the SEC.
Management's Overview
Business Objectives and Growth Plans
Our fundamental business objective is to maximize the total return to the Company's stockholders and the Operating Partnership's partners by increasing our cash flow and property values. Our long-term business growth plans include the following elements:
•Internal Growth. We seek to grow internally by: (i) increasing revenues by renewing or re-leasing expiring leases at higher rental levels; (ii) obtaining contractual rent escalations on our long-term leases; (iii) increasing occupancy at properties with existing vacancies while maintaining high occupancy across the remainder of the portfolio; (iv) controlling and minimizing property operating expenses, general and administrative expenses and releasing costs; and (v) selectively renovating existing properties.
•External Growth. We seek to grow externally through: (i) the development of best-in-class industrial properties and the acquisition of individual assets, portfolios of industrial properties and leased land sites that meet our investment parameters within our 15 key logistics markets; and (ii) the expansion and redevelopment of our existing properties.
•Portfolio Enhancement. We continually seek to upgrade our overall portfolio by making new investments and selling assets that lack strong long-term cash flow growth potential. Our investment focus is on 15 key logistics markets which exhibit desirable long-term growth characteristics and where developable land is relatively scarce.
Our ability to pursue our long-term growth plans is affected by market conditions and our financial condition and operating capabilities.
Business Strategies
We utilize the following strategies in connection with the operation of our business:
•Organizational Strategy. We employ a decentralized property operations strategy through the deployment of experienced regional management teams and local property managers. Our headquarters in Chicago, Illinois provides acquisition, development and financing assistance, asset management oversight and financial reporting functions to our regional operations. We believe the size of our portfolio enables us to realize operating efficiencies by spreading overhead costs among many properties and by negotiating favorable terms and purchasing discounts.
•Market Strategy. Our market strategy focuses on 15 key logistics markets in the United States. These markets exhibit one or more of the following characteristics: (i) favorable industrial real estate fundamentals, including improving industrial demand and constrained future supply that can lead to long-term rent growth; (ii) favorable and diversified economic and business environments that should benefit from increases in distribution activity driven by growth in global trade and local consumption; (iii) population growth, which generally drives industrial demand; (iv) natural barriers to entry and scarcity of land which are key elements in delivering future rent growth; (v) sufficient market size to provide ample opportunity for growth through incremental investments and support asset liquidity; and (vi) favorable governmental, regulatory and tax environment.
•Leasing and Marketing Strategy. We utilize an operational management strategy designed to enhance tenant satisfaction and portfolio performance. We pursue an active leasing strategy that includes broadly marketing available space, seeking to renew existing leases at higher rents while minimizing re-leasing costs and seeking leases which provide for the pass-through of property-related expenses to the tenant. Additionally, we have both local and national marketing programs that target the business and real estate brokerage communities, as well as multi-national tenants.
•Acquisition/Development Strategy. Our investment strategy is primarily focused on developing and acquiring industrial properties in 15 key logistics markets in the United States through the deployment of experienced regional management teams. When evaluating potential industrial property acquisitions and developments, we consider such factors as: (i) the geographic area and type of property; (ii) the location, construction quality, functionality, condition and design of the property; (iii) the terms and credit quality of tenant leases, including the potential for rent rate growth; (iv) the potential for economic growth and the general business, tax and regulatory environment of the surrounding area; (v) the occupancy and demand by tenants for properties of a similar type in the vicinity; (vi) competition from existing properties and the potential for the construction of new properties in the area; (vii) the potential for capital appreciation of the property; (viii) the ability to improve the property's
performance through renovation; and (ix) the potential for physical expansion of the property and/or additional sites.
•Disposition Strategy. We continually evaluate local market conditions and property-related factors across all of our markets to identify assets suitable for disposition. Our focus is on selling properties with lower rent growth potential or that lack optimal functionality. The capital from these sales is generally reinvested in new assets consistent with our investment strategy or otherwise used in a manner consistent with our business strategy.
•Financing Strategy. To finance acquisitions, developments and debt maturities, as market conditions permit, we may utilize proceeds from property sales, unsecured debt offerings, unsecured term loans, mortgage financings and borrowings under our $850.0 million unsecured revolving credit agreement (the "Unsecured Credit Facility"), and proceeds from the issuance, when and as warranted, of additional equity securities. We also periodically evaluate joint venture arrangements as another source of capital to finance acquisitions and developments as well as manage investment exposure and allocation.
