e10vq
Table of Contents

 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-Q
 
 
     
þ
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
    For the quarterly period ended September 30, 2009
o
  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.
(Exact Name of Registrant as Specified in its Charter)
 
 
     
Maryland   36-3935116
(State or Other Jurisdiction of
Incorporation or Organization)
  (I.R.S. Employer
Identification No.)
 
 
311 S. Wacker Drive, Suite 4000, Chicago, Illinois 60606
(Address of Principal Executive Offices)
 
(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, and (2) has been subject to such filing requirements for the past 90 days.  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).  Yes o     No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting company o
(Do not check if a smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o     No þ
 
Number of shares of Common Stock, $.01 par value, outstanding as of November 9, 2009: 61,601,978.
 


 

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
Form 10-Q
 
For the Period Ended September 30, 2009
 
INDEX
 
             
        Page
 
  Financial Statements     2  
    Consolidated Balance Sheets as of September 30, 2009 and December 31, 2008 (As Adjusted)     2  
    Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2009 and September 30, 2008 (As Adjusted)     3  
    Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2009 and September 30, 2008 (As Adjusted)     4  
    Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2009 and September 30, 2008 (As Adjusted)     5  
    Notes to Consolidated Financial Statements     6  
  Management’s Discussion and Analysis of Financial Condition and Results of Operations     30  
  Quantitative and Qualitative Disclosures About Market Risk     45  
  Controls and Procedures     45  
  Legal Proceedings     46  
  Risk Factors     46  
  Unregistered Sales of Equity Securities and Use of Proceeds     46  
  Defaults Upon Senior Securities     46  
  Submission of Matters to a Vote of Security Holders     46  
  Other Information     46  
  Exhibits     47  
    48  
    49  
 EX-31.1
 EX-31.2
 EX-32.1


Table of Contents

 
PART I. FINANCIAL INFORMATION
 
Item 1.   Financial Statements
 
FIRST INDUSTRIAL REALTY TRUST, INC.

CONSOLIDATED BALANCE SHEETS
 
 
                 
          (As Adjusted)
 
    September 30,
    December 31,
 
    2009     2008  
    (Unaudited)
 
    (In thousands
 
    except share and
 
    per share data)  
 
ASSETS
Assets:
               
Investment in Real Estate:
               
Land
  $ 761,411     $ 776,991  
Buildings and Improvements
    2,533,433       2,551,450  
Construction in Progress
    28,355       57,156  
Less: Accumulated Depreciation
    (576,630 )     (523,108 )
                 
Net Investment in Real Estate
    2,746,569       2,862,489  
                 
Real Estate Held for Sale, Net of Accumulated Depreciation and Amortization of $7,357 and $2,251 at September 30, 2009 and December 31, 2008, respectively
    49,718       21,117  
Cash and Cash Equivalents
    19,072       3,182  
Restricted Cash
    102       109  
Tenant Accounts Receivable, Net
    3,137       10,414  
Investments in Joint Ventures
    10,556       16,299  
Deferred Rent Receivable, Net
    37,607       32,984  
Deferred Financing Costs, Net
    14,320       12,091  
Deferred Leasing Intangibles, Net
    71,814       90,342  
Prepaid Expenses and Other Assets, Net
    170,722       174,474  
                 
Total Assets
  $ 3,123,617     $ 3,223,501  
                 
 
LIABILITIES AND EQUITY
Liabilities:
               
Mortgage Loans Payable, Net
  $ 270,353     $ 77,396  
Senior Unsecured Debt, Net
    1,251,025       1,511,955  
Unsecured Line of Credit
    469,588       443,284  
Accounts Payable, Accrued Expenses and Other Liabilities, Net
    89,952       128,828  
Deferred Leasing Intangibles, Net
    25,999       30,754  
Rents Received in Advance and Security Deposits
    26,028       26,181  
Leasing Intangibles Held for Sale, Net of Accumulated Amortization of $241 and $254 at September 30, 2009 and December 31, 2008, respectively
    1,000       541  
Dividends Payable
          13,846  
                 
Total Liabilities
    2,133,945       2,232,785  
                 
Commitments and Contingencies
           
Equity:
               
First Industrial Realty Trust, Inc.’s Stockholders’ Equity:
               
Preferred Stock ($0.01 par value, 10,000,000 shares authorized, 500, 250, 600, and 200 shares of Series F, G, J, and K Cumulative Preferred Stock, respectively, issued and outstanding at September 30, 2009 and December 31, 2008 having a liquidation preference of $100,000 per share ($50,000), $100,000 per share ($25,000), $250,000 per share ($150,000), and $250,000 per share ($50,000), respectively)
           
Common Stock ($0.01 par value, 100,000,000 shares authorized, 52,268,553 and 48,976,296 shares issued and 47,944,439 and 44,652,182 shares outstanding at September 30, 2009 and December 31, 2008, respectively)
    523       490  
Additional Paid-in-Capital
    1,469,434       1,398,024  
Distributions in Excess of Accumulated Earnings
    (395,290 )     (370,229 )
Accumulated Other Comprehensive Loss
    (19,311 )     (19,668 )
Treasury Shares at Cost (4,324,114 shares at September 30, 2009 and December 31, 2008)
    (140,018 )     (140,018 )
                 
Total First Industrial Realty Trust, Inc.’s Stockholders’ Equity
    915,338       868,599  
Noncontrolling Interest
    74,334       122,117  
                 
Total Equity
    989,672       990,716  
                 
Total Liabilities and Equity
  $ 3,123,617     $ 3,223,501  
                 
 
The accompanying notes are an integral part of the consolidated financial statements.


2


Table of Contents

FIRST INDUSTRIAL REALTY TRUST, INC.
 
CONSOLIDATED STATEMENTS OF OPERATIONS
 
                                 
          (As Adjusted)
          (As Adjusted)
 
    Three Months
    Three Months
    Nine Months
    Nine Months
 
    Ended
    Ended
    Ended
    Ended
 
    September 30,
    September 30,
    September 30,
    September 30,
 
    2009     2008     2009     2008  
    (Unaudited)
 
    (In thousands except
 
    per share data)  
 
Revenues:
                               
Rental Income
  $ 66,747     $ 65,369     $ 201,954     $ 193,967  
Tenant Recoveries and Other Income
    22,397       25,730       69,235       78,964  
Construction Revenues
    15,954       45,202       52,703       101,600  
                                 
Total Revenues
    105,098       136,301       323,892       374,531  
                                 
Expenses:
                               
Property Expenses
    30,371       30,114       94,088       93,173  
General and Administrative
    8,391       18,088       30,141       64,342  
Restructuring Costs
    1,380             6,196        
Impairment of Real Estate
    6,934             6,934        
Depreciation and Other Amortization
    37,033       38,713       111,732       118,432  
Construction Expenses
    14,895       41,895       50,567       96,628  
                                 
Total Expenses
    99,004       128,810       299,658       372,575  
                                 
Other Income/(Expense):
                               
Interest Income
    731       1,054       2,013       2,816  
Interest Expense
    (29,119 )     (27,039 )     (86,608 )     (84,301 )
Amortization of Deferred Financing Costs
    (758 )     (707 )     (2,220 )     (2,132 )
Gain from Early Retirement of Debt
    18,179       1,260       22,165       2,749  
Mark-to-Market (Loss) Gain on Interest Rate Protection Agreements
    (555 )           2,861        
                                 
Total Other Income/(Expense)
    (11,522 )     (25,432 )     (61,789 )     (80,868 )
                                 
Loss from Continuing Operations Before Equity in (Loss) Income of Joint Ventures and Income Tax Benefit
    (5,428 )     (17,941 )     (37,555 )     (78,912 )
Equity in (Loss) Income of Joint Ventures
    (5,889 )     725       (4,309 )     7,295  
Income Tax Benefit
    6,114       2,074       10,975       7,276  
                                 
Loss from Continuing Operations
    (5,203 )     (15,142 )     (30,889 )     (64,341 )
Income from Discontinued Operations (Including Gain on Sale of Real Estate of $6,734 and $22,548 for the Three Months Ended September 30, 2009 and September 30, 2008, respectively, and $15,054 and $166,393 for the Nine Months Ended September 30, 2009 and September 30, 2008, respectively)
    7,430       24,130       16,724       179,389  
(Provision) Benefit for Income Taxes Allocable to Discontinued Operations (Including $(238) and $26 Allocable to Gain on Sale of Real Estate for the Three Months Ended September 30, 2009 and September 30, 2008, respectively, and $158 and $(2,748) for the Nine Months Ended September 30, 2009 and September 30, 2008, respectively)
    (96 )     (75 )     30       (3,379 )
                                 
