Document


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _______________________________
Form 10-Q
_______________________________
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2017
or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to            
Commission File Number: 1-13102 (First Industrial Realty Trust, Inc.)
333-21873 (First Industrial, L.P.)
  _______________________________
FIRST INDUSTRIAL REALTY TRUST, INC.
FIRST INDUSTRIAL, L.P.
(Exact name of Registrant as specified in its Charter)
 
Maryland (First Industrial Realty Trust, Inc.)
 
36-3935116 (First Industrial Realty Trust, Inc.)
Delaware ( First Industrial, L.P.)
 
36-3924586 (First Industrial, L.P.)
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
311 S. Wacker Drive,
Suite 3900, Chicago, Illinois
 
60606
(Address of principal executive offices)
 
(Zip Code)
(312) 344-4300
(Registrant’s telephone number, including area code)
 _______________________________ 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
First Industrial Realty Trust, Inc.
Yes þ No o
First Industrial, L.P.
Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
First Industrial Realty Trust, Inc.
Yes þ No o
First Industrial, L.P.
Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
First Industrial Realty Trust, Inc.:
 
 
 
 
 
 
 
Large accelerated filer
 
þ
 
 
Accelerated filer
 
o
Non-accelerated filer
 
o
 
(Do not check if a smaller reporting company)
Smaller reporting company
 
o
Emerging growth company
 
o
 
 
 
 
 
First Industrial, L.P.:
 
 
 
 
 
 
 
Large accelerated filer
 
o
 
 
Accelerated filer
 
þ
Non-accelerated filer
 
o
 
(Do not check if a smaller reporting company)
Smaller reporting company
 
o
Emerging growth company
 
o
 
 
 
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
First Industrial Realty Trust, Inc.
Yes o No o
First Industrial, L.P.
Yes o No o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
First Industrial Realty Trust, Inc.
Yes o No þ
First Industrial, L.P.
Yes o No þ
At July 27, 2017, 119,844,995 shares of First Industrial Realty Trust, Inc.’s Common Stock, $0.01 par value, were outstanding. 
 






EXPLANATORY NOTE
This report combines the Quarterly Reports on Form 10-Q for the period ended June 30, 2017 of First Industrial Realty Trust, Inc., a Maryland corporation (the "Company"), and First Industrial, L.P., a Delaware limited partnership (the "Operating Partnership"). Unless stated otherwise or the context otherwise requires, the terms "we," "our" and "us" refer to the Company and its subsidiaries, including the Operating Partnership and its consolidated subsidiaries.
The Company is a real estate investment trust and the general partner of the Operating Partnership. At June 30, 2017, the Company owned an approximate 96.7% common general partnership interest in the Operating Partnership. The remaining approximate 3.3% common limited partnership interests in the Operating Partnership are owned by certain limited partners. As the sole general partner of the Operating Partnership, the Company exercises exclusive and complete discretion over the Operating Partnership’s day-to-day management and control and can cause it to enter into certain major transactions, including acquisitions, dispositions and refinancings. The management of the Company consists of the same members as the management of the Operating Partnership.
The Company and the Operating Partnership are managed and operated as one enterprise. The financial results of the Operating Partnership are consolidated into the financial statements of the Company. The Company has no significant assets other than its investment in the Operating Partnership. Substantially all of the Company’s assets are held by, and its operations are conducted through, the Operating Partnership and its subsidiaries. Therefore, the assets and liabilities of the Company and the Operating Partnership are substantially the same.
We believe it is important to understand the differences between the Company and the Operating Partnership in the context of how the Company and the Operating Partnership operate as an interrelated, consolidated company. The main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership are:
Stockholders’ Equity, Noncontrolling Interest and Partners’ Capital. The 3.3% equity interest in the Operating Partnership held by entities other than the Company are classified within partners’ capital in the Operating Partnership’s financial statements and as a noncontrolling interest in the Company's financial statements.
Relationship to Other Real Estate Partnerships. The Company's operations are conducted primarily through the Operating Partnership and its subsidiaries, though operations are also conducted through eight other limited partnerships, which are referred to as the "Other Real Estate Partnerships." The Operating Partnership is a limited partner, holding at least a 99% interest, and the Company is a general partner, holding at least a .01% general partnership interest through eight separate wholly-owned corporations, in each of the Other Real Estate Partnerships. The Other Real Estate Partnerships are variable interest entities that both the Company and the Operating Partnership consolidate. The Company's direct general partnership interest in the Other Real Estate Partnerships is reflected as noncontrolling interest within the Operating Partnership's financial statements.
Relationship to Service Subsidiary. The Company has a direct wholly-owned subsidiary that does not own any real estate but provides services to various other entities owned by the Company. Since the Operating Partnership does not have an ownership interest in this entity, its operations are reflected in the consolidated results of the Company but not the Operating Partnership. Also, this entity owes certain amounts to the Operating Partnership, for which a receivable is included on the Operating Partnership’s balance sheet but is eliminated on the Company’s consolidated balance sheet, since both this entity and the Operating Partnership are fully consolidated by the Company.
We believe combining the Company’s and Operating Partnership’s quarterly reports into this single report results in the following benefits:
enhances investors' understanding of the Company and the Operating Partnership by enabling them to view the business as a whole and in the same manner as management views and operates the business;
creates time and cost efficiencies through the preparation of one combined report instead of two separate reports; and
eliminates duplicative disclosures and provides a more streamlined and readable presentation for our investors to review since a substantial portion of the Company’s disclosure applies to both the Company and the Operating Partnership.
To help investors understand the differences between the Company and the Operating Partnership, this report provides the following separate disclosures for each of the Company and the Operating Partnership:
consolidated financial statements;
a single set of consolidated notes to such financial statements that includes separate discussions of each entity’s stockholders’ equity or partners’ capital, as applicable; and
a combined Management’s Discussion and Analysis of Financial Condition and Results of Operations section that includes distinct information related to each entity.
This report also includes separate Part I, Item 4, Controls and Procedures sections and separate Exhibits 31 and 32 certifications for the Company and the Operating Partnership in order to establish that the requisite certifications have been made and that the Company and the Operating Partnership are both compliant with Rule 13a-15 and Rule 15d-15 of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350.




FIRST INDUSTRIAL REALTY TRUST, INC. AND FIRST INDUSTRIAL, L.P.
FORM 10-Q
FOR THE PERIOD ENDED JUNE 30, 2017
INDEX
 
 
 
Page
 
First Industrial Realty Trust, Inc.
 
 
 
 
 
 
 
First Industrial, L.P.
 
 
 
 
 
 
 
First Industrial Realty Trust, Inc. and First Industrial, L.P.
 
 



2



PART I: FINANCIAL INFORMATION 
Item 1.
Financial Statements
FIRST INDUSTRIAL REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
 
 
June 30, 2017
 
December 31, 2016
 
(Unaudited)
 
 
ASSETS
 
 
 
Assets:
 
 
 
Investment in Real Estate:
 
 
 
Land
$
842,512

 
$
794,821

Buildings and Improvements
2,570,558

 
2,523,015

Construction in Progress
45,402

 
67,078

Less: Accumulated Depreciation
(806,477
)
 
(796,492
)
Net Investment in Real Estate
2,651,995

 
2,588,422

Real Estate and Other Assets Held for Sale, Net of Accumulated Depreciation and Amortization of $6,048 and $1,471
6,593

 
2,354

Cash and Cash Equivalents
11,607

 
9,859

Restricted Cash
5,619

 
11,602

Tenant Accounts Receivable, Net
3,730

 
4,757

Deferred Rent Receivable, Net
69,703

 
67,382

Deferred Leasing Intangibles, Net
29,670

 
29,499

Prepaid Expenses and Other Assets, Net
85,046

 
79,388

Total Assets
$
2,863,963

 
$
2,793,263

LIABILITIES AND EQUITY
 
 
 
Liabilities:
 
 
 
Indebtedness:
 
 
 