Summary of the Three Months Ended March 31, 2026
Our operating results were strong for the three months ended March 31, 2026, highlighted by a robust 31.7% average increase in cash rental rates on new and renewal commenced leases, tenant retention of 85.7% and quarter-end occupancy of 94.3%, demonstrating healthy demand.
As of March 31, 2026, we had four development projects underway, totaling 0.7 million square feet of GLA, with an aggregate estimated investment of approximately $124.2 million.
During the three months ended March 31, 2026, we completed the following significant real estate transactions:
•We reclassified a 100-acre ground lease in Phoenix from an operating lease to a sales-type lease following the tenant's exercise of a purchase option, resulting in the recognition of a gain on sale of approximately $109 million. The transaction is expected to close in June 2026.
•We substantially completed development of two industrial buildings totaling 0.4 million square feet of GLA in our Philadelphia market.
During the three months ended March 31, 2026, our key financing activities included:
•We declared a first quarter cash dividend of $0.50 per common share or Unit, an increase of 12.4% over the 2025 quarterly dividend rate.
•In January, we refinanced our $425.0 million and $300.0 million unsecured term loans, extending their maturities to January 2030 (with an additional one-year extension option) and January 2029 (with two one-year extension options), respectively. We also increased the principal balance on our $300.0 million term loan by $75.0 million, bringing it to $375.0 million. In connection with these refinancings, we amended our existing $200.0 million unsecured term loan and eliminated the 10 basis point SOFR adjustment across all unsecured term loans.
•We established a new share repurchase program under which the Company may repurchase up to $250 million of common stock.
•As of March 31, 2026, we had $723.9 million of available borrowing capacity under our Unsecured Credit Facility and held $37.1 million in cash and cash equivalents, excluding our Joint Venture partner's 6% interest, which is consolidated in our financial statements.
Results of Operations
The tables below summarize our revenues, property expenses and depreciation and other amortization by category for the three months ended March 31, 2026 and 2025.
Same Store Properties: Same store properties include those that were owned and in service prior to January 1, 2025 and remained in service through March 31, 2026. Same store properties also includes developments and redevelopments placed in service prior to January 1, 2025. A property is considered placed in service when it meets one of the following criteria: (i) acquired properties with occupancy of at least 75% at acquisition, unless we anticipate tenant move-outs within two years of ownership would reduce occupancy below 75%; (ii) acquired properties with occupancy less than 75% at acquisition are placed in service upon reaching the earlier of 90% occupancy or one year subsequent to acquisition; (iii) developments, redevelopments and acquired income-producing land parcels for which our ultimate intent is to redevelop or develop on the land parcel are placed in service upon the earlier of reaching 90% occupancy or one year after construction completion; and (iv) properties acquired with occupancy greater than 75% but with anticipated move out within two years of ownership, are placed in service upon the earlier of reaching 90% occupancy or twelve months after tenant move out. Properties are moved from the same store category to the redevelopment classification when projected capital expenditures are estimated to exceed 20% of the property's undepreciated gross book value.
Acquired Properties: Acquired properties are properties that were purchased subsequent to December 31, 2024 and held as an operating property through March 31, 2026.
Sold Properties: Sold properties are properties that were disposed of subsequent to December 31, 2024.
Developments and Redevelopments: Developments and redevelopments (collectively referred to as "(Re)Developments") include properties that were either: (i) not substantially complete 12 months prior to January 1, 2025; or (ii) not stabilized prior to January 1, 2025.
Other Revenues and Property Expenses: 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, interest income, joint venture fees 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.
During the three months ended March 31, 2026, a tenant exercised its option to purchase a leased land site located in Phoenix, Arizona. We reclassified the lease from an operating lease to a sales-type lease. As a result of the lease reclassification, the results of operations with this land site were reclassified from the same store property classification to the other classification.
During the year ended December 31, 2025, one industrial property, totaling approximately 0.1 million square feet of GLA, was taken out of service with the intent for future redevelopment. As a result of taking this industrial property out of service, the results of operations associated with this property were reclassified from the same store property classification to the other classification.
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.
Comparison of Three Months Ended March 31, 2026 to Three Months Ended March 31, 2025
Our net income was $147.9 million and $52.9 million for the three months ended March 31, 2026 and 2025, respectively.