Income (Loss) Before Gain on Sale of Real Estate
    2,131       8,913       (14,135 )     111,669  
Gain on Sale of Real Estate
    261             721       12,008  
Benefit (Provision) for Income Taxes Allocable to Gain on Sale of Real Estate
    380             (151 )     (2,909 )
                                 
Net Income (Loss)
    2,772       8,913       (13,565 )     120,768  
Less: Net Loss (Income) Attributable to the Noncontrolling Interest
    193       (454 )     3,100       (13,293 )
                                 
Net Income (Loss) Attributable to First Industrial Realty Trust, Inc. 
    2,965       8,459       (10,465 )     107,475  
Less: Preferred Stock Dividends
    (4,913 )     (4,857 )     (14,594 )     (14,571 )
                                 
Net (Loss) Income Available to First Industrial Realty Trust, Inc.’s Common Stockholders and Participating Securities
  $ (1,948 )   $ 3,602     $ (25,059 )   $ 92,904  
                                 
Basic and Diluted Earnings Per Share:
                               
Loss from Continuing Operations Available to First Industrial Realty Trust, Inc.’s Common Stockholders
  $ (0.19 )   $ (0.40 )   $ (0.89 )   $ (1.42 )
                                 
Income From Discontinued Operations Attributable to First Industrial Realty Trust, Inc.’s Common Stockholders
  $ 0.14     $ 0.49     $ 0.33     $ 3.52  
                                 
Net (Loss) Income Available to First Industrial Realty Trust, Inc.’s Common Stockholders
  $ (0.04 )   $ 0.08     $ (0.56 )   $ 2.10  
                                 
Weighted Average Shares Outstanding, Basic and Diluted
    45,360       43,151       44,653       43,088  
                                 
Dividends/Distribution Declared per Common Share Outstanding
  $ 0.00     $ 0.72     $ 0.00     $ 2.16  
                                 
 
The accompanying notes are an integral part of the consolidated financial statements.


3


Table of Contents

FIRST INDUSTRIAL REALTY TRUST, INC.
 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
                                 
          (As Adjusted)
          (As Adjusted)
 
    Three Months
    Three Months
    Nine Months
    Nine Months
 
    Ended
    Ended
    Ended
    Ended
 
    September 30,
    September 30,
    September 30,
    September 30,
 
    2009     2008     2009     2008  
    (Unaudited)
 
    (In thousands)  
 
Net Income (Loss)
  $ 2,772     $ 8,913     $ (13,565 )   $ 120,768  
Mark-to-Market on Interest Rate Protection Agreements, Net of Income Tax (Provision) Benefit of $(149) and $52 for the Three Months Ended September 30, 2009 and September 30, 2008, respectively, and $(390) and $(32) for the Nine Months Ended September 30, 2009 and September 30, 2008, respectively
    320       (1,878 )     (716 )     1,655  
Amortization of Interest Rate Protection Agreements
    479       (206 )     311       (584 )
Write-off of Unamortized Settlement of Interest Rate Protection Agreements
    3       376       (60 )     831  
Foreign Currency Translation Adjustment, Net of Tax (Provision) Benefit of $(1,510) and $507 for the Three Months Ended September 30, 2009 and September 30, 2008, respectively, and $(2,436) and $922 for the Nine Months Ended September 30, 2009 and September 30, 2008, respectively
    946       (570 )     1,395       (958 )
                                 
Comprehensive Income (Loss)
    4,520       6,635       (12,635 )     121,712  
Comprehensive (Income) Loss Attributable to Noncontrolling Interest
    (154 )     (174 )     2,527       (13,423 )
                                 
Comprehensive Income (Loss) Attributable to First Industrial Realty Trust, Inc. 
  $ 4,366     $ 6,461     $ (10,108 )   $ 108,289  
                                 
 
The accompanying notes are an integral part of the consolidated financial statements.


4


Table of Contents

FIRST INDUSTRIAL REALTY TRUST, INC.
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                 
          (As Adjusted)
 
    Nine Months
    Nine Months
 
    Ended
    Ended
 
    September 30,
    September 30,
 
    2009     2008  
    (Unaudited)
 
    (In thousands)  
 
CASH FLOWS FROM OPERATING ACTIVITIES:
               
Net (Loss) Income
  $ (13,565 )   $ 120,768  
Adjustments to Reconcile Net (Loss) Income to Net Cash Provided by Operating Activities:
               
Depreciation
    85,388       86,378  
Amortization of Deferred Financing Costs
    2,220       2,132  
Other Amortization
    40,765       48,806  
Provision for Bad Debt
    2,872       2,752  
Mark-to-Market Gain on Interest Rate Protection Agreements
    (2,861 )      
Equity in Loss (Income) of Joint Ventures
    4,309       (7,295 )
Impairment of Real Estate
    6,934        
Distributions from Joint Ventures
    1,127       9,934  
Gain on Sale of Real Estate
    (15,775 )     (178,401 )
Gain from Early Retirement of Debt
    (22,165 )     (2,749 )
Decrease in Developments for Sale Costs
    812       1,860  
Decrease (Increase) in Tenant Accounts Receivable, Prepaid Expenses and Other Assets, Net
    12,851       (32,580 )
Increase in Deferred Rent Receivable
    (5,850 )     (4,689 )
(Decrease) Increase in Accounts Payable, Accrued Expenses, Other Liabilities, Rents Received in Advance and Security Deposits
    (16,579 )     12,578  
Decrease in Restricted Cash
    7       90  
Cash Book Overdraft
          934  
                 
Net Cash Provided by Operating Activities
    80,490       60,518  
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Purchases of and Additions to Investment in Real Estate
    (62,375 )     (494,912 )
Net Proceeds from Sales of Investments in Real Estate
    41,199       479,938  
Contributions to and Investments in Joint Ventures
    (3,170 )     (14,703 )
Distributions from Joint Ventures
    6,942       7,934  
Funding of Notes Receivable
          (10,325 )
Repayment of Mortgage Loans Receivable
    2,933       62,271  
Increase in Restricted Cash
          (1,166 )
                 
Net Cash (Used in) Provided by Investing Activities
    (14,471 )     29,037  
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Offering Costs
    (144 )     (185 )
Net Proceeds from the Issuance of Common Stock
    15,920       174  
Repurchase of Restricted Stock
    (726 )     (3,787 )
Dividends/Distributions
    (12,614 )     (108,922 )
Preferred Stock Dividends
    (15,826 )     (15,803 )
Proceeds from Origination of Mortgage Loans Payable
    201,260        
Repayments on Mortgage Loans Payable
    (7,766 )     (2,387 )
Debt Issuance Costs
    (4,912 )     (76 )
Repurchase of Equity Component of Exchangeable Notes
    (22 )      
Settlement of Interest Rate Protection Agreements
    (7,491 )      
Repayments of Senior Unsecured Debt
    (240,903 )     (32,526 )
Proceeds from Unsecured Line of Credit
    46,000       476,920  
Repayments on Unsecured Line of Credit
    (23,000 )     (402,000 )
                 
Net Cash Used in Financing Activities
    (50,224 )     (88,592 )
                 
Net Effect of Exchange Rate Changes on Cash and Cash Equivalents
    95       138  
Net Increase in Cash and Cash Equivalents
    15,795       963  
Cash and Cash Equivalents, Beginning of Period
    3,182       5,757  
                 
Cash and Cash Equivalents, End of Period
  $ 19,072     $ 6,858  
                 
 
The accompanying notes are an integral part of the consolidated financial statements.