Mortgage Loans Payable, Net
$
455,016

 
$
495,956

Senior Unsecured Notes, Net
301,554

 
204,998

Unsecured Term Loans, Net
456,971

 
456,638

Unsecured Credit Facility
127,000

 
189,500

Accounts Payable, Accrued Expenses and Other Liabilities
66,003

 
84,412

Deferred Leasing Intangibles, Net
10,883

 
10,400

Rents Received in Advance and Security Deposits
46,544

 
43,300

Dividends and Distributions Payable
26,715

 
23,434

Total Liabilities
1,490,686

 
1,508,638

Commitments and Contingencies

 

Equity:
 
 
 
First Industrial Realty Trust Inc.’s Stockholders’ Equity:
 
 
 
Common Stock ($0.01 par value, 225,000,000 and 150,000,000 shares authorized and 119,848,054 and 117,107,746 shares issued and outstanding)
1,199

 
1,172

Additional Paid-in-Capital
1,963,129

 
1,886,771

Distributions in Excess of Accumulated Earnings
(632,390
)
 
(641,859
)
Accumulated Other Comprehensive Loss
(3,777
)
 
(4,643
)
Total First Industrial Realty Trust, Inc.’s Stockholders’ Equity
1,328,161

 
1,241,441

Noncontrolling Interest
45,116

 
43,184

Total Equity
1,373,277

 
1,284,625

Total Liabilities and Equity
$
2,863,963

 
$
2,793,263

The accompanying notes are an integral part of the consolidated financial statements.

3



FIRST INDUSTRIAL REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except per share data)
 
 
Three Months Ended June 30, 2017
 
Three Months Ended June 30, 2016
 
Six Months Ended June 30, 2017
 
Six Months Ended June 30, 2016
Revenues:
 
 
 
 
 
 
 
Rental Income
$
75,802

 
$
72,271

 
$
150,720

 
$
144,023

Tenant Recoveries and Other Income
21,777

 
20,744

 
44,242

 
42,459

Total Revenues
97,579

 
93,015

 
194,962

 
186,482

Expenses:
 
 
 
 
 
 
 
Property Expenses
26,897

 
26,875

 
55,383

 
55,242

General and Administrative
6,785

 
6,433

 
14,818

 
14,107

Acquisition Costs

 
155

 

 
219

Depreciation and Other Amortization
29,040

 
28,725

 
57,534

 
59,853

Total Expenses
62,722

 
62,188

 
127,735

 
129,421

Other Income (Expense):
 
 
 
 
 
 
 
Gain on Sale of Real Estate
20,860

 
36,775

 
28,869

 
44,026

Interest Expense
(14,915
)
 
(14,589
)
 
(29,284
)
 
(30,848
)
Amortization of Deferred Financing Costs
(780
)
 
(782
)
 
(1,558
)
 
(1,655
)
Loss from Retirement of Debt

 

 
(1,653
)
 

Total Other Income (Expense)
5,165

 
21,404

 
(3,626
)
 
11,523

Income from Operations Before Income Tax Provision
40,022

 
52,231

 
63,601

 
68,584

Income Tax Provision
(1,169
)
 
(123
)
 
(1,257
)
 
(181
)
Net Income
38,853

 
52,108

 
62,344

 
68,403

Less: Net Income Attributable to the Noncontrolling Interest
(1,291
)
 
(1,879
)
 
(2,073
)
 
(2,486
)
Net Income Available to First Industrial Realty Trust, Inc.’s Common Stockholders and Participating Securities
$
37,562

 
$
50,229

 
$
60,271

 
$
65,917

Basic and Diluted Earnings Per Share:
 
 
 
 
 
 
 
Net Income Available to First Industrial Realty Trust, Inc.’s Common Stockholders
$
0.32

 
$
0.43

 
$
0.51

 
$
0.58

Dividends/Distributions Per Share
$
0.21

 
$
0.19

 
$
0.42

 
$
0.38

Weighted Average Shares Outstanding - Basic
117,299

 
116,191

 
117,070

 
113,492

Weighted Average Shares Outstanding - Diluted
117,779

 
116,558

 
117,522

 
113,771

The accompanying notes are an integral part of the consolidated financial statements.


4



FIRST INDUSTRIAL REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited; in thousands)
 
 
Three Months Ended June 30, 2017
 
Three Months Ended June 30, 2016
 
Six Months Ended June 30, 2017
 
Six Months Ended June 30, 2016
Net Income
$
38,853

 
$
52,108

 
$
62,344

 
$
68,403

Mark-to-Market (Loss) Gain on Interest Rate Protection Agreements
(1,435
)
 
(5,120
)
 
743

 
(17,616
)
Amortization of Interest Rate Protection Agreements
60

 
96

 
156

 
198

Comprehensive Income
37,478

 
47,084

 
63,243

 
50,985

Comprehensive Income Attributable to Noncontrolling Interest
(1,245
)
 
(1,707
)
 
(2,103
)
 
(1,852
)
Comprehensive Income Attributable to First Industrial Realty Trust, Inc.
$
36,233

 
$
45,377

 
$
61,140

 
$
49,133

The accompanying notes are an integral part of the consolidated financial statements.


5



FIRST INDUSTRIAL REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited; in thousands)
 
Common
Stock
 
Additional
Paid-in-
Capital
 
Distributions
in Excess of
Accumulated
Earnings
 
Accumulated
Other
Comprehensive
Loss
 
Noncontrolling
Interest
 
Total
Balance as of December 31, 2016
$
1,172

 
$
1,886,771

 
$
(641,859
)
 
$
(4,643
)
 
$
43,184

 
$
1,284,625

Issuance of Common Stock, Net of Issuance Costs
25

 
74,636

 

 

 

 
74,661

Stock Based Compensation Activity
2

 
3,244

 
(724
)
 

 

 
2,522

Reallocation - Additional Paid-in-Capital

 
(1,522
)
 

 

 
1,522

 

Common Stock Dividends and Unit Distributions

 

 
(50,078
)
 

 
(1,696
)
 
(51,774
)
Net Income

 

 
60,271

 

 
2,073

 
62,344

Reallocation - Other Comprehensive Income

 

 

 
(3
)
 
3

 

Other Comprehensive Income

 

 

 
869

 
30

 
899

Balance as of June 30, 2017
$
1,199

 
$
1,963,129

 
$
(632,390
)
 
$
(3,777
)
 
$
45,116

 
$
1,373,277

The accompanying notes are an integral part of the consolidated financial statements.

6



FIRST INDUSTRIAL REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)
 
Six Months Ended June 30, 2017
 
Six Months Ended June 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net Income
$
62,344

 
$
68,403

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
 
 
 
Depreciation
46,751

 
49,084

Amortization of Deferred Financing Costs
1,558

 
1,655

Other Amortization, including Stock Based Compensation
14,939

 
14,892

Provision for Bad Debt
127

 
491

Gain on Sale of Real Estate
(28,869
)
 
(44,026
)
Loss from Retirement of Debt
1,653

 

Increase in Tenant Accounts Receivable, Prepaid Expenses and Other Assets, Net
(938
)
 
1,371

Increase in Deferred Rent Receivable, Net
(2,936
)
 
(3,303
)
Decrease in Accounts Payable, Accrued Expenses, Other Liabilities, Rents Received in Advance and Security Deposits
(729
)
 
(13,889
)
Payments of Prepayment Penalties and Discounts Associated with Retirement of Debt
(1,453
)
 
(554
)
Net Cash Provided by Operating Activities
92,447

 
74,124

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Acquisitions of Real Estate
(96,492
)
 
(71,223
)
Additions to Investment in Real Estate and Non-Acquisition Tenant Improvements and Lease Costs
(72,125
)
 
(67,176
)
Net Proceeds from Sales of Investments in Real Estate
56,773

 
96,849

Decrease in Escrows
4,866

 
12,457

Net Cash Used in Investing Activities
(106,978
)
 
(29,093
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Financing and Equity Issuance Costs
(1,829
)
 
(375
)
Proceeds from the Issuance of Common Stock, Net of Underwriter’s Discount
74,880

 
124,936

Repurchase and Retirement of Restricted Stock
(2,401
)
 