For the three months ended March 31, 2026 and 2025, the average daily occupancy rate of our same store properties was 94.5% and 95.7%, respectively.
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| ($ in 000's) | |||||||||||||||||||||||
| REVENUES | |||||||||||||||||||||||
| Same Store Properties | $ | 181,782 | $ | 171,792 | $ | 9,990 | 5.8 | % | |||||||||||||||
| Acquired Properties | 5,479 | 415 | 5,064 | 1,220.2 | % | ||||||||||||||||||
| Sold Properties | - | 728 | (728) | (100.0) | % | ||||||||||||||||||
| (Re)Developments | 4,390 | 280 | 4,110 | 1,467.9 | % | ||||||||||||||||||
| Other | 3,176 | 3,859 | (683) | (17.7) | % | ||||||||||||||||||
| Total Revenues | $ | 194,827 | $ | 177,074 | $ | 17,753 | 10.0 | % | |||||||||||||||
Revenues from same store properties increased $10.0 million primarily due to increases in rental rates and tenant recoveries, partially offset by a decrease in occupancy. Revenues from acquired properties increased $5.1 million due to the four industrial properties acquired subsequent to December 31, 2024 totaling approximately 1.9 million square feet of GLA. Revenues from sold properties decreased $0.7 million due to the seven industrial properties sold subsequent to December 31, 2024 totaling approximately 0.3 million square feet of GLA. Revenues from (re)developments increased $4.1 million primarily due to an increase in occupancy. Revenues from other decreased by $0.7 million, primarily due to a decrease in revenues from a previously occupied property that was taken out of service in preparation for future redevelopment as well as decreases in joint venture fees and interest income, partially offset by an increase in revenues from income-producing land parcels.
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| ($ in 000's) | |||||||||||||||||||||||
| PROPERTY EXPENSES | |||||||||||||||||||||||
| Same Store Properties | $ | 45,306 | $ | 41,435 | $ | 3,871 | 9.3 | % | |||||||||||||||
| Acquired Properties | 881 | 23 | 858 | 3,730.4 | % | ||||||||||||||||||
| Sold Properties | 1 | 187 | (186) | (99.5) | % | ||||||||||||||||||
| (Re)Developments | 1,775 | 541 | 1,234 | 228.1 | % | ||||||||||||||||||
| Other | 5,651 | 6,125 | (474) | (7.7) | % | ||||||||||||||||||
| Total Property Expenses | $ | 53,614 | $ | 48,311 | $ | 5,303 | 11.0 | % | |||||||||||||||
Property expenses include real estate taxes, repairs and maintenance, property management, utilities, insurance and other property related expenses. Property expenses from same store properties increased $3.9 million primarily due to increases in real estate taxes and repairs and maintenance expenses, partially offset by a decrease in insurance expenses. Property expenses from acquired properties increased $0.9 million due to properties acquired subsequent to December 31, 2024. Property expenses from sold properties decreased $0.2 million due to properties sold subsequent to December 31, 2024. Property expenses from (re)developments increased $1.2 million primarily due to the completion of developments. Property expenses from other was not significant for either three-month period.
General and administrative expense increased by $7.1 million, or 44.5%, primarily due to $5.6 million of costs as of the date hereof related to financial advisors, legal counsel and other consultants in connection with a threatened contested proxy campaign initiated by the principal of Land & Buildings Investment Management, LLC, who nominated himself for election at the Company's annual meeting (with notice provided in November 2025) before subsequently withdrawing his nomination in March 2026.
Joint Venture development services expense, representing payments made to a third party for property development assistance within the Joint Venture for both three-month periods was not significant.