5


Table of Contents

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
(Unaudited)
 
1.   Organization and Formation of Company
 
First Industrial Realty Trust, Inc. (the “Company”) was organized in the state of Maryland on August 10, 1993. The Company is a real estate investment trust (“REIT”) as defined in the Internal Revenue Code of 1986 (the “Code”). Unless the context otherwise requires, the terms the “Company,” “we,” “us,” and “our” refer to First Industrial Realty Trust, Inc., First Industrial, L.P. and their other controlled subsidiaries. We refer to our operating partnership, First Industrial, L.P., as the “Operating Partnership.” Effective September 1, 2009, our taxable REIT subsidiary, First Industrial Investment, Inc. (the “old TRS”) merged into First Industrial Investment II, LLC (“FI LLC”), which is wholly owned by the Operating Partnership. Immediately thereafter, certain assets and liabilities of FI LLC were contributed to a new subsidiary, FR Investment Properties, LLC (“FRIP”). FRIP is 1% owned by FI LLC and 99% owned by a new taxable REIT subsidiary, First Industrial Investment Properties, Inc. (the “new TRS,” which, collectively with the old TRS, will be referred to as the “TRSs”), which is wholly owned by FI LLC (see Note 11).
 
We began operations on July 1, 1994. Our operations are conducted primarily through the Operating Partnership, of which we are the sole general partner with an approximate 89.7% and 87.6% ownership interest at September 30, 2009 and September 30, 2008, respectively, and through the old TRS prior to September 1, 2009, and through FI LLC, the new TRS and FRIP subsequent to September 1, 2009. We also conduct operations through other partnerships, corporations, and limited liability companies, the operating data of which, together with that of the Operating Partnership, FI LLC, FRIP and the TRSs, are consolidated with that of the Company as presented herein. Noncontrolling interest at September 30, 2009 and September 30, 2008 of approximately 10.3% and 12.4%, respectively, represents the aggregate partnership interest in the Operating Partnership held by the limited partners thereof.
 
We also own noncontrolling equity interests in, and provide various services to, seven joint ventures whose purpose is to invest in industrial properties (the “2003 Net Lease Joint Venture,” the “2005 Development/Repositioning Joint Venture,” the “2005 Core Joint Venture,” the “2006 Net Lease Co-Investment Program,” the “2006 Land/Development Joint Venture,” the “2007 Canada Joint Venture” and the “2007 Europe Joint Venture”; together the “Joint Ventures”). The Joint Ventures are accounted for under the equity method of accounting. The 2007 Europe Joint Venture does not own any properties.
 
The operating data of the Joint Ventures is not consolidated with that of the Company as presented herein.
 
As of September 30, 2009, we owned 787 industrial properties (inclusive of developments in process) located in 28 states in the United States and one province in Canada, containing an aggregate of approximately 69.7 million square feet of gross leaseable area (“GLA”).
 
2.   Current Business Risks and Uncertainties
 
The real estate markets have been significantly impacted by recent events in the global capital markets. The current recession has resulted in downward pressure on our net operating income and has impaired our ability to sell properties.
 
Our $500,000 unsecured credit facility (the “Unsecured Line of Credit”) and the indentures under which our senior unsecured indebtedness is, or may be, issued, contain certain financial covenants, including, among other things, coverage ratios and limitations on our ability to incur total indebtedness and secured and unsecured indebtedness. Consistent with our prior practice, we will, in the future, continue to interpret and certify our performance under these covenants in a good faith manner that we deem reasonable and appropriate. However, these financial covenants are complex and there can be no assurance that these provisions would not be interpreted by our lenders in a manner that could impose and cause us to incur material costs. Any violation of these covenants would subject us to higher finance costs and fees, or accelerated maturities. In addition, our credit facilities and


6


Table of Contents

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
senior debt securities contain certain cross-default provisions, which are triggered in the event that our other material indebtedness is in default. Under the Unsecured Line of Credit, an event of default can also 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 agreement.
 
We believe that we were in compliance with our financial covenants as of September 30, 2009, and we anticipate that we will be able to operate in compliance with our financial covenants for the remainder of 2009. However, our ability to meet our financial covenants may be reduced if economic and capital market conditions limit our property sales and reduce our net operating income below our projections. We plan to enhance our liquidity, and reduce our indebtedness, through a combination of capital retention, mortgage and equity financing, asset sales and the repayment of outstanding debt.
 
  •  Capital Retention — We plan to retain capital by distributing the minimum amount of dividends required to maintain our REIT status. We did not pay a common dividend in April 2009, July 2009 or October 2009 and may not pay dividends for the last quarter in 2009 depending on our taxable income. If we are required to pay common stock dividends for 2009, we may elect to satisfy this obligation by distributing a combination of cash and common shares.
 
  •  Mortgage Financing — During the three and nine months ended September 30, 2009, we originated $47,080 and $201,260, respectively, in mortgage financings with maturities ranging from September 2014 to July 2019 and interest rates ranging from 6.42% to 7.87% (see Note 5). We believe these mortgage financings comply with all covenants contained in our Unsecured Line of Credit and our senior debt securities, including coverage ratios and total indebtedness, total unsecured indebtedness and total secured indebtedness limitations. We are in active discussions with various lenders regarding the origination of additional mortgage financings and the terms and conditions thereof. We expect to use proceeds from our mortgage financings to pay down our debt. No assurances can be made that additional mortgage financing will be obtained.
 
  •  Equity Financing — During the three and nine months ended September 30, 2009, we sold 3,034,120 shares of the Company’s common stock, generating approximately $15,920 in net proceeds, under the direct stock purchase component of the Company’s Dividend Reinvestment and Direct Stock Purchase Plan (“DRIP”). On September 29, 2009, we agreed to sell in an underwritten public offering 12,500,000 shares, with an underwriters overallotment option to purchase up to 1,875,000 additional shares, of the Company’s common stock at a price to the public of $5.25 per share (see Note 6). We may opportunistically access the equity markets again, subject to contractual restrictions, and may continue to issue shares under the direct stock purchase component of the DRIP. We expect to use the proceeds from our equity sales to reduce our indebtedness.
 
  •  Asset Sales — During the three and nine months ended September 30, 2009 we sold five industrial properties and several land parcels, and 11 industrial properties and several land parcels, respectively, for gross proceeds of $23,753 and $57,238, respectively. We are in various stages of discussions with third parties for the sale of additional properties for the remainder of 2009 and plan to continue to market other properties for sale throughout 2009. We expect to use sales proceeds to pay down additional debt. If we are unable to sell properties on an advantageous basis, this may impair our liquidity and our ability to meet our financial covenants.
 
  •  Debt Reduction — During the three and nine months ended September 30, 2009, we repurchased $123,712 and $158,691, respectively, of our senior unsecured notes (including $19,279 of our 2009 Notes prior to their repayment at maturity on June 15, 2009) (see Note 5), at a discount to the principal amounts of the notes. We may from time to time repay additional amounts of our outstanding debt. Any repayments would depend upon prevailing market conditions, our liquidity requirements, contractual restrictions and other factors we consider important. Future repayments may materially impact our liquidity, future tax liability and results of operations.


7


Table of Contents

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
 
Although we believe we will be successful in meeting our liquidity needs through a combination of capital retention, mortgage and equity financing and asset sales, if we were to be unsuccessful in executing one or more of the strategies outlined above, we could be materially adversely affected.
 
3.   Summary of Significant Accounting Policies
 
The accompanying unaudited interim financial statements have been prepared in accordance with the accounting policies described in the financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2008 (“2008 Form 10-K”) and should be read in conjunction with such financial statements and related notes. The following notes to these interim financial statements highlight significant changes to the notes included in the December 31, 2008 audited financial statements included in our 2008 Form 10-K and present interim disclosures as required by the Securities and Exchange Commission.
 
The 2008 year end consolidated balance sheet data included in this Form 10-Q filing was derived from the audited financial statements in our 2008 Form 10-K, and has been revised as the result of the adoption of new accounting principles (mentioned hereafter), but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”).
 
In order to conform with GAAP, we, in preparation of our financial statements, 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 September 30, 2009 and December 31, 2008, and the reported amounts of revenues and expenses for the three and nine months ended September 30, 2009 and September 30, 2008. Actual results could differ from those estimates.
 
In our opinion, the accompanying unaudited interim financial statements reflect all adjustments necessary for a fair statement of our financial position as of September 30, 2009 and December 31, 2008 and the results of our operations and comprehensive income for each of the three and nine months ended September 30, 2009 and September 30, 2008, and our cash flows for each of the nine months ended September 30, 2009 and September 30, 2008, and all adjustments are of a normal recurring nature.
 