(5,230
)
Common Stock Dividends and Unit Distributions Paid
(48,493
)
 
(36,658
)
Repayments on Mortgage Loans Payable
(41,507
)
 
(63,690
)
Proceeds from Senior Unsecured Notes
200,000

 

Repayments of Senior Unsecured Notes
(101,871
)
 
(159,125
)
Proceeds from Unsecured Credit Facility
262,000

 
343,000

Repayments on Unsecured Credit Facility
(324,500
)
 
(247,500
)
Net Cash Provided by (Used in) Financing Activities
16,279

 
(44,642
)
Net Increase (Decrease) in Cash and Cash Equivalents
1,748

 
389

Cash and Cash Equivalents, Beginning of Year
9,859

 
3,987

Cash and Cash Equivalents, End of Period
$
11,607

 
$
4,376

SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS:
 
 
 
Interest Expense Capitalized in Connection with Development Activity
$
1,907

 
$
1,319

Supplemental Schedule of Non-Cash Investing and Financing Activities:
 
 
 
Common Stock Dividends and Unit Distributions Payable
$
26,715

 
$
23,284

Exchange of Limited Partnership Units for Common Stock:
 
 
 
Noncontrolling Interest
$

 
$
(107
)
Additional Paid-in-Capital

 
107

Total
$

 
$

Assumption of Indebtedness and Other Liabilities in Connection with the Acquisition of Real Estate
$
305

 
$
5,127

Accounts Payable Related to Construction in Progress and Additions to Investment in Real Estate
$
19,786

 
$
25,518

Write-off of Fully Depreciated Assets
$
(15,295
)
 
$
(25,543
)
The accompanying notes are an integral part of the consolidated financial statements.

7



FIRST INDUSTRIAL, L.P.
CONSOLIDATED BALANCE SHEETS
(In thousands, except Unit data)
 
June 30, 2017
 
December 31, 2016
 
(Unaudited)
 
 
ASSETS
 
 
 
Assets:
 
 
 
Investment in Real Estate:
 
 
 
Land
$
842,512

 
$
794,821

Buildings and Improvements
2,570,558

 
2,523,015

Construction in Progress
45,402

 
67,078

Less: Accumulated Depreciation
(806,477
)
 
(796,492
)
Net Investment in Real Estate (including $281,816 and $278,398 related to consolidated variable interest entities, see Note 5)
2,651,995

 
2,588,422

Real Estate and Other Assets Held for Sale, Net of Accumulated Depreciation and Amortization of $6,048 and $1,471
6,593

 
2,354

Cash and Cash Equivalents
11,607

 
9,859

Restricted Cash
5,619

 
11,602

Tenant Accounts Receivable, Net
3,730

 
4,757

Deferred Rent Receivable, Net
69,703

 
67,382

Deferred Leasing Intangibles, Net
29,670

 
29,499

Prepaid Expenses and Other Assets, Net
95,422

 
89,826

Total Assets
$
2,874,339

 
$
2,803,701

LIABILITIES AND PARTNERS’ CAPITAL
 
 
 
Liabilities:
 
 
 
Indebtedness:
 
 
 
Mortgage Loans Payable, Net (including $61,911 and $70,366 related to consolidated variable interest entities, see Note 5)
$
455,016

 
$
495,956

Senior Unsecured Notes, Net
301,554

 
204,998

Unsecured Term Loans, Net
456,971

 
456,638

Unsecured Credit Facility
127,000

 
189,500

Accounts Payable, Accrued Expenses and Other Liabilities
66,003

 
84,412

Deferred Leasing Intangibles, Net
10,883

 
10,400

Rents Received in Advance and Security Deposits
46,544

 
43,300

Distributions Payable
26,715

 
23,434

Total Liabilities
1,490,686

 
1,508,638

Commitments and Contingencies

 

Partners’ Capital:
 
 
 
First Industrial, L.P.'s Partners' Capital:
 
 
 
General Partner Units (119,848,054 and 117,107,746 units outstanding)
1,307,078

 
1,219,755

Limited Partners Units (4,039,375 and 4,039,375 units outstanding)
79,533

 
79,156

Accumulated Other Comprehensive Loss
(3,905
)
 
(4,804
)
Total First Industrial L.P.'s Partners’ Capital
1,382,706

 
1,294,107

Noncontrolling Interest
947

 
956

Total Partners’ Capital
1,383,653

 
1,295,063

Total Liabilities and Partners’ Capital
$
2,874,339

 
$
2,803,701

The accompanying notes are an integral part of the consolidated financial statements.

8



FIRST INDUSTRIAL L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except per Unit data)
 
 
Three Months Ended June 30, 2017
 
Three Months Ended June 30, 2016
 
Six Months Ended June 30, 2017
 
Six Months Ended June 30, 2016
Revenues:
 
 
 
 
 
 
 
Rental Income
$
75,802

 
$
72,271

 
150,720

 
$
144,023

Tenant Recoveries and Other Income
21,777

 
20,744

 
44,242

 
42,459

Total Revenues
97,579

 
93,015

 
194,962

 
186,482

Expenses:
 
 
 
 
 
 
 
Property Expenses
26,897

 
26,875

 
55,383

 
55,242

General and Administrative
6,785

 
6,433

 
14,818

 
14,107

Acquisition Costs

 
155

 

 
219

Depreciation and Other Amortization
29,040

 
28,725

 
57,534

 
59,853

Total Expenses
62,722

 
62,188

 
127,735

 
129,421

Other Income (Expense):
 
 
 
 
 
 
 
Gain on Sale of Real Estate
20,860

 
36,775

 
28,869

 
44,026

Interest Expense
(14,915
)
 
(14,589
)
 
(29,284
)
 
(30,848
)
Amortization of Deferred Financing Costs
(780
)
 
(782
)
 
(1,558
)
 
(1,655
)
Loss from Retirement of Debt

 

 
(1,653
)
 

Total Other Income (Expense)
5,165

 
21,404

 
(3,626
)
 
11,523

Income from Operations Before Income Tax Provision
40,022

 
52,231

 
63,601

 
68,584

Income Tax Provision
(1,169
)
 
(123
)
 
(1,257
)
 
(181
)
Net Income
38,853

 
52,108

 
62,344

 
68,403

Less: Net Income Attributable to the Noncontrolling Interest
(26
)
 
(60
)
 
(53
)
 
(74
)
Net Income Available to Unitholders and Participating Securities
$
38,827

 
$
52,048

 
$
62,291

 
$
68,329

Basic and Diluted Earnings Per Unit:
 
 
 
 
 
 

Net Income Available to Unitholders
$
0.32

 
$
0.43

 
$
0.51

 
$
0.58

Distributions Per Unit
$
0.21

 
$
0.19

 
$
0.42

 
$
0.38

Weighted Average Units Outstanding - Basic
121,339

 
120,486

 
121,109

 
117,791

Weighted Average Units Outstanding - Diluted
121,819

 
120,853

 
121,561

 
118,070

The accompanying notes are an integral part of the consolidated financial statements.



9



FIRST INDUSTRIAL L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited; in thousands)
 
 
Three Months Ended June 30, 2017
 
Three Months Ended June 30, 2016
 
Six Months Ended June 30, 2017
 
Six Months Ended June 30, 2016
Net Income
$
38,853

 
$
52,108

 
$
62,344

 
$
68,403

Mark-to-Market (Loss) Gain on Interest Rate Protection Agreements
(1,435
)
 
(5,120
)
 
743

 
(17,616
)
Amortization of Interest Rate Protection Agreements
60

 
96

 
156

 
198

Comprehensive Income
$
37,478

 
$
47,084

 
$
63,243

 
$
50,985

Comprehensive Income Attributable to Noncontrolling Interest
(26
)
 
(60
)
 
(53
)
 
(74
)
Comprehensive Income Attributable to Unitholders
$
37,452

 
$
47,024

 
$
63,190

 
$
50,911

The accompanying notes are an integral part of the consolidated financial statements.