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| ($ in 000's) | |||||||||||||||||||||||
| DEPRECIATION AND OTHER AMORTIZATION | |||||||||||||||||||||||
| Same Store Properties | $ | 42,440 | $ | 42,438 | $ | 2 | - | % | |||||||||||||||
| Acquired Properties | 4,721 | - | 4,721 | - | |||||||||||||||||||
| Sold Properties | - | 107 | (107) | (100.0) | % | ||||||||||||||||||
| (Re)Developments | 2,550 | 787 | 1,763 | 224.0 | % | ||||||||||||||||||
| Corporate Furniture, Fixtures and Equipment and Other | 357 | 422 | (65) | (15.4) | % | ||||||||||||||||||
| Total Depreciation and Other Amortization | $ | 50,068 | $ | 43,754 | $ | 6,314 | 14.4 | % | |||||||||||||||
Depreciation and other amortization from same store properties remained relatively unchanged. Depreciation and other amortization from acquired properties increased $4.7 million due to properties acquired subsequent to December 31, 2024. Depreciation and other amortization from sold properties decreased $0.1 million due to properties sold subsequent to December 31, 2024. Depreciation and other amortization from (re)developments increased $1.8 million primarily due to an increase in depreciation and amortization related to completed developments. Depreciation from corporate furniture, fixtures and equipment and other was not significant for either three-month period.
For the three months ended March 31, 2026, gain on sale of real estate included $109.0 million of gain related to the reclassification of an operating lease to a sales-type lease following the tenant's exercise of its option to purchase the land site. The sale is expected to close during the three months ended June 30, 2026. For the three months ended March 31, 2025, we recognized $6.8 million of gain on sale of real estate related to the sale of two industrial properties totaling approximately 0.1 million square feet of GLA.
Interest expense increased $4.4 million, or 22.3%, primarily due to a higher weighted average debt balance of $2,581.9 million for the three months ended March 31, 2026 compared to $2,250.4 million for the three months ended March 31, 2025, as well as an increase in the weighted average interest rate to 4.21% for the three months ended March 31, 2026 from 4.03% for the three months ended March 31, 2025, offset by a $0.1 million increase in capitalized interest during the three months ended March 31, 2026 compared to the three months ended March 31, 2025.
Amortization of debt issuance costs increased $0.6 million, or 59.0%, primarily due to financing costs incurred related to the amendment and restatement of the Unsecured Credit Facility in March 2025 and the issuance of $450.0 million of senior notes in May 2025.
Equity in income of joint venture decreased by $3.4 million, or 96.9%, primarily due to a decrease in gain on sale and incentive fees associated with the Joint Venture's sale of two properties during the three months ended March 31, 2025. As we were the purchaser of the properties, our economic share of the gain and incentive fees was offset against the basis of the real estate acquired. The remaining portion of the gain on sale and incentive fees represents our partner's share, which is consolidated in our financial statements. Additionally, the decrease also reflects a reduction in our pro-rata share of operating income, as the Joint Venture disposed of its final real estate assets during the year ended December 31, 2025.
The income tax provision decreased by $1.9 million, or 32.0%, primarily due to a decrease in our pro-rata share of gain and incentive fees recognized from the sale of real estate by the Joint Venture during the three months ended March 31, 2026 compared to the three months ended March 31, 2025.
Leasing Activity
The following table provides a summary of our leasing activity for the three months ended March 31, 2026. The table does not include month-to-month leases or leases with terms less than twelve months.
| Three Months Ended |
Number of Leases Commenced |
Square Feet Commenced (in 000's) |
Net Rent Per
Square Foot (A)
|
Straight Line Basis
Rent Growth (B)
|
Weighted
Average Lease
Term (C)
|
Lease Costs
Per Square
Foot (D)
|
Weighted
Average Tenant
Retention (E)
|
||||||||||||||||||||||||||||||||||
| New Leases | 18 | 307 | $ | 10.72 | 38.1 | % | 5.5 | $ | 6.65 | N/A | |||||||||||||||||||||||||||||||
| Renewal Leases | 24 | 1,974 | $ | 9.79 | 54.5 | % | 5.1 | $ | 2.74 | 85.7 | % | ||||||||||||||||||||||||||||||
| Development / Acquisition Leases | 4 | 138 | $ | 10.83 | N/A | 5.4 | N/A | N/A | |||||||||||||||||||||||||||||||||
| Total / Weighted Average | 46 | 2,419 | $ | 9.97 | 51.9 | % | 5.2 | $ | 3.27 | 85.7 | % | ||||||||||||||||||||||||||||||
_______________
(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 calculated as the percentage change in net rent (including straight line rent adjustments) on a new or renewal lease compared to the net rent (also including straight line rent adjustments) of the expiring comparable lease. New leases without a prior comparable lease are excluded from this metric.
(C) The lease term is expressed in years and assumes no exercise of any renewal or extension options.
