In This Article:
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NAREIT Funds from Operations: $0.68 per fully diluted share, up from $0.62 per share in 3Q 2023.
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Cash Same-Store NOI Growth: 7.6% excluding termination fees; 11.9% including tenant improvement reimbursement.
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In-Service Occupancy: 95% with 200 basis points of lease-up opportunity.
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Lease Commencements: 3.5 million square feet, including 500,000 new, 2.2 million renewals, and 900,000 for developments and acquisitions.
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2024 NAREIT FFO Guidance: $2.61 to $2.65 per share, increased by $0.02 at the midpoint.
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Fourth-Quarter Cash Same-Store NOI Growth Guidance: 8% to 10% before termination fees.
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G&A Expense Guidance: $39.5 million to $40.5 million for 2024.
Release Date: October 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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First Industrial Realty Trust Inc (NYSE:FR) reported a strong quarter with solid operating metrics and significant new leases.
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The company achieved a cash rental rate increase of 51% on 2024 lease expirations, following a 58% increase in 2023.
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Development leasing activities included a full building lease for the First Pioneer project and a new development start in Nashville with an expected cash yield of approximately 7%.
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The company has a strong balance sheet with no debt maturities until 2026, providing financial flexibility.
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First Industrial Realty Trust Inc (NYSE:FR) has embedded growth opportunities within its portfolio and future growth potential from its landholdings capable of supporting over 14 million square feet of logistics facilities.
Negative Points
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The US industrial market saw a slight increase in vacancy rates, reflecting the impact of new developments coming online.
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The company experienced higher free rent and lower average occupancy, which partially offset rental rate increases.
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The boohoo tenant is ceasing operations at a leased building, leading to a $0.01 per share reduction in NAREIT FFO due to the write-off of straight-line rent assets.
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Occupancy guidance for the fourth quarter has a wide range, indicating uncertainty in lease-up activities.
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The company anticipates that some development leasing initially expected in the fourth quarter will be delayed to 2025, impacting occupancy projections.
Q & A Highlights
Q: Can you discuss the factors that could drive occupancy towards the upper end of your guidance range of 95% to 97% by year-end? Are there specific large leases in progress? A: Christopher Schneider, EVP of Operations, mentioned that the occupancy drop was partly due to the development portfolio. They are in discussions with tenants but have prudently pushed back lease-up expectations. Scott Musil, CFO, added that development leasing is key to hitting the high end of the guidance, with 400,000 square feet of development leasing built into the fourth quarter guidance.