10



FIRST INDUSTRIAL, L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL
(Unaudited; in thousands)
 
 
General
Partner
Units
 
Limited
Partner
Units
 
Accumulated
Other
Comprehensive
Loss
 
Noncontrolling Interest
 
Total
Balance as of December 31, 2016
$
1,219,755

 
$
79,156

 
$
(4,804
)
 
$
956

 
$
1,295,063

Contribution of General Partner Units, Net of Issuance Costs
74,661

 

 

 

 
74,661

Stock Based Compensation Activity
2,522

 

 

 

 
2,522

Unit Distributions
(50,078
)
 
(1,696
)
 

 

 
(51,774
)
Contributions from Noncontrolling Interest

 

 

 
20

 
20

Distributions to Noncontrolling Interest

 

 

 
(82
)
 
(82
)
Net Income
60,218

 
2,073

 

 
53

 
62,344

Other Comprehensive Income

 

 
899

 

 
899

Balance as of June 30, 2017
$
1,307,078

 
$
79,533

 
$
(3,905
)
 
$
947

 
$
1,383,653

The accompanying notes are an integral part of the consolidated financial statements.


11



FIRST INDUSTRIAL, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)
 
Six Months Ended June 30, 2017
 
Six Months Ended June 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net Income
$
62,344

 
$
68,403

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
 
 
 
Depreciation
46,751

 
49,084

Amortization of Deferred Financing Costs
1,558

 
1,655

Other Amortization, including Stock Based Compensation
14,939

 
14,892

Provision for Bad Debt
127

 
491

Gain on Sale of Real Estate
(28,869
)
 
(44,026
)
Loss from Retirement of Debt
1,653

 

Increase in Tenant Accounts Receivable, Prepaid Expenses and Other Assets, Net
(876
)
 
1,530

Increase in Deferred Rent Receivable, Net
(2,936
)
 
(3,303
)
Decrease in Accounts Payable, Accrued Expenses, Other Liabilities, Rents Received in Advance and Security Deposits
(729
)
 
(13,889
)
Payments of Prepayment Penalties and Discounts Associated with Retirement of Debt

(1,453
)
 
(554
)
Net Cash Provided by Operating Activities
92,509

 
74,283

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Acquisitions of Real Estate
(96,492
)
 
(71,223
)
Additions to Investment in Real Estate and Non-Acquisition Tenant Improvements and Lease Costs
(72,125
)
 
(67,176
)
Net Proceeds from Sales of Investments in Real Estate
56,773

 
96,849

Decrease in Escrows
4,866

 
12,457

Net Cash Used in Investing Activities
(106,978
)
 
(29,093
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Financing and Equity Issuance Costs
(1,829
)
 
(375
)
Contribution of General Partner Units
74,880

 
124,936

Repurchase and Retirement of Restricted Units
(2,401
)
 
(5,230
)
Unit Distributions Paid
(48,493
)
 
(36,658
)
Contributions from Noncontrolling Interests
20

 
15

Distributions to Noncontrolling Interests
(82
)
 
(174
)
Repayments on Mortgage Loans Payable
(41,507
)
 
(63,690
)
Proceeds from Senior Unsecured Notes
200,000

 

Repayments of Senior Unsecured Notes
(101,871
)
 
(159,125
)
Proceeds from Unsecured Credit Facility
262,000

 
343,000

Repayments on Unsecured Credit Facility
(324,500
)
 
(247,500
)
Net Cash Provided by (Used in) Financing Activities
16,217

 
(44,801
)
Net Increase (Decrease) in Cash and Cash Equivalents
1,748

 
389

Cash and Cash Equivalents, Beginning of Year
9,859

 
3,987

Cash and Cash Equivalents, End of Period
$
11,607

 
$
4,376

SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS:
 
 
 
Interest Expense Capitalized in Connection with Development Activity
$
1,907

 
$
1,319

Supplemental Schedule of Non-Cash Investing and Financing Activities:
 
 
 
General and Limited Partner Unit Distributions Payable
$
26,715

 
$
23,284

Exchange of Limited Partner Units for General Partner Units:
 
 
 
Limited Partner Units
$

 
$
(107
)
General Partner Units

 
107

Total
$

 
$

Assumption of Indebtedness and Other Liabilities in Connection with the Acquisition of Real Estate
$
305

 
$
5,127

Accounts Payable Related to Construction in Progress and Additions to Investment in Real Estate
$
19,786

 
$
25,518

Write-off of Fully Depreciated Assets
$
(15,295
)
 
$
(25,543
)
The accompanying notes are an integral part of the consolidated financial statements.

12



FIRST INDUSTRIAL REALTY TRUST, INC. AND FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; dollars in thousands, except per share and Unit data)
1. Organization
First Industrial Realty Trust, Inc. (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. Unless stated otherwise or the context otherwise requires, the terms "we," "our" and "us" refer to the Company and its subsidiaries, including its operating partnership, First Industrial, L.P. (the "Operating Partnership"), and its consolidated subsidiaries.
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 96.7% ownership interest ("General Partner Units") at June 30, 2017. 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 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. Noncontrolling interest in the Operating Partnership of approximately 3.3% at June 30, 2017 represents the aggregate partnership interest held by the limited partners thereof ("Limited Partner Units" and together with the General Partner Units, the "Units"). "). At June 30, 2017 and December 31, 2016, the Operating Partnership had receivable balances of $10,387 and $10,448, respectively, from a direct wholly-owned subsidiary of the Company.
Profits, losses and distributions of the Operating Partnership, the LLCs, the Other Real Estate Partnerships and the TRSs 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 of June 30, 2017, we owned 524 industrial properties located in 22 states, containing an aggregate of approximately 63.3 million square feet of gross leasable area ("GLA"). Of the 524 properties owned on a consolidated basis, none of them are directly owned by the Company.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the accounting policies described in the consolidated financial statements and related notes included in our annual report on Form 10-K for the year ended December 31, 2016 ("2016 Form 10-K") and should be read in conjunction with such consolidated financial statements and related notes. The 2016 year end consolidated balance sheet data included in this Form 10-Q filing was derived from the audited consolidated financial statements in our 2016 Form 10-K, but does not include all disclosures required by accounting principles generally accepted in the United States of America ("GAAP"). The following notes to these interim consolidated financial statements highlight significant changes to the notes included in the December 31, 2016 audited consolidated financial statements included in our 2016 Form 10-K and present interim disclosures as required by the Securities and Exchange Commission.
Use of Estimates
In order to conform with GAAP, in preparation of our consolidated financial statements we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of June 30, 2017 and December 31, 2016, and the reported amounts of revenues and expenses for the three and six months ended June 30, 2017 and 2016. Actual results could differ from those estimates. In our opinion, the accompanying unaudited interim consolidated financial statements reflect all adjustments necessary for a fair statement of our financial position as of June 30, 2017 and December 31, 2016, the results of our operations and comprehensive income for each of the three and six months ended June 30, 2017 and 2016, and our cash flows for each of the six months ended June 30, 2017 and 2016. All adjustments are of a normal recurring nature.