(D) Lease costs include all costs incurred or capitalized for improvements related to vacant and renewal spaces, along with leasing commissions and other capitalized transaction-related costs. Lease costs per square foot represent the total expected turnover costs for leases that commenced during the period and may not reflect actual expenditures for the period. Excludes properties with zero square footage, such as income producing land.
(E) Represents the weighted average square footage of tenants that renewed their respective leases.
The following table provides a summary of our leases that commenced during the three months ended March 31, 2026, which included rent concessions (abated rent) during the lease term.
| Three Months Ended |
Number of Leases With Rent Concessions |
Square Feet (in 000's) |
Rent Concessions | ||||||||||||||
| New Leases | 14 | 244 | $ | 569 | |||||||||||||
| Renewal Leases | 2 | 104 | 177 | ||||||||||||||
| Development / Acquisition Leases | 4 | 138 | 463 | ||||||||||||||
| Total | 20 | 486 | $ | 1,209 | |||||||||||||
Liquidity and Capital Resources
At March 31, 2026, our cash and cash equivalents were approximately $37.1 million, excluding our Joint Venture partner's share of cash and cash equivalents that we consolidate and report in our financial statements. We also had $723.9 million of availability for additional borrowings under our Unsecured Credit Facility as of March 31, 2026.
We have considered our short-term liquidity requirements through March 31, 2027, as well as the adequacy of our estimated cash flow from operations and other expected liquidity sources to meet those requirements. As of March 31, 2026, we had no debt maturities within the next twelve months. Beyond this period, we believe that our principal short-term liquidity needs include funding normal recurring expenses, property acquisitions, developments, expansions, renovations and other nonrecurring capital improvements, debt service requirements, the minimum distributions required to maintain the Company's REIT status under the Code and distributions approved by the Company's Board of Directors. We anticipate meeting these short-term liquidity requirements primarily through cash flows generated by operating activities and proceeds from select asset dispositions. Additional sources of liquidity may include the issuance of other debt or equity securities or borrowings under our Unsecured Credit Facility, subject to market conditions.
We expect to meet our long-term liquidity requirements (beyond March 31, 2027) such as property acquisitions, development projects, scheduled debt maturities, major renovations, expansions and other nonrecurring capital improvements through a combination of select asset dispositions, long-term unsecured and secured indebtedness and the issuance of additional equity securities, subject to market conditions.
We believe that we were in compliance with our financial covenants as of March 31, 2026, and we anticipate that we will be able to operate in compliance for the next twelve months. However, these financial covenants are complex and there can be no assurance that these provisions would not be interpreted by our lenders and noteholders in a manner that could impose and cause us to incur material costs and our access to borrowings on the Unsecured Credit Facility may be limited if we fail to meet any of these covenants.
As of April 24, 2026, we had approximately $642.9 million available for additional borrowings under our Unsecured Credit Facility.
Our senior unsecured notes have been assigned credit ratings from Standard & 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.
Cash Flow Activity
The following table summarizes our cash flow activity for the Company for the three months ended March 31, 2026 and 2025:
| 2026 | 2025 | |||||||||||||
| (In thousands) | ||||||||||||||
| Net cash provided by operating activities | $ | 88,892 | $ | 88,566 | ||||||||||
| Net cash used in investing activities | (72,477) | (213,348) | ||||||||||||
| Net cash (used in) provided by financing activities | (57,300) | 110,510 | ||||||||||||
The following table summarizes our cash flow activity for the Operating Partnership for the three months ended March 31, 2026 and 2025:
| 2026 | 2025 | |||||||||||||
| (In thousands) | ||||||||||||||
| Net cash provided by operating activities | $ | 88,913 | $ | 88,585 | ||||||||||
| Net cash used in investing activities | (72,477) | (213,348) | ||||||||||||
| Net cash (used in) provided by financing activities | (57,321) | 110,491 | ||||||||||||
Changes in cash flow for the three months ended March 31, 2026, compared to the prior year comparable period are described as follows:
Operating Activities: Cash provided by operating activities increased $0.3 million, primarily due to the following:
•increase in net operating income ("NOI") from same store properties, acquired properties and recently developed properties of $13.2 million offset by a decrease in NOI due to the disposition of real estate of $0.5 million; and
•decrease in tenant accounts receivable, prepaid expenses and other assets due to timing of cash receipts; offset by:
◦decrease in accounts payable, accrued expenses, other liabilities, rents received in advance and security deposits due to timing of cash payments.