Deferred Leasing Intangibles
 
Deferred Leasing Intangibles, exclusive of Deferred Leasing Intangibles held for sale, included in our total assets consist of the following:
 
                 
    September 30,
    December 31,
 
    2009     2008  
 
In-Place Leases
  $ 73,560     $ 84,424  
Less: Accumulated Amortization
    (32,468 )     (30,350 )
                 
    $ 41,092     $ 54,074  
                 
Above Market Leases
  $ 13,870     $ 15,830  
Less: Accumulated Amortization
    (2,610 )     (2,607 )
                 
    $ 11,260     $ 13,223  
                 
Tenant Relationships
  $ 27,034     $ 28,717  
Less: Accumulated Amortization
    (7,572 )     (5,672 )
                 
    $ 19,462     $ 23,045  
                 
Total Deferred Leasing Intangibles, Net
  $ 71,814     $ 90,342  
                 


8


Table of Contents

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Deferred Leasing Intangibles, exclusive of Deferred Leasing Intangibles held for sale, included in our total liabilities consist of the following:
 
                 
    September 30,
    December 31,
 
    2009     2008  
 
Below Market Leases
  $ 40,913     $ 42,856  
Less: Accumulated Amortization
    (14,914 )     (12,102 )
                 
Total Deferred Leasing Intangibles, Net
  $ 25,999     $ 30,754  
                 
 
Amortization expense related to in-place leases and tenant relationships of deferred leasing intangibles was $4,120 and $6,764 for the three months ended September 30, 2009 and September 30, 2008, respectively, and $14,164 and $23,652 for the nine months ended September 30, 2009 and September 30, 2008, respectively. Rental revenues increased by $1,073 and $1,135 related to net amortization of above/(below) market leases for the three months ended September 30, 2009 and September 30, 2008, respectively, and $2,371 and $5,958 for the nine months ended September 30, 2009 and September 30, 2008, respectively.
 
Income Taxes
 
An income tax benefit has been made for federal income taxes in the accompanying consolidated financial statements for activities conducted in the TRSs. The total benefit/expense has been separately allocated to income from continuing operations, income from discontinued operations and gain on sale of real estate.
 
Recent Accounting Pronouncements
 
In June 2009, the Financial Accounting Standards Board (the “FASB”) issued new guidance which revises and updates previously issued guidance related to variable interest entities. This new guidance revises the previous guidance by eliminating the exemption for qualifying special purpose entities, by establishing a new approach for determining who should consolidate a variable-interest entity and by changing when it is necessary to reassess who should consolidate a variable-interest entity. We will adopt this new guidance January 1, 2010. We are currently reviewing the impact of the guidance on our financial statements and expect to complete this evaluation in 2009.
 
In May 2009, the FASB issued guidance relating to events that occur subsequent to the reporting date. The guidance is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date — that is, whether that date represents the date the financial statements were issued or were available to be issued. The guidance is effective for interim and annual periods ending after June 15, 2009. We adopted this guidance in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2009. This guidance does not impact the consolidated financial results as it is disclosure-only in nature.
 
In April 2009, the FASB issued guidance which requires an entity to provide disclosures about fair value of financial instruments in interim financial information. The disclosures are required prospectively and are effective for interim and annual periods ending after June 15, 2009 with early adoption permitted for periods ending after March 15, 2009. We first included the required disclosures in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2009. This guidance does not impact the consolidated financial results as it is disclosure-only in nature.
 
Effective January 1, 2009 we adopted newly issued guidance from the FASB relating to noncontrolling interests within consolidated financial statements. This guidance establishes requirements for ownership interests in subsidiaries held by parties other than the Company (formerly called “minority interests”) to be clearly identified, presented, and disclosed in the consolidated statement of financial position within equity, but separate from the parent’s equity. Changes in a parent’s ownership interest (and transactions with noncontrolling interest holders)


9


Table of Contents

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
while the parent retains its controlling financial interest in its subsidiary should be accounted for as equity transactions. The carrying amount of the noncontrolling interest shall be adjusted to reflect the change in its ownership interest in the subsidiary, with the offset to equity attributable to the parent. As a result of transactions with noncontrolling interest holders and changes in ownership percentages that occurred during the nine months ended September 30, 2009, we decreased noncontrolling interest and increased Additional Paid-in-Capital by $38,811, which represents the cumulative impact of historical changes in the parent’s ownership in the subsidiary. This guidance was effective, on a prospective basis, for fiscal years beginning after December 15, 2008, however, presentation and disclosure requirements need to be retrospectively applied to comparative financial statements. See Note 6 for additional disclosures.
 
Effective January 1, 2009 we adopted newly issued guidance from the FASB relating to disclosures about derivatives and hedging activities. This guidance expands the current disclosure requirements and entities must now provide enhanced disclosures on an interim basis and annual basis regarding how and why the entity uses derivatives, how derivatives and related hedged items are accounted for and how derivatives and related hedged items affect the entity’s financial position, financial results and cash flow. See Note 15 for the required disclosures. This guidance does not impact the consolidated financial results as it is disclosure-only in nature.
 
Effective January 1, 2009 we adopted newly issued guidance from the FASB which delayed the effective date relating to fair value measurements for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). See Note 12 for the required disclosures. This guidance does not impact the consolidated financial results as it is disclosure-only in nature.
 
Effective January 1, 2009 we adopted newly issued guidance from the Emerging Issues Task Force (“EITF”) regarding the determination of whether instruments granted in share-based payment transactions are participating securities. The guidance required retrospective application. Under this guidance, unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are participating securities and, therefore, are included in the computation of earnings per share (“EPS”) pursuant to the two-class method. The two-class method determines EPS for each class of common stock and participating securities according to dividends or dividend equivalents and their respective participation rights in undistributed earnings. Certain restricted stock awards granted to employees and directors are considered participating securities as they receive non-forfeitable dividend or dividend equivalents at the same rate as common stock. The impact of adopting this guidance decreased previously filed basic and diluted EPS by $0.05 for the nine months ended September 30, 2008.
 
Effective January 1, 2009 we adopted newly issued guidance from the FASB regarding business combinations. This guidance states that direct costs of a business combination, such as transaction fees, due diligence and consulting fees no longer qualify to be capitalized as part of the business combination. Instead, these direct costs need to be recognized as expense in the period in which they are incurred. Accordingly, we retroactively expensed these types of costs in 2008 related to future operating property acquisitions.
 
Effective January 1, 2009 we adopted newly issued guidance from the Accounting Principles Board (“APB”) regarding accounting for convertible debt instruments that may be settled for cash upon conversion. This guidance requires the liability and equity components of convertible debt instruments to be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. The guidance requires that the value assigned to the debt component be the estimated fair value of a similar bond without the conversion feature, which would result in the debt being recorded at a discount. The resulting debt discount is then amortized over the period during which the debt is expected to be outstanding (i.e., through the first optional redemption date) as additional non-cash interest expense. Retrospective application to all periods presented is required.
 
The equity component of our convertible unsecured notes (the “2011 Exchangeable Notes”) was $7,898 and therefore we retroactively adjusted our Senior Unsecured Debt by this amount as of September 2006. This debt discount has been subsequently amortized and as of September 30, 2009 the principal amount of the 2011


10


Table of Contents

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Exchangeable Notes, its unamortized discount and the net carrying amount is $199,000, $3,143 and $195,857, respectively. In addition, we reclassified $194 of the original finance fees incurred in relation to the 2011 Exchangeable Notes to equity as of September 2006. For the three and nine months ended September 30, 2009, we recognized $2,705 and $8,120, respectively, of interest expense related to the 2011 Exchangeable Notes of which $2,311 and $6,936, respectively, relates to the coupon rate and $394 and $1,184, respectively, relates to the debt discount amortization. We anticipate amortizing the remaining debt discount into interest expense through maturity in September 2011. We recognized $3,555 and $(88) as an adjustment to total equity as of December 31, 2008 that represents amortization expense of the discount and the loan fees, respectively, which would have been recognized had the new guidance regarding accounting for convertible debt instruments been effective since the issuance date of our 2011 Exchangeable Notes.
 
The impact to net income and the loss from continuing operations, before noncontrolling interest, related to the adoption of the guidance regarding business combinations and convertible debt instruments, for the three and nine months ended September 30, 2008 was an increase to general and administrative expense of $22 and $151, respectively, an increase to interest expense of $395 and $1,185, respectively, and a decrease to amortization of deferred financing fees of $10 and $30, respectively.
 