13



Investment in Real Estate and Depreciation
Effective January 1, 2017, we adopted Accounting Standards Update ("ASU") No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business" ("ASU 2017-01"). ASU 2017-01 clarifies the framework for determining whether an integrated set of assets and activities meets the definition of a business. The revised framework establishes a screen for determining whether an integrated set of assets and activities is a business and narrows the definition of a business, which is expected to result in fewer transactions being accounted for as business combinations. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset acquisitions. We applied ASU 2017-01 prospectively. We anticipate that our acquisitions of real estate in the future will generally not meet the definition of a business combination and, accordingly, transaction costs which have historically been expensed will be capitalized as part of the basis of the real estate assets acquired.
Recent Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2016-02, "Leases" ("ASU 2016-02"), which amends the existing accounting standards for lease accounting and sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract. Under ASU 2016-02, we will be required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. We are a lessee on certain ground and operating leases as disclosed in Note 14 to the consolidated financial statements in our 2016 Form 10-K. Due to the length of the lease terms of some of these ground and operating leases, we expect to record a right-of-use asset and lease liability with respect to certain of our ground and operating leases upon adoption of this standard. ASU 2016-02 also requires that lessors expense certain initial direct costs that are not incremental in negotiating a lease as incurred. Under existing standards, certain of these initial direct costs are capitalizable. ASU 2016-02 requires the use of a modified retrospective approach for all leases existing at, or entered into after, the beginning of the earliest period presented in the consolidated financial statements, with certain practical expedients available. We are continuing the process of evaluating and quantifying the effect that ASU 2016-02 will have on our consolidated financial statements and related disclosures. We will adopt ASU 2016-02 on January 1, 2019.
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 requires entities to recognize revenue when they transfer promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. While lease contracts with customers, which constitute a vast majority of our revenues, are a specific scope exception, certain of our revenue streams may be impacted by the new guidance. Once the new guidance setting forth principles for the recognition, measurement, presentation and disclosure of leases (ASU 2016-02, as discussed above) goes into effect, the new revenue standard may apply to executory costs and other components of revenue due under leases that are deemed to be non-lease components (such as common area maintenance and provision of utilities), even when the revenue for such activities is not separately stipulated in the lease. ASU 2014-09 provides the option of using a full retrospective or a modified retrospective approach. We have not decided which method of adoption we will use. ASU 2014-09 is effective for annual periods beginning after December 15, 2017. We are currently in the process of evaluating the impact the adoption of ASU 2014-09 will have on our financial position or results of operations and we will adopt ASU 2014-09 on January 1, 2018.
In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” ("ASU 2016-15"). ASU 2016-15 addresses eight specific cash flow issues and intends to reduce the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for annual periods beginning after December 15, 2017 with retrospective application required. We expect ASU 2016-15 to impact the presentation of our consolidated statement of cash flows and we will adopt ASU 2016-15 on January 1, 2018.

14



In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash" ("ASU 2016-18"). ASU 2016-18 requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash and restricted cash equivalents when reconciling the beginning- of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for annual periods beginning after December 15, 2017. We expect ASU 2016-18 to impact the presentation of our consolidated statement of cash flows and we will adopt ASU 2016-18 on January 1, 2018.
3. Investment in Real Estate
Acquisitions
During the six months ended June 30, 2017, we acquired four industrial properties comprised of approximately 0.5 million square feet of GLA and several land parcels. The purchase price of these acquisitions totaled $94,497, excluding costs incurred in conjunction with the acquisition of the industrial properties and land parcels. The revenue and net income associated with the acquisition of the industrial properties, since their respective acquisition dates, are not significant for the six months ended June 30, 2017.
The following table summarizes the amounts recognized for each major class of asset and liability for the industrial properties and land parcels acquired during the six months ended June 30, 2017:
 
Purchase Price
 
Weighted Average Life (in Months)
Land
$
56,888

 
N/A
Building and Improvements
34,816

 
(A)
Other Assets
546

 
(B)
In-Place Leases
3,417

 
85
Below Market Leases
(1,170
)
 
95
Total Purchase Price
$
94,497

 
 
(A) See Note 2 to the consolidated financial statements in our 2016 Form 10-K for the disclosure of useful lives of our Investment in Real Estate and our Depreciation policy.
(B) Represents leasing commissions, which are included in prepaid expenses and other assets, net on the consolidated balance sheets and amortized over the remaining term of each lease.
Real Estate Held for Sale
As of June 30, 2017, we had three industrial properties comprised of approximately 0.4 million square feet of GLA and one land parcel held for sale.
Sales
During the six months ended June 30, 2017, we sold 20 industrial properties comprised of approximately 1.0 million square feet of GLA. Gross proceeds from the sales of these industrial properties were $59,130. The gain on sale of real estate was $28,869.

15



4. Indebtedness
The following table discloses certain information regarding our indebtedness: 
 
Outstanding Balance at
 
Interest
Rate at
June 30, 2017
 
Effective
Interest
Rate at
Issuance
 
Maturity
Date
 
June 30, 2017
 
December 31,
2016
 
Mortgage Loans Payable, Gross
$
456,928

 
$
498,435

 
4.03% – 8.26%
 
3.82% – 8.26%
 
June 2018 –
September 2022
Unamortized Deferred Financing Costs
(2,255
)
 
(2,905
)
 
 
 
 
 
 
Unamortized Premiums
343

 
426

 
 
 
 
 
 
Mortgage Loans Payable, Net
$
455,016

 
$
495,956

 
 
 
 
 
 
Senior Unsecured Notes, Gross
 
 
 
 
 
 
 
 
 
2017 Notes
54,981

 
54,981

 
7.50%
 
7.52%
 
12/1/2017
2027 Notes
6,070

 
6,070

 
7.15%
 
7.11%
 
5/15/2027
2028 Notes
31,901

 
31,901

 
7.60%
 
8.13%
 
7/15/2028
2032 Notes
10,600

 
10,600

 
7.75%
 
7.87%
 
4/15/2032
2017 II Notes

 
101,871

 
N/A
 
N/A
 
5/15/2017
2027 Private Placement Notes
125,000

 

 
4.30%
 
4.30%
 
4/20/2027
2029 Private Placement Notes
75,000

 

 
4.40%
 
4.40%
 
4/20/2029
Subtotal
$
303,552

 
$
205,423

 
 
 
 
 
 
Unamortized Deferred Financing Costs
(1,909
)
 
(320
)
 
 
 
 
 
 
Unamortized Discounts
(89
)
 
(105
)
 
 
 
 
 
 
Senior Unsecured Notes, Net
$
301,554

 
$
204,998

 
 
 
 
 
 
Unsecured Term Loans, Gross
 
 


 
 
 
 
 
 
2014 Unsecured Term Loan (A)
$
200,000

 
$
200,000

 
3.99%
 
N/A
 
1/29/2021
2015 Unsecured Term Loan (A)
260,000

 
260,000

 
3.39%
 
N/A
 
9/12/2022
Subtotal
$
460,000

 
$
460,000

 

 

 

Unamortized Deferred Financing Costs
(3,029
)
 
(3,362
)
 
 
 
 
 
 
Unsecured Term Loans, Net
$
456,971

 
$
456,638

 
 
 
 
 
 
Unsecured Credit Facility (B)
$
127,000

 
$
189,500

 
2.22%
 
N/A
 
3/11/2019
(A) The interest rate at June 30, 2017 reflects the interest rate protection agreements we entered into to effectively convert the variable rate to a fixed rate. See Note 10.
(B) The maturity date may be extended an additional year at our election, subject to certain restrictions. Amounts exclude unamortized deferred financing costs of $2,213 and $2,876 as of June 30, 2017 and December 31, 2016, respectively, which are included in prepaid expenses and other assets on the consolidated balance sheets.
Mortgage Loans Payable, Net
During the six months ended June 30, 2017, we paid off mortgage loans in the amount of $36,108. In connection with the mortgage loans paid off during the six months ended June 30, 2017, we recognized $1,653 as loss from retirement of debt representing prepayment penalties and the write-off of unamortized deferred financing costs.
As of June 30, 2017, mortgage loans payable are collateralized, and in some instances cross-collateralized, by industrial properties with a net carrying value of $590,246. We believe the Operating Partnership and the Company were in compliance with all covenants relating to mortgage loans as of June 30, 2017.