Investing Activities: Cash used in investing activities decreased $140.9 million, primarily due to the following:
•decrease of $150.7 million related to the acquisition, development and investment in real estate activity, primarily attributed to lower acquisition-related spending during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, offset by increased development and other real estate investment spending during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025; offset by:
◦decrease of $11.5 million in net proceeds received from the disposition of real estate in 2026 as compared to 2025.
Financing Activities: Cash used in financing activities was $57.3 million for the three months ended March 31, 2026 as compared to cash provided by financing activities of $110.5 million for the three months ended March 31, 2025, resulting in a decrease of cash used in financing activities of $167.8 million, primarily due to the following:
•increase in net repayments of borrowings under our Unsecured Credit Facility of $231.0 million in 2026 as compared to 2025; and
•increase in dividend and unit distributions of $10.3 million due to the Company increasing the dividend rate in 2026 as well as a slight increase in common shares and units outstanding; offset by:
◦increase of $75.0 million in proceeds from refinancing of the $300.0 million unsecured term loan with a $375.0 million unsecured term loan in 2026.
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 that are held by us at March 31, 2026 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.
At March 31, 2026, $2,380.0 million, or 92.3%, of our total debt, excluding unamortized debt issuance costs, was fixed rate debt, while $199.0 million, or 7.7%, was variable rate debt. At December 31, 2025, $2,379.9 million, or 92.9%, of our total debt, excluding unamortized debt issuance costs, was fixed rate debt, while $183.0 million, or 7.1%, was variable rate debt. At March 31, 2026 and December 31, 2025, the fixed rate debt amounts include variable rate debt that has been effectively swapped to a fixed rate through the use of derivative instruments with an aggregate notional amount outstanding of $925.0 million. These derivatives mitigate our exposure to our Unsecured Term Loans' variable interest rates, which are based on SOFR. The use of derivative financial instruments allows us to manage the risk of interest rate increases and the related impact on our earnings and cash flows. We designated all of the interest rate swaps related to our Unsecured Term Loans as cash flow hedges. 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 SOFR rate component relevant to our variable rate debt were to have increased 10%, we estimate that our interest expense during the three months ended March 31, 2026 would have increased by approximately $0.2 million based on our average outstanding floating-rate debt during the three months ended March 31, 2026. Additionally, if weighted average interest rates on our weighted average fixed rate debt during the three months ended March 31, 2026 were to have increased by 10% due to refinancing, interest expense would have increased by approximately $2.5 million during the three months ended March 31, 2026.
As of March 31, 2026, the estimated fair value of our debt was approximately $2,531.8 million based on our estimate of the then-current market interest rates.
Supplemental Earnings Measure
Investors in and industry analysts following the real estate industry utilize funds from operations ("FFO") and NOI as supplemental 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 2026 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. Additionally, our method for calculating FFO and SS NOI may differ from those used by other real estate companies, limiting comparability.
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 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 months ended March 31, 2026 and 2025.
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (In thousands) | |||||||||||
|
Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders and Participating Securities
|
$ | 143,101 | $ | 48,103 | |||||||
| Adjustments: | |||||||||||
| Depreciation and Other Amortization of Real Estate | 49,911 | 43,583 | |||||||||
| Depreciation and Other Amortization of Real Estate in the Joint Venture | - | 1,056 | |||||||||
| Gain on Sale of Real Estate | (109,032) | (6,844) | |||||||||
| Gain on Sale of Real Estate (Including Incentive Fees) from the Joint Venture | (49) | (3,305) | |||||||||
| Income Tax Provision - Excluded from FFO | 3,712 | 5,736 | |||||||||
| Noncontrolling Interest Share of Adjustments | 1,808 | 1,862 | |||||||||
|
Funds from Operations Available to First Industrial Realty Trust, Inc.'s Common Stockholders and Participating Securities
|
$ | 89,451 | $ | 90,191 | |||||||
Same Store Net Operating Income
We consider cash basis SS NOI to be a useful non-GAAP supplemental measure of our operating performance. We believe SS NOI enhances the comparability of a company's real estate portfolio to that of other real estate companies. SS NOI reflects the results of operations of properties that were owned and placed in service prior to January 1, 2025, and remained in service through the end of the reporting period.