The impact to the balance sheet as of December 31, 2008 related to the adoption of the guidance regarding business combinations and convertible debt instruments is as follows:
 
                                 
          Adjustments
             
          Related to
    Adjustments
       
    Balance Sheet as
    Adoption of
    Related to
    Balance Sheet
 
    Previously
    Business
    Adoption of
    as
 
    Filed - as of
    Combination
    Convertible Debt
    Adjusted - as of
 
    December 31, 2008     Guidance     Instrument Guidance     December 31, 2008  
 
Deferred Financing Costs, Net
  $ 12,197     $     $ (106 )   $ 12,091  
Prepaid Expenses and Other Assets, Net
  $ 174,743     $ (269 )   $     $ 174,474  
Senior Unsecured Debt, Net
  $ 1,516,298     $     $ (4,343 )   $ 1,511,955  
Additional Paid-in-Capital
  $ 1,390,358     $     $ 7,666     $ 1,398,024  
Distributions in Excess of Accumulated Earnings
  $ (366,962 )   $ (255 )   $ (3,012 )   $ (370,229 )
Total First Industrial Realty Trust, Inc.’s Stockholders’ Equity
  $ 864,200     $ (255 )   $ 4,654     $ 868,599  
Noncontrolling Interest
    122,548       (14 )     (417 )     122,117  
                                 
Total Equity
  $ 986,748     $ (269 )   $ 4,237     $ 990,716  
                                 
 
4.   Investments in Joint Ventures and Property Management Services
 
At September 30, 2009, the 2003 Net Lease Joint Venture owned 10 industrial properties comprising approximately 5.1 million square feet of GLA, the 2005 Development/Repositioning Joint Venture owned 46 industrial properties comprising approximately 8.2 million square feet of GLA and several land parcels, the 2005 Core Joint Venture owned 48 industrial properties comprising approximately 3.9 million square feet of GLA and several land parcels, the 2006 Net Lease Co-Investment Program owned 11 industrial properties comprising approximately 4.4 million square feet of GLA, the 2006 Land/Development Joint Venture owned one industrial property comprising approximately 0.8 million square feet and several land parcels and the 2007 Canada Joint Venture owned two industrial properties comprising approximately 0.2 million square feet of GLA and several land parcels. As of September 30, 2009, the 2007 Europe Joint Venture does not own any properties.


11


Table of Contents

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
On September 18, 2009, the Company received a notice from the counterparty in the 2006 Net Lease Co-Investment Program that such counterparty is exercising the buy/sell provision in the program’s governing agreement to either purchase the Company’s 15% interests in the real property assets currently owned by the program or sell to the Company its interests in some or all of such assets, along with an additional real property asset in another program which the Company manages but in which the Company has no ownership interest. The purchasing party for each asset in the program will be required to deposit 10% of the applicable purchase price, as an earnest money deposit, and the remaining 90% will be required to be paid within six months, or other mutually agreed upon time. Under the buy/sell provision, the Company has a 60 day period during which to respond. The Company is still evaluating its alternatives, but anticipates that it will accept the counterparty’s offered price to purchase the Company’s interests in all of the 2006 Net Lease Co-Investment Program’s real property assets. As a result, during the three months ended September 30, 2009, we recognized a $3,879 impairment loss in Equity in Loss of Joint Ventures as a result of the difference between our basis in our 2006 Net Lease Co-Investment Program interest and the offered price, which approximates fair value. Additionally, we recorded an impairment loss of $1,748 in Equity in Loss of Joint Ventures which represents our proportionate share of the impairment loss recorded by the 2006 Net Lease Co-Investment Program related to one industrial property.
 
During July 2007, we entered into a management arrangement with an institutional investor to provide property management, leasing, acquisition, disposition and portfolio management services for industrial properties (the “July 2007 Fund”). We do not own an equity interest in the July 2007 Fund, however, we are entitled to incentive payments if certain economic thresholds related to the industrial properties are achieved. During the three months ended September 30, 2009, our management arrangement for certain industrial properties within the July 2007 Fund was terminated. We received and recorded $866 as a termination fee which is included in Tenant Recoveries and Other Income on the statement of operations for the three and nine months ended September 30, 2009.
 
At September 30, 2009 and December 31, 2008, we have receivables from the Joint Ventures and the July 2007 Fund of $1,729 and $3,939, respectively, which mainly relates to development, leasing, property management and asset management fees due to us from the Joint Ventures and the July 2007 Fund, reimbursement for other operating expenditures paid on behalf of the Joint Ventures and the July 2007 Fund and reimbursement for development expenditures made by the TRSs in their capacity as the general contractor for development projects for the 2005 Development/Repositioning Joint Venture. These receivable amounts are included in Prepaid Expenses and Other Assets, Net.
 
During the three and nine months ended September 30, 2009 and September 30, 2008, we invested the following amounts in, as well as received distributions from, our Joint Ventures and recognized fees from acquisition, disposition, leasing, development, incentive, property management and asset management services from our Joint Ventures and the July 2007 Fund in the following amounts:
 
                                 
    Three Months
    Three Months
    Nine Months
    Nine Months
 
    Ended
    Ended
    Ended
    Ended
 
    September 30,
    September 30,
    September 30,
    September 30,
 
    2009     2008     2009     2008  
 
Contributions
  $ 449     $ 3,585     $ 3,170     $ 13,999  
Distributions
  $ 1,126     $ 6,636     $ 8,069     $ 17,868  
Fees
  $ 3,450     $ 5,969     $ 9,008     $ 15,257  


12


Table of Contents

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
 
5.   Mortgage Loans Payable, Net, Senior Unsecured Debt, Net and Unsecured Line of Credit
 
The following table discloses certain information regarding our mortgage loans payable, senior unsecured debt and Unsecured Line of Credit:
 
                                         
    Outstanding
          Effective
       
    Balance at     Interest
    Interest
       
          (As Adjusted)
    Rate at
    Rate at
       
    September 30,
    December 31,
    September 30,
    September 30,
       
    2009     2008     2009     2009     Maturity Date  
 
                                      December 2010 -  
Mortgage Loans Payable, Net
  $ 270,353     $ 77,396       5.92 % - 9.25%     4.93 % - 9.25%     September 2024  
Unamortized Premiums
    (1,180 )     (1,717 )                        
                                         
Mortgage Loans Payable, Gross
  $ 269,173     $ 75,679                          
                                         
Senior Unsecured Debt, Net
                                       
2016 Notes
  $ 175,117     $ 194,524       5.750 %     5.91 %     01/15/16  
2017 Notes
    91,053       99,914       7.500 %     7.52 %     12/01/17  
2027 Notes
    15,057       15,056       7.150 %     7.11 %     05/15/27  
2028 Notes
    199,852       199,846       7.600 %     8.13 %     07/15/28  
2011 Notes
    155,831       199,868       7.375 %     7.39 %     03/15/11  
2012 Notes
    143,812       199,546       6.875 %     6.85 %     04/15/12  
2032 Notes
    49,497       49,480       7.750 %     7.87 %     04/15/32  
2009 Notes
          124,980       5.250 %     4.10 %     06/15/09  
2014 Notes
    106,763       114,921       6.420 %     6.54 %     06/01/14  
2011 Exchangeable Notes*
    195,857       195,657       4.625 %     5.53 %     09/15/11  
2017 II Notes
    118,186       118,163       5.950 %     6.37 %     05/15/17  
                                         
Subtotal
  $ 1,251,025     $ 1,511,955                          
Unamortized Discounts
    13,063       16,545                          
                                         
Senior Unsecured Debt, Gross
  $ 1,264,088     $ 1,528,500                          
                                         
Unsecured Line of Credit
  $ 469,588     $ 443,284       1.281 %     1.281 %     09/28/12  
                                         
 
 
* On September 25, 2006, we issued $175,000 of the 2011 Exchangeable Notes which bears interest at a rate of 4.625%. We also granted the initial purchasers of the 2011 Exchangeable Notes an option exercisable until October 4, 2006 to purchase up to an additional $25,000 principal amount of the 2011 Exchangeable Notes to cover over-allotments, if any (the “Over-Allotment Option”). On October 3, 2006, the initial purchasers of the 2011 Exchangeable Notes exercised their Over-Allotment Option with respect to $25,000 in principal amount of the 2011 Exchangeable Notes. With the exercise of the Over-Allotment Option, the aggregate principal amount of 2011 Exchangeable Notes initially issued and outstanding was $200,000. The 2011 Exchangeable Notes have an initial exchange rate of 19.6356 shares of our common stock per $1,000 principal amount, representing an exchange price of approximately $50.93 per common share which is an exchange premium of approximately 20% based on the last reported sale price of $42.44 per share of our common stock on September 19, 2006.
 