16



Senior Unsecured Notes, Net
During the six months ended June 30, 2017, the Operating Partnership issued $125,000 of 4.30% Series A Guaranteed Senior Notes due April 20, 2027 (the “2027 Private Placement Notes”) and $75,000 of 4.40% Series B Guaranteed Senior Notes due April 20, 2029 (the “2029 Private Placement Notes”) (collectively, the "Private Placement Notes") in a private placement pursuant to a Note and Guaranty Agreement dated February 21, 2017. The 2027 Private Placement Notes and the 2029 Private Placement Notes are unsecured obligations of the Operating Partnership that are fully and unconditionally guaranteed by the Company and require semi-annual interest payments.
Additionally, during the six months ended June 30, 2017, we paid off and retired our 2017 II Notes (as described in the table above), at maturity in the amount of $101,871.
Indebtedness
The following is a schedule of the stated maturities and scheduled principal payments of our indebtedness, exclusive of premiums, discounts and deferred financing costs, for the next five years as of June 30, and thereafter: 
 
Amount
Remainder of 2017
$
60,307

2018
165,449

2019
206,329

2020
58,762

2021
266,818

Thereafter
589,815

Total
$
1,347,480

Our unsecured credit facility (the "Unsecured Credit Facility"), the Unsecured Term Loans (as defined in Note 10), the Private Placement Notes and the indentures governing our senior unsecured notes contain certain financial covenants, including limitations on incurrence of debt and debt service coverage. Under the Unsecured Credit Facility and the Unsecured Term Loans an event of default can occur if the lenders, in their good faith judgment, determine that a material adverse change has occurred which could prevent timely repayment or materially impair our ability to perform our obligations under the loan agreements. We believe that the Operating Partnership and the Company were in compliance with all covenants relating to the Unsecured Credit Facility, the Unsecured Term Loans, the Private Placement Notes and indentures governing our senior unsecured notes as of June 30, 2017. 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.

17



Fair Value
At June 30, 2017 and December 31, 2016, the fair value of our indebtedness was as follows: 
 
June 30, 2017
 
December 31, 2016
 
Carrying
Amount (A)
 
Fair
Value
 
Carrying
Amount (A)
 
Fair
Value
Mortgage Loans Payable, Net
$
457,271

 
$
470,999

 
$
498,861

 
$
513,540

Senior Unsecured Notes, Net
303,463

 
323,333

 
205,318

 
222,469

Unsecured Term Loans
460,000

 
466,596

 
460,000

 
458,602

Unsecured Credit Facility
127,000

 
127,000

 
189,500

 
189,500

Total
$
1,347,734

 
$
1,387,928

 
$
1,353,679

 
$
1,384,111

(A) The carrying amounts include unamortized premiums and discounts and exclude unamortized deferred financing costs.
The fair values of our mortgage loans payable were determined by discounting the future cash flows using the current rates at which similar loans would be made based upon similar remaining maturities. The current market rates we utilized were internally estimated. The fair value of the senior unsecured notes were determined by using rates, as advised by our bankers, that are based upon recent trades within the same series of the senior unsecured notes, recent trades for senior unsecured notes with comparable maturities, recent trades for fixed rate unsecured notes from companies with profiles similar to ours, as well as overall economic conditions. The fair value of the Unsecured Credit Facility and the Unsecured Term Loans was determined by discounting the future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining term, assuming no repayment until maturity. We have concluded that our determination of fair value for each of our mortgage loans payable, senior unsecured notes, the Unsecured Term Loans and the Unsecured Credit Facility was primarily based upon Level 3 inputs.
5. Variable Interest Entities
The Other Real Estate Partnerships are variable interest entities ("VIEs") of the Operating Partnership and the Operating Partnership is the primary beneficiary, thus causing the Other Real Estate Partnerships to be consolidated by the Operating Partnership. In addition, the Operating Partnership is a VIE of the Company and the Company is the primary beneficiary.
The following table summarizes the assets and liabilities of the Other Real Estate Partnerships included in our consolidated balance sheets, net of intercompany amounts:
 
June 30, 2017
 
December 31, 2016
ASSETS
 
 
 
Assets:
 
 
 
Net Investment in Real Estate
$
281,816

 
$
278,398

Other Assets, Net
23,072

 
24,401

Total Assets
$
304,888

 
$
302,799

LIABILITIES AND PARTNERS’ CAPITAL
 
 
 
Liabilities:
 
 
 
Mortgage Loans Payable, Net
$
61,911

 
$
70,366

Other Liabilities, Net
9,130

 
9,138

Partners’ Capital
233,847

 
223,295

Total Liabilities and Partners’ Capital
$
304,888

 
$
302,799


18



6. Stockholders’ Equity of the Company and Partners' Capital of the Operating Partnership
Issuance of Shares of Common Stock
During the six months ended June 30, 2017, the Company issued 2,560,000 shares of the Company's common stock in an underwritten public offering. Proceeds to the Company, net of the underwriter's discount, were $74,880. The proceeds were contributed to the Operating Partnership in exchange for General Partner Units and are reflected in the financial statements as a general partner contribution.
Increased Authorized Shares of Common Stock
On May 11, 2017, we filed an amendment to the Company’s articles of incorporation, increasing the number of shares of the Company’s common stock authorized for issuance from 150 million to 225 million shares.
Noncontrolling Interest of the Company
The following table summarizes the changes in noncontrolling interest for the Company for the six months ended June 30, 2017 and 2016:
 
2017
 
2016
Balance as of December 31
$
43,184

 
$
42,035

    Net Income
2,073

 
2,486

    Unit Distributions
(1,696
)
 
(1,632
)
    Other Comprehensive Income
30

 
(598
)
    Conversion of Limited Partner Units to Common Stock (A)

 
(107
)
    Reallocation - Additional Paid-in-Capital
1,522

 
2,434

    Reallocation - Other Comprehensive Income
3

 

Balance as of June 30
$
45,116

 
$
44,618

(A) For the six months ended June 30, 2016, 10,697 Limited Partner Units were converted into an equivalent number of shares of common stock of the Company, resulting in a reclassification of $107 of noncontrolling interest to the Company’s stockholders’ equity.
Noncontrolling Interest of the Operating Partnership
The following table summarizes the changes in noncontrolling interest for the Operating Partnership for the six months ended June 30, 2017 and 2016:
 
2017
 
2016
Balance as of December 31
$
956

 
$
1,096

    Net Income
53

 
74

    Contributions
20

 
15

    Distributions
(82
)
 
(174
)
Balance as of June 30
$
947

 
$
1,011

Dividends/Distributions
During the six months ended June 30, 2017, we declared $51,774 common stock dividends and Unit distributions.

19



7. Accumulated Other Comprehensive Loss
The following table summarizes the changes in accumulated other comprehensive loss by component for the Company and the Operating Partnership for the six months ended June 30, 2017:
 
Interest Rate Protection Agreements
 
Accumulated Other Comprehensive Loss of the Operating Partnership
 
Comprehensive Loss Attributable to Noncontrolling Interest of the Company
 
Accumulated Other Comprehensive Loss of the Company
Balance as of December 31, 2016
$
(4,804
)
 
$
(4,804
)
 
$
161

 
(4,643
)
Other Comprehensive Income Before Reclassifications
(1,831
)
 
(1,831
)
 
(33
)
 
(1,864
)
Amounts Reclassified from Accumulated Other Comprehensive Loss
2,730

 
2,730

 

 
2,730

Net Current Period Other Comprehensive Income
899

 
899

 
(33
)
 
866

Balance as of June 30, 2017
$
(3,905
)
 
$
(3,905
)
 
$
128

 
$
(3,777
)
The following table summarizes the reclassifications out of accumulated other comprehensive loss for both the Company and the Operating Partnership for the six months ended June 30, 2017 and 2016:
 
 
Amounts Reclassified from Accumulated
Other Comprehensive Loss
 
 
Details about Accumulated
Other Comprehensive Loss Components
 
Three Months Ended June 30, 2017
 
Three Months Ended June 30, 2016
 
Six Months Ended June 30, 2017
 
Six Months Ended June 30, 2016
 
Affected Line Items in the
Consolidated Statements of Operations
Interest Rate Protection Agreements:
 
 
 
 
 
 
 
 
 
 
Amortization of Interest Rate Protection Agreements (Previously Settled)
 
$
60

 
$
96

 
$
156

 
$
198

 
Interest Expense
Settlement Payments to our Counterparties
 
1,161

 
1,815

 
2,574

 
3,651

 
Interest Expense
Total
 
$
1,221

 
$
1,911

 
$
2,730

 
$
3,849

 
 
The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in other comprehensive income (loss) and is subsequently reclassified to earnings through interest expense over the life of the derivative or over the life of the debt. In the next 12 months, we expect to amortize approximately $95 into net income by increasing interest expense for interest rate protection agreements we settled in previous periods. Additionally, recurring settlement amounts on the 2014 Swaps and 2015 Swaps (as defined in Note 10) will also be reclassified to net income. See Note 10 for more information about our derivatives.