We define SS NOI as revenues minus property expenses such as real estate taxes, repairs and maintenance, property management, utilities, insurance and other expenses. SS NOI is further adjusted to exclude the NOI of properties that are not included in the same store pool. Additionally, we exclude the impact of straight-line rent, above and below market rent amortization and lease termination fees, as we believe excluding them provides a more meaningful reflection of cash-basis rental growth and allows for a more consistent year-over-year analysis of property-level performance. SS NOI does not include depreciation and amortization, general and administrative expense, interest expense, income tax benefit and expense, equity in income or loss from joint venture, joint venture fees and joint venture development services expense.
The primary factors influencing SS NOI are occupancy levels, changes in rental rates and fluctuations in tenant recoveries. Our ability to grow SS NOI is largely dependent on our success in leasing space and recovering property operating costs from tenants under existing lease agreements.
The following table shows a reconciliation of the same store revenues and property expenses, as disclosed in the results of operations and reconciled to revenues and expenses reflected on the statements of operations, to SS NOI for the three months ended March 31, 2026 and 2025.
| Three Months Ended March 31, | |||||||||||||||||
| 2026 | 2025 | % Change | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Same Store Revenues | $ | 181,782 | $ | 171,792 | |||||||||||||
| Same Store Property Expenses | (45,306) | (41,435) | |||||||||||||||
| Same Store Net Operating Income Before Same Store Adjustments | $ | 136,476 | $ | 130,357 | 4.7% | ||||||||||||
| Same Store Adjustments: | |||||||||||||||||
|
Straight-line Rent
|
(1,202) | (5,945) | |||||||||||||||
| Above (Below) Market Lease Amortization | (479) | (560) | |||||||||||||||
|
Lease Termination Fees
|
(166) | (24) | |||||||||||||||
| Same Store Net Operating Income | $ | 134,629 | $ | 123,828 | 8.7% | ||||||||||||
The following table shows a reconciliation of net income available to common stockholders and participating securities to cash basis SS NOI without lease termination fees for the three months ended March 31, 2026 and 2025.
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (In thousands) | |||||||||||
| Net Income Available to First Industrial Realty Trust, Inc.'s Common Stockholders and Participating Securities | $ | 143,101 | $ | 48,103 | |||||||
| Interest Expense | 23,819 | 19,469 | |||||||||
| Depreciation and Other Amortization of Real Estate | 49,911 | 43,583 | |||||||||
| Depreciation and Other Amortization of Real Estate in the Joint Venture | - | 1,056 | |||||||||
| Income Tax Provision - Allocable to FFO | 301 | 164 | |||||||||
| Net Income Attributable to the Noncontrolling Interests | 4,817 | 4,781 | |||||||||
| Equity in FFO from Joint Venture Attributable to the Noncontrolling Interest | (7) | (147) | |||||||||
| Amortization of Debt Issuance Costs | 1,531 | 963 | |||||||||
| Depreciation of Corporate FF&E | 157 | 171 | |||||||||
| Gain on Sale of Real Estate | (109,032) | (6,844) | |||||||||
| Gain on Sale of Real Estate from Joint Venture | (49) | (3,305) | |||||||||
| Income Tax Provision - Excluded from FFO | 3,712 | 5,736 | |||||||||
| General and Administrative | 22,973 | 15,897 | |||||||||
| Equity in FFO from Joint Venture, Net of Noncontrolling Interest | (52) | (1,081) | |||||||||
| Net Operating Income | $ | 141,182 | $ | 128,546 | |||||||
| Non-Same Store Net Operating Income | (4,706) | 1,811 | |||||||||
| Same Store Net Operating Income Before Same Store Adjustments | $ | 136,476 | $ | 130,357 | |||||||
| Straight-line Rent | (1,202) | (5,945) | |||||||||
| Above (Below) Market Lease Amortization | (479) | (560) | |||||||||
| Lease Termination Fees | (166) | (24) | |||||||||
| Same Store Net Operating Income (Cash Basis without Termination Fees) | $ | 134,629 | $ | 123,828 | |||||||
Subsequent Events
We have evaluated subsequent events through the date that the Consolidated Financial Statements were issued, noting none.
First Industrial Realty Trust Inc. published this content on April 24, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on April 24, 2026 at 18:43 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]