In connection with our offering of the 2011 Exchangeable Notes, we entered into capped call transactions (the “capped call transactions”) with affiliates of two of the initial purchasers of the 2011 Exchangeable Notes (the “option counterparties”) in order to increase the effective exchange price of the 2011 Exchangeable Notes to $59.42 per share of our common stock, which represents an exchange premium of approximately 40% based on the last reported sale price of $42.44 per share of the our common stock on September 19, 2006. The aggregate cost of the capped call transactions was approximately $6,835. The capped call transactions are expected to reduce the potential dilution with respect to our common stock upon exchange of the 2011 Exchangeable Notes to the extent the then market value per share of our common stock does not exceed the cap price of the capped call


13


Table of Contents

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
transaction during the observation period relating to an exchange. The cost of the capped call is accounted for as a hedge and included in First Industrial Realty Trust, Inc.’s Stockholders’ Equity because the derivative is indexed to our own stock and meets the scope exception within the derivative guidance.
 
During the nine months ended September 30, 2009, we obtained the following mortgage loans:
 
                                                     
                            Number of
          Property
 
                            Industrial
          Carrying
 
                            Properties
          Value at
 
Mortgage
  Loan
    Interest
  Origination
  Maturity
  Amortization
    Collateralizing
    GLA
    September 30,
 
Financing
  Principal    
Rate
 
Date
 
Date
  Period     Mortgage     (In millions)     2009  
 
I
  $ 14,680     7.50%   May 7, 2009   June 5, 2016     25-year       1       0.6     $ 22,113  
                                                     
II
  $ 62,500     7.75%   May 8, 2009   June 1, 2016     25-year       26       3.1     $ 93,575  
                                                     
III
  $ 77,000     7.87%   June 3, 2009   July 1, 2019     30-year       28       2.6     $ 127,047  
                                                     
    $ 2,000     7.50%   August 27, 2009   September 5, 2014     22-year       1       0.1     $ 3,622  
IV
  $ 5,850     7.60%   August 27, 2009   September 5, 2016     25-year       1       0.2     $ 10,043  
    $ 5,000     7.60%   August 26, 2009   September 5, 2016     25-year       1       0.2     $ 6,624  
                                                     
    $ 7,350     6.95%   September 21, 2009   October 15, 2014     25-year       7       0.2     $ 8,296  
V
  $ 4,100     7.05%             25-year       1       0.1     $ 5,086  
    $ 8,900     7.05%             25-year       5       0.5     $ 11,878  
                                                     
VI
  $ 13,880     6.42%   September 24, 2009   November 1, 2014     25-year       5       0.3     $ 17,910  
                                                     
    $ 201,260                                         $ 306,194  
                                                     
 
For Mortgage Financings I, II, III and IV, prepayment is prohibited anywhere between 36 and 60 months from loan origination. Thereafter, a prepayment premium is required. Mortgage Financing I requires the payment of a premium equal to 3% of the loan balance if paid during the fifth loan year, 2% during the sixth loan year, 1% during the seventh loan year. No premium shall be due on prepayments made within 45 days of maturity. Mortgage Financings II and III require the payment of a premium equal to the greater of 1% of the loan balance or a yield maintenance amount. No premium shall be due on prepayments made within 90 days of maturity for Mortgage Financing II and 120 days for Mortgage Financing III. Mortgage Financing IV requires the payment of a premium equal to 2% of the loan balance if paid during the fourth loan year, 1% during the fifth loan year for the $2,000 loan, and the payment of a premium equal to 3% of the loan balance if paid during the fifth loan year, 2% during the sixth loan year, 1% during the seventh loan year for the $5,850 and $5,000 loans. No premium shall be due on prepayments made within 45 days of maturity.
 
Prepayment is not prohibited at any time for Mortgage Financings V and VI, but a prepayment penalty is required. Mortgage Financing V requires the payment of a premium equal to the greater of 1% of the loan balance or a yield maintenance amount. No premium shall be due on prepayments made within 120 days of maturity. Mortgage Financing VI requires the payment of a premium equal to 5% of the outstanding loan balance if paid during the first loan year, 4% during the second loan year, 3% during the third loan year, 2% during the fourth loan year and 1% during the fifth loan year. No premium shall be due on prepayments made within 60 days of maturity.
 
On June 1, 2009 we paid off and retired our secured mortgage debt maturing in July 2009 in the amount of $5,025.
 
On June 15, 2009, we paid off and retired our 2009 Notes in the amount of $105,721.


14


Table of Contents

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
During the three and nine months ended September 30, 2009, we repurchased and retired the following senior unsecured debt prior to its maturity:
 
                                 
    Principal Amount Repurchased     Purchase Price  
    For the
    For the
    For the
    For the
 
    Three Months
    Nine Months
    Three Months
    Nine Months
 
    Ended
    Ended
    Ended
    Ended
 
    September 30,
    September 30,
    September 30,
    September 30,
 
    2009     2009     2009     2009  
 
2009 Notes
  $     $ 19,279     $     $ 19,064  
2011 Notes
    44,102       44,102       40,438       40,438  
2011 Exchangeable Notes
    1,000       1,000       870       870  
2012 Notes
    40,235       55,935       36,606       48,519  
2014 Notes
    10,000       10,000       7,100       7,100  
2016 Notes
    19,500       19,500       12,115       12,115  
2017 Notes
    8,875       8,875       7,098       7,098  
                                 
    $ 123,712     $ 158,691     $ 104,227     $ 135,204  
                                 
 
In connection with these repurchases prior to maturity, we recognized $18,179 and $22,165 as gain on early retirement of debt for the three and nine months ended September 30, 2009, respectively, which is the difference between the repurchase amount of $104,227 and $135,204, respectively, and the principal amount retired of $123,712 and $158,691, respectively, net of the pro rata write off of the unamortized debt issue discount, the unamortized loan fees and the unamortized settlement amount of the interest rate protection agreements related to the repurchases of $909, $416 and $3, respectively, and $941, $463 and $(60), respectively. In addition, we allocated $22 of the purchase price for our 2011 Exchangeable Notes to the reacquisition of the 2011 Exchangeable Notes equity component.
 
The following is a schedule of the stated maturities and scheduled principal payments of the mortgage loans payable, senior unsecured debt and Unsecured Line of Credit, exclusive of premiums and discounts, for the next five years ending December 31, and thereafter:
 
         
    Amount  
 
Remainder of 2009
  $ 1,031  
2010
    17,447  
2011
    364,730  
2012
    621,207  
2013
    5,519  
Thereafter
    992,915  
         
Total
  $ 2,002,849  
         
 
All of our senior unsecured debt (except for the 2011 Exchangeable Notes) contain certain covenants, including limitations on incurrence of debt and debt service coverage. The Unsecured Line of Credit contains certain covenants, including limitations on incurrence of debt and debt service coverage. Under the Unsecured Line of Credit, an event of default can also 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 agreement. We believe that the Operating Partnership and the Company were in compliance with all covenants relating to senior unsecured debt and the Unsecured Line of Credit as of September 30, 2009. However, these financial covenants are complex and there can be no assurance that these provisions would not be interpreted by our noteholders or lenders in a manner that could impose and cause us to incur material costs.


15


Table of Contents

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Fair Value
 
At September 30, 2009 and December 31, 2008, the fair value of our mortgage loans payable, senior unsecured debt and Unsecured Line of Credit were as follows:
 
                                 
    September 30, 2009     December 31, 2008  
    Carrying
    Fair
    Carrying
    Fair
 
    Amount     Value     Amount     Value  
 
Mortgage Loans Payable, Net
  $ 270,353     $ 269,059     $ 77,396     $ 75,817  
Senior Unsecured Debt, Net
    1,251,025       984,305       1,511,955       1,033,283  
Unsecured Line of Credit
    469,588       420,801       443,284       400,849  
                                 
Total
  $ 1,990,966     $ 1,674,165     $ 2,032,635     $ 1,509,949  
                                 
 
The fair value of the senior unsecured debt was determined by quoted market prices, if available. 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 to borrowers with similar credit ratings and for the same remaining maturities. The fair value of the Unsecured Line of Credit 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.
 