20


8. Earnings Per Share and Earnings Per Unit ("EPS"/"EPU")
The computation of basic and diluted EPS of the Company is presented below: 
 
Three Months Ended
June 30, 2017
 
Three Months Ended
June 30, 2016
 
Six Months Ended
June 30, 2017
 
Six Months Ended
June 30, 2016
Numerator:
 
 
 
 
 
 
 
Net Income Available to First Industrial Realty Trust, Inc.’s Common Stockholders and Participating Securities
$
37,562

 
$
50,229

 
$
60,271

 
$
65,917

Net Income Allocable to Participating Securities
(129
)
 
(180
)
 
(154
)
 
(217
)
Net Income Available to First Industrial Realty Trust, Inc.’s Common Stockholders
$
37,433

 
$
50,049

 
$
60,117

 
$
65,700

Denominator (In Thousands):
 
 
 
 
 
 
 
Weighted Average Shares - Basic
117,299

 
116,191

 
117,070

 
113,492

Effect of Dilutive Securities:
 
 
 
 
 
 
 
        LTIP Unit Awards (As Defined in Note 9)
480

 
367

 
452

 
279

Weighted Average Shares - Diluted
117,779

 
116,558

 
117,522

 
113,771

Basic and Diluted EPS:
 
 
 
 
 
 
 
Net Income Available to First Industrial Realty Trust, Inc.’s Common Stockholders
$
0.32

 
$
0.43

 
$
0.51

 
$
0.58

The computation of basic and diluted EPU of the Operating Partnership is presented below:
 
Three Months Ended
June 30, 2017
 
Three Months Ended
June 30, 2016
 
Six Months Ended
June 30, 2017
 
Six Months Ended
June 30, 2016
Numerator:
 
 
 
 
 
 
 
Net Income Available to Unitholders and Participating Securities
$
38,827

 
$
52,048

 
$
62,291

 
$
68,329

Net Income Allocable to Participating Securities
(129
)
 
(180
)
 
(154
)
 
(217
)
Net Income Available to Unitholders
$
38,698

 
$
51,868

 
$
62,137

 
$
68,112

Denominator (In Thousands):
 
 
 
 
 
 
 
Weighted Average Units - Basic
121,339

 
120,486

 
121,109

 
117,791

Effect of Dilutive Securities that Result in the Issuance of General Partner Units:
 
 
 
 
 
 
 
LTIP Unit Awards (As Defined in Note 9)
480

 
367

 
452

 
279

Weighted Average Units - Diluted
121,819

 
120,853

 
121,561

 
118,070

Basic and Diluted EPU:
 
 
 
 
 
 
 
Net Income Available to Unitholders
$
0.32

 
$
0.43

 
$
0.51

 
$
0.58

Participating securities include 404,276 and 418,366 of unvested restricted stock or restricted Unit awards outstanding at June 30, 2017 and 2016, respectively, which participate in non-forfeitable distributions. Under the two class method, participating security holders are allocated income, in proportion to total weighted average shares or Units outstanding, based upon the greater of net income or common stock dividends or Unit distributions declared.

21



9. Benefit Plans
Restricted Stock or Restricted Unit Awards
For the six months ended June 30, 2017, the Company awarded 252,213 shares of restricted stock awards to certain employees, which had an aggregate fair value of $6,631 on the date such awards were approved by the Compensation Committee of the Board of Directors. These restricted stock awards were granted based upon the achievement of certain corporate performance goals and generally vest over a period of three years. Additionally, during the six months ended June 30, 2017, the Company awarded 15,108 shares of restricted stock to non-employee members of the Board of Directors, which had an aggregate fair value of $420 on the date of approval. These restricted stock awards vest over a one-year period. The Operating Partnership issued restricted Unit awards to the Company in the same amount for both restricted stock awards.
Compensation expense is charged to earnings over the vesting periods for the restricted stock or restricted Unit awards expected to vest except if the recipient is not required to provide future service in exchange for vesting of such restricted stock or restricted Unit awards. If vesting of a recipient's restricted stock or restricted Unit awards is not contingent upon future service, the expense is recognized immediately at the date of grant. During both the six months ended June 30, 2017 and 2016, we recognized $1,590 of compensation expense related to restricted stock or restricted Unit awards granted to our former Chief Executive Officer for which future service was not required.
LTIP Unit Awards
For the six months ended June 30, 2017, the Company granted to certain employees 195,951 Long-Term Incentive Program ("LTIP") performance units ("LTIP Unit Awards"), which had a fair value of $2,473 on the grant date as determined by a lattice-binomial option-pricing model based on a Monte Carlo simulation. The LTIP Unit Awards vest based upon the relative total shareholder return ("TSR") of the Company's common stock compared to the TSRs of the MSCI US REIT Index and the NAREIT Industrial Index over a performance period of three years. Compensation expense is charged to earnings on a straight-line basis over the performance period. At the end of the performance period each participant will be issued shares of the Company's common stock equal to the maximum shares issuable to the participant for the performance period multiplied by a percentage, ranging from 0% to 100%, based on the Company's TSR as compared to the TSRs of the MSCI US REIT Index and the NAREIT Industrial Index. The Operating Partnership issues General Partner Units to the Company in the same amounts for vested LTIP Unit Awards.
Outstanding Restricted Stock or Restricted Unit Awards and LTIP Unit Awards
We recognized $1,822 and $1,507 for the three months ended June 30, 2017 and 2016, respectively and $4,923 and $4,470 for the six months ended June 30, 2017 and 2016 respectively, in amortization related to restricted stock or restricted Unit awards and LTIP Unit Awards. Restricted stock or restricted Unit award and LTIP Unit Award amortization capitalized in connection with development activities was not significant. At June 30, 2017, we had $11,302 in unrecognized compensation related to unvested restricted stock or restricted Unit awards and LTIP Unit Awards. The weighted average period that the unrecognized compensation is expected to be recognized is 1.02 years.

22



10. Derivatives
Our objectives in using derivatives are to add stability to interest expense and to manage our cash flow volatility and exposure to interest rate movements. To accomplish this objective, we primarily use interest rate protection agreements as part of our interest rate risk management strategy. Interest rate protection agreements designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
In connection with the originations of the seven-year, $200,000 unsecured loan (the "2014 Unsecured Term Loan") and the seven-year, $260,000 unsecured loan (the "2015 Unsecured Term Loan" and together with the 2014 Unsecured Term Loan, the "Unsecured Term Loans") (See Note 4) , we entered into interest rate protection agreements to manage our exposure to changes in the one month LIBOR rate. The four interest rate protection agreements, which fix the variable rate of the 2014 Unsecured Term Loan, have an aggregate notional value of $200,000, mature on January 29, 2021 and fix the LIBOR rate at a weighted average rate of 2.29% (the "2014 Swaps"). The six interest rate protection agreements, which fix the variable rate of the 2015 Unsecured Term Loan, have an aggregate notional value of $260,000, mature on September 12, 2022 and fix the LIBOR rate at a weighted average rate of 1.79% (the "2015 Swaps"). We designated the 2014 Swaps and 2015 Swaps as cash flow hedges.
Our agreements with our derivative counterparties contain provisions where if we default on any of our indebtedness, then we could also be declared in default on our derivative obligations subject to certain thresholds. As of June 30, 2017, we had not posted any collateral related to these agreements and were not in breach of any of the provisions of these agreements. If we had breached these agreements, we could have been required to settle our obligations under the agreements at their termination value.
The following table sets forth our financial assets and liabilities related to the 2014 Swaps and 2015 Swaps, which are included in prepaid expenses and other assets and accounts payable, accrued expenses and other liabilities on the consolidated balance sheets and are accounted for at fair value on a recurring basis as of June 30, 2017:
 
 
 
 
Fair Value Measurements at Reporting Date Using:
Description
 
Fair Value
 
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Unobservable
Inputs
(Level 3)
Derivatives designated as a hedging instrument:
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
2015 Swaps
 
$
1,094

 

 
$
1,094

 

Liabilities:
 
 
 
 
 
 
 
 
2014 Swaps
 
$
(3,947
)
 

 
$
(3,947
)
 

There was no ineffectiveness recorded on the 2014 Swaps and 2015 Swaps during the six months ended June 30, 2016. See Note 7 for more information regarding our derivatives.
The estimated fair value of the 2014 Swaps and 2015 Swaps was determined using the market standard methodology of netting the discounted fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of interest rates (forward curves) derived from observable market interest rate curves. In addition, credit valuation adjustments are incorporated in the fair value to account for potential non-performance risk, including our own non-performance risk and the respective counterparty’s non-performance risk. We determined that the significant inputs used to value the 2014 Swaps and 2015 Swaps fell within Level 2 of the fair value hierarchy.

23




11. Commitments and Contingencies
In the normal course of business, we are involved in legal actions arising from the ownership of our industrial properties. In our opinion, the liabilities, if any, that may ultimately result from such legal actions are not expected to have a materially adverse effect on our consolidated financial position, operations or liquidity.
In conjunction with the development of industrial properties, we have entered into agreements with general contractors for the construction of industrial properties. At June 30, 2017, we had six industrial properties totaling approximately 0.9 million square feet of GLA under construction. The estimated total investment as of June 30, 2017 is approximately $86,700. Of this amount, approximately $48,000 remains to be funded. There can be no assurance that the actual completion cost will not exceed the estimated total investment.
During the year ended December 31, 2016, a 0.03 million square foot industrial property in San Diego, California was significantly destroyed by a fire (the “2016 Fire”). In a separate event, on April 3, 2017, a fire caused significant damage to a 0.08 million square foot industrial property located in Los Angeles, California (the “2017 Fire”). During the respective periods in which the fires occurred, we wrote off the unamortized net book value of the building improvements for the damaged portions of the industrial properties and recorded a receivable from our insurance company for the amount of the write off, less our $25 deductible per occurrence. As of June 30, 2017, we have an aggregate receivable outstanding from the insurance company for both the 2016 Fire and the 2017 Fire of $8,246. While we believe the damages incurred due to the 2016 Fire and 2017 Fire are fully insured and reimbursable in accordance with our insurance policies, subject to the deductibles, there can be no assurance that the cost to repair the damages will be collected.
12. Subsequent Events
From July 1, 2017 to July 27, 2017, we sold three industrial properties for approximately $18,345.

24



Item 2.
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 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;
changes in 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;
difficulties in identifying and consummating acquisitions and dispositions;
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;
changes in general accounting principles, policies and guidelines applicable to real estate investment trusts; 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 ended December 31, 2016 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.

25



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").
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 96.7% ownership interest ("General Partner Units") at June 30, 2017. 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 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 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. Noncontrolling interest in the Operating Partnership of approximately 3.3% at June 30, 2017 represents the aggregate partnership interest held by the limited partners thereof ("Limited Partner Units" and together with the General Partner Units, the "Units"). 
Profits, losses and distributions of the Operating Partnership, the LLCs, the Other Real Estate Partnerships and the TRSs 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 of June 30, 2017, we owned 524 industrial properties located in 22 states, containing an aggregate of approximately 63.3 million square feet of gross leasable area ("GLA"). Of the 524 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 the SEC. You may also read and copy any document filed at the public reference facilities of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at (800) SEC-0330 for further information about the public reference facilities. These documents also may be accessed through the SEC’s Interactive Data Electronic Application via the SEC's home page on the Internet (www.sec.gov). In addition, the Company's Corporate Governance Guidelines, Code of Business Conduct and Ethics, 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.
311 S. Wacker Drive, Suite 3900
Chicago, IL 60606
Attention: Investor Relations

26



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 rental income and tenant recoveries 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.

27



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.
Summary of Significant Transactions During the Six Months Ended June 30, 2017
During the six months ended June 30, 2017, we completed the following significant real estate transactions and financing activities:
We acquired four industrial properties comprised of approximately 0.5 million square feet of GLA and several land parcels for an aggregate purchase price of approximately $94.5 million, excluding costs incurred in conjunction with the acquisition.
We sold 20 industrial properties comprised of approximately 1.0 million square feet of GLA for total gross sales proceeds of approximately $59.1million.
We issued ten-year, $125.0 million private placement notes at a rate of 4.3% and twelve-year, $75.0 million private placement notes at a rate of 4.4%.
We paid off and retired our 2017 II Notes, at maturity, in the amount of $101.9 million as well as $36.1 million in mortgage loans payable.
We declared a first and second quarter cash dividend of $0.21 per common share or Unit per quarter, an increase of 10.5% from the 2016 quarterly rate.
We issued 2,560,000 shares of the Company's common stock in an underwritten public offering. Proceeds to the Company, net of the underwriter's discount, were $74.9 million.
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 ended June 30, 2017 and 2016. Same store properties are properties owned prior to January 1, 2016 and held as an in-service property through June 30, 2017 and developments and redevelopments that were placed in service prior to January 1, 2016 or were substantially completed for the 12 months prior to January 1, 2016. Properties which are at least 75% occupied at acquisition are placed in service. Acquisitions that are less than 75% occupied at the date of acquisition, developments and redevelopments are placed in service as they reach the earlier of a) stabilized occupancy (generally 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 in the first year 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 to December 31, 2015 and held as an operating property through June 30, 2017. Sold properties are properties that were sold subsequent to December 31, 2015. (Re)Developments include developments and redevelopments that were not: a) substantially complete 12 months prior to January 1, 2016; or b) stabilized prior to January 1, 2016. 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.

28



Comparison of Six Months Ended June 30, 2017 to Six Months Ended June 30, 2016
Our net income was $62.3 million and $68.4 million for the six months ended June 30, 2017 and 2016, respectively.
For the six months ended June 30, 2017 and 2016, the average occupancy rates of our same store properties were 95.9%
and 96.7%, respectively

 
Six Months Ended June 30,
 
 
 
 
 
2017
 
2016
 
$ Change
 
% Change
 
($ in 000’s)
REVENUES
 
 
 
 
 
 
 
Same Store Properties
$
177,276

 
$
172,265

 
$
5,011

 
2.9
 %
Acquired Properties
2,714

 
691

 
2,023

 
292.8
 %
Sold Properties
1,463

 
9,647

 
(8,184
)
 
(84.8
)%
(Re) Developments
11,914

 
2,811

 
9,103

 
323.8
 %
Other
1,595

 
1,068

 
527

 
49.3
 %
Total Revenues
$
194,962

 
$
186,482

 
$
8,480

 
4.5
 %
Revenues from same store properties increased $5.0 million primarily due to an increase in rental rates and tenant recoveries, offset by a decrease in occupancy. Revenues from acquired properties increased $2.0 million due to the 10 industrial properties acquired subsequent to December 31, 2015 totaling approximately 1.2 million square feet of GLA. Revenues from sold properties decreased $8.2 million due to the 83 industrial properties sold subsequent to December 31, 2015 totaling approximately 4.9 million square feet of GLA. Revenues from (re) developments increased $9.1 million due to an increase in occupancy. Other revenues increased $0.5 million primarily due to an increase in occupancy related to two properties acquired in 2015 and placed in service during 2016.
 
Six Months Ended June 30,
 
 
 
 
 
2017
 
2016
 
$ Change
 
% Change
 
($ in 000’s)
PROPERTY EXPENSES
 
 
 
 
 
 
 
Same Store Properties
$
46,801

 
$
45,663

 
$
1,138

 
2.5
 %
Acquired Properties
692

 
151

 
541

 
358.3
 %
Sold Properties
828

 
3,873

 
(3,045
)
 
(78.6
)%
(Re) Developments
2,552

 
1,088

 
1,464

 
134.6
 %
Other
4,510

 
4,467

 
43

 
1.0
 %
Total Property Expenses
$
55,383

 
$
55,242

 
$
141