6.   Stockholders’ Equity
 
Shares of Common Stock:
 
During the nine months ended September 30, 2009, 318,094 limited partnership interests in the Operating Partnership (“Units”) were converted into an equivalent number of shares of common stock, resulting in a reclassification of $6,444 of noncontrolling interest to First Industrial Realty Trust Inc.’s Stockholders’ Equity.
 
On August 8, 2008, the Company’s DRIP became effective. Under the terms of the DRIP, stockholders who participate may reinvest all or part of their dividends in additional shares of the Company at a discount from the market price, at our discretion, when the shares are issued and sold directly by us from authorized but unissued shares of the Company’s common stock. Stockholders and non-stockholders may also purchase additional shares at a discounted price, at our discretion, when the shares are issued and sold directly by us from authorized but unissued shares of the Company’s common stock, by making optional cash payments, subject to certain dollar thresholds. During the three months ended September 30, 2009, we issued 3,034,120 shares under the direct stock purchase component of the DRIP for approximately $15,920.
 
On September 29, 2009, we agreed to sell in an underwritten public offering of 12,500,000 shares the Company’s common stock at a price of $5.25 per share that settled on October 5, 2009. In addition, we granted the underwriters a 30-day option to purchase up to an additional 1,875,000 shares to cover over-allotments, if any. The underwriters’ option was partially exercised and 1,135,700 additional shares settled on October 5, 2009. The price per share to the public was $5.25 resulting in gross offering proceeds from the issuance, including from the over-allotment option, of $71,587 in the aggregate. Proceeds to us, net of underwriters’ discount and total expenses, were approximately $67,803.
 
During the three months ended September 30, 2009, we awarded 27,588 shares of common stock to certain directors. The common stock shares had a fair value of approximately $120 on the date of issuance.


16


Table of Contents

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The following table summarizes the changes in Total Equity:
 
                         
          First
       
          Industrial
       
          Realty Trust,
       
          Inc.
       
          Common
    Noncontrolling
 
    Total     Stockholders     Interest  
 
Total Equity, December 31, 2008 (As Adjusted)
  $ 990,716     $ 868,599     $ 122,117  
Net Loss
    (13,565 )     (10,465 )     (3,100 )
Other Comprehensive Loss
    930       357       573  
                         
Comprehensive Loss
    (12,635 )     (10,108 )     (2,527 )
                         
Conversion of Units to Common Stock
          3       (3 )
Additional Paid in Capital:
                       
Amortization of Restricted Stock Awards
    11,037       11,037        
Conversion of Units to Common Stock
          6,441       (6,441 )
Issuance of Common Stock
    16,040       16,040        
Reallocation of Noncontrolling Interest
          38,812       (38,812 )
Repurchase and Retirement of Restricted Stock Awards/Common Stock
    (726 )     (726 )      
Stock Offering Costs
    (144 )     (144 )      
Repurchase of Equity Component Exchangeable Notes
    (22 )     (22 )      
Distributions in Excess of Accumulated Earnings:
                       
Preferred Dividends
    (14,594 )     (14,594 )      
                         
Total Equity, September 30, 2009
  $ 989,672     $ 915,338     $ 74,334  
                         
 
Restricted Stock/Units:
 
During the nine months ended September 30, 2009, we awarded 35,145 shares of restricted common stock to certain directors. The restricted common stock had a fair value of approximately $149 on the date of issuance. The restricted common stock awarded to directors vests over a five year period. Compensation expense will be charged to earnings over the respective vesting period for the shares expected to vest.
 
During the nine months ended September 30, 2009, we made a grant of 1,000,000 restricted stock units to our Chief Executive Officer. These restricted stock units had a fair value of approximately $6,014 on the date of issuance. Of these restricted stock units, a total of 600,000 (the “Service Awards”) vest in four equal installments on the first, second, third and fourth year anniversary of December 31, 2008, and a total of 400,000 (the “Performance Awards”) vest in four installments of up to 100,000 on the first, up to 200,000 on the second, up to 300,000 on the third and up to 400,000 on the fourth year anniversary of December 31, 2008, to the extent certain market conditions are met. The market conditions are met when certain stock price levels are achieved and maintained for certain time periods between the award issuance date and December 31, 2013. Both the Service Awards and Performance Awards require the Chief Executive Officer to be employed by the Company at the applicable vesting dates, subject to certain clauses in the award agreement. The Service Awards are amortized over the four year service period. The Performance Awards are amortized over the service period of each installment.
 
During the three months ended September 30, 2009, we made a grant of 473,600 restricted stock units to certain members of management. These restricted stock units had a fair value of approximately $1,392 on the date of issuance. The restricted stock units will vest in four installments on the first, second, third and fourth anniversary of June 30, 2009, to the extent certain service periods and market conditions are both met. The market conditions are met when certain stock price levels are achieved and maintained for certain time periods between the award


17


Table of Contents

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
issuance date and June 30, 2014. The restricted stock units are amortized over the service period of each installment. In conjunction with the issuance of the restricted stock units, the members of management were also granted cash awards with a fair value of $792. The cash awards vest on June 30, 2010 and compensation expense is recognized on a straight-line basis over the service period. In order to receive the restricted stock units and the cash awards, the members of management are required to be employed by the Company at the applicable vesting dates, subject to certain clauses in the award agreements.
 
Dividend/Distributions:
 
The coupon rate of our Series F Preferred Stock resets every quarter beginning March 31, 2009 at 2.375% plus the greater of (i) the 30 year U.S. Treasury rate, (ii) the 10 year U.S. Treasury rate or (iii) 3-month LIBOR. On July 1, 2009, the new coupon rate was 6.685%. See Note 15 for additional derivative information related to the Series F Preferred Stock coupon rate reset.
 
The following table summarizes dividends/distributions accrued during the nine months ended September 30, 2009.
 
                 
    Nine Months Ended
    September 30, 2009
    Dividend/
   
    Distribution
  Total
    per Share   Dividend
 
Series F Preferred Stock
  $ 4,724.00     $ 2,362  
Series G Preferred Stock
  $ 5,427.00     $ 1,357  
Series J Preferred Stock
  $ 13,593.90     $ 8,156  
Series K Preferred Stock
  $ 13,593.90     $ 2,719  
 
7.   Acquisition of Real Estate
 
During the nine months ended September 30, 2008, we acquired 25 industrial properties comprising approximately 3.1 million square feet of GLA and several land parcels. The purchase price of these acquisitions totaled approximately $316,015, excluding costs incurred in conjunction with the acquisition of the industrial properties and land parcels.
 
During the nine months ended September 30, 2009, we acquired one land parcel. The purchase price of the land parcel was approximately $208, excluding costs incurred in conjunction with the acquisition of the land parcel.
 
Intangible Assets Subject to Amortization in the Period of Acquisition
 
The fair value of in-place leases, above market leases, tenant relationships and below market leases recorded due to real estate properties acquired for the nine months ended September 30, 2009 and September 30, 2008 is as follows:
 
                 
    Nine Months
  Nine Months
    Ended
  Ended
    September 30,
  September 30,
    2009   2008
 
In-Place Leases
  $     $ 19,346  
Above Market Leases
  $     $ 61  
Tenant Relationships
  $     $ 6,973  
Below Market Leases
  $     $ (3,482 )


18


Table of Contents

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The weighted average life in months of in-place leases, above market leases, tenant relationships and below market leases recorded as a result of the real estate properties acquired for the nine months ended September 30, 2009 and September 30, 2008 is as follows:
 
                 
    Nine Months
  Nine Months
    Ended
  Ended
    September 30,
  September 30,
    2009   2008
 
In-Place Leases
    N/A       116  
Above Market Leases
    N/A       43  
Tenant Relationships
    N/A       92  
Below Market Leases
    N/A       34  
 
8.   Sale of Real Estate, Real Estate Held for Sale and Discontinued Operations
 
During the nine months ended September 30, 2009, we sold 11 industrial properties comprising approximately 1.3 million square feet of GLA and several land parcels. Gross proceeds from the sales of the 11 industrial properties and several land parcels were approximately $57,238. The gain on sale of real estate was approximately $15,775, of which $15,054 is shown in discontinued operations. The 11 sold industrial properties meet the criteria to be included in discontinued operations. Therefore the results of operations and gain on sale of real estate for the 11 sold industrial properties are included in discontinued operations. The results of operations and gain on sale of real estate for the several land parcels that does not meet the criteria to be included in discontinued operations is included in continuing operations.
 
At September 30, 2009, we had seven industrial properties comprising approximately 0.9 million square feet of GLA held for sale. The results of operations of the seven industrial properties held for sale at September 30, 2009 are included in discontinued operations. There can be no assurance that such industrial properties held for sale will be sold.
 
Income from discontinued operations, net of income taxes, for the nine months ended September 30, 2008 reflects the results of operations of the 11 industrial properties that were sold during the nine months ended September 30, 2009, the results of operations of 113 industrial properties that were sold during the year ended December 31, 2008, the results of operations of the seven industrial properties identified as held for sale at September 30, 2009 and the gain on sale of real estate relating to 107 industrial properties that were sold during the nine months ended September 30, 2008.
 
The following table discloses certain information regarding the industrial properties included in our discontinued operations for the three and nine months ended September 30, 2009 and September 30, 2008:
 
                                 
    Three Months
    Three Months
    Nine Months
    Nine Months
 
    Ended
    Ended
    Ended
    Ended
 
    September 30, 2009     September 30, 2008     September 30, 2009     September 30, 2008  
 
Total Revenues
  $ 1,344     $ 5,046     $ 5,563     $ 34,663  
Property Expenses
    (197 )     (1,810 )     (1,601 )     (12,611 )
Depreciation and Amortization
    (451 )     (1,654 )     (2,292 )     (9,056 )
Gain on Sale of Real Estate
    6,734       22,548       15,054       166,393  
(Provision) Benefit for Income Taxes
    (96 )     (75 )     30       (3,379 )
                                 
Income from Discontinued Operations
  $ 7,334     $ 24,055     $ 16,754     $ 176,010  
                                 
 
At September 30, 2009 and December 31, 2008, we had notes receivables outstanding of approximately $47,912 and $37,512, respectively, which is included as a component of Prepaid Expenses and Other Assets, Net. At


19


Table of Contents

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
September 30, 2009 and December 31, 2008, the fair value of the notes receivables were $43,681 and $31,061, respectively. The fair values of our notes receivables were determined by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.
 
9.   Supplemental Information to Statements of Cash Flows
 
Supplemental disclosure of cash flow information:
 
                 
          (As Adjusted)
 
    Nine Months
    Nine Months
 
    Ended
    Ended
 
    September 30, 2009     September 30, 2008  
 
Interest paid, net of capitalized interest
  $ 88,965     $ 85,103  
                 
Capitalized interest
  $ 281     $ 6,711  
                 
Supplemental schedule of noncash investing and financing activities:
               
Distribution payable on common stock/Units
  $     $ 36,425  
                 
Distribution payable on preferred stock
  $     $  
                 
Exchange of Units for common stock:
               
Noncontrolling interest
  $ (6,444 )   $ (4,187 )
Common stock
    3       2  
Additional paid-in-capital
    6,441       4,185  
                 
    $     $  
                 
In conjunction with the property and land acquisitions, the following liabilities were assumed:
               
Accounts payable and accrued expenses
  $     $ (464 )
                 
Mortgage debt
  $     $ (7,852 )
                 
Write-off of fully depreciated assets
  $ (42,253 )   $ (58,469 )
                 
In conjunction with certain property sales, we provided seller financing:
               
Mortgage notes receivable
  $ 12,615     $ 62,613  
                 


20


Table of Contents

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
 
10.   Earnings Per Share (“EPS”)
 
The computation of basic and diluted EPS is presented below:
 
                                 
          (As Adjusted)
          (As Adjusted)
 
    Three Months
    Three Months
    Nine Months
    Nine Months
 
    Ended
    Ended
    Ended
    Ended
 
    September 30,
    September 30,
    September 30,
    September 30,
 
    2009     2008     2009     2008  
 
Numerator:
                               
Loss from Continuing Operations
  $ (5,203 )   $ (15,142 )   $ (30,889 )   $ (64,341 )
Noncontrolling Interest Allocable to Continuing Operations
    1,051       2,531       5,018       9,901  
                                 
Loss from Continuing Operations, Net of Noncontrolling Interest and Income Tax Benefit
    (4,152 )     (12,611 )     (25,871 )     (54,440 )
Gain on Sale of Real Estate
    261             721       12,008  
Income Tax Benefit (Provision) Allocable to Gain on Sale of Real Estate
    380             (151 )     (2,909 )
Noncontrolling Interest Allocable to Gain on Sale of Real Estate
    (69 )           (63 )     (1,140 )
Preferred Stock Dividends
    (4,913 )     (4,857 )     (14,594 )     (14,571 )
                                 
Loss from Continuing Operations Available to First Industrial Realty Trust, Inc.’s Common Stockholders
  $ (8,493 )   $ (17,468 )   $ (39,958 )   $ (61,052 )
                                 
Income from Discontinued Operations
  $ 7,430     $ 24,130     $ 16,724     $ 179,389  
Income Tax (Provision) Benefit Allocable to Discontinued Operations
    (96 )     (75 )     30       (3,379 )
Noncontrolling Interest Allocable to Discontinued Operations
    (789 )     (2,985 )     (1,855 )     (22,054 )
Discontinued Operations Allocable to Participating Securities
          (95 )           (2,290 )
                                 
Discontinued Operations Attributable to First Industrial Realty Trust, Inc. 
  $ 6,545     $ 20,975     $ 14,899     $ 151,666  
                                 
Net (Loss) Income Available
  $ (1,948 )   $ 3,602     $ (25,059 )   $ 92,904  
Net Income Allocable to Participating Securities
          (95 )           (2,290 )
                                 
Net (Loss) Income Available to First Industrial Realty Trust, Inc.’s Common Stockholders
  $ (1,948 )   $ 3,507     $ (25,059 )   $ 90,614  
                                 
Denominator:
                               
Weighted Average Shares — Basic and Diluted
    45,360,288       43,150,905       44,653,170       43,087,942  
                                 
Basic and Diluted EPS:
                               
Loss from Continuing Operations Available to First Industrial Realty Trust, Inc.’s Common Stockholders
  $ (0.19 )   $ (0.40 )   $ (0.89 )   $ (1.42 )
                                 
Discontinued Operations Attributable to First Industrial Realty Trust, Inc.’s Common Stockholders
  $ 0.14     $ 0.49     $ 0.33     $ 3.52  
                                 
Net (Loss) Income Available to First Industrial Realty Trust, Inc.’s Common Stockholders
  $ (0.04 )   $ 0.08     $ (0.56 )   $ 2.10  
                                 
 
Participating securities included unvested restricted stock/units outstanding during the respective period that participate in non-forfeitable dividends of the Company. In accordance with the newly issued guidance regarding participating securities, $95 and $2,290 of income was allocated to participating securities for purposes of the EPS


21


Table of Contents

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
computation based on their proportionate share of net income for the three and nine months ended September 30, 2008, respectively. Participating security holders are not obligated to share in losses, therefore, none of the loss was allocated to participating securities for the three and nine months ended September 30, 2009.
 
The number of weighted average shares — diluted is the same as the number of weighted average shares — basic for the three and nine months ended September 30, 2009 and September 30, 2008 as the effect of stock options and restricted units (that are not participating securities) was excluded as its inclusion would have been antidilutive to the loss from continuing operations available to First Industrial Realty Trust, Inc.’s common stockholders. If the loss from continuing operations available to First Industrial Realty Trust Inc.’s common stockholders had been income, the dilutive effect of stock options and restricted units (that are not participating securities) would have been 0 and 188,990, respectively, for the three months ended September 30, 2009, 0 and 134,342, respectively, for the nine months ended September 30, 2009, 0 and 0, respectively, for the three months ended September 30, 2008, and 1,035 and 0, respectively, for the nine months ended September 30, 2008.
 
Unvested restricted units (that are not participating securities) aggregating 600,000 for the three and nine months ended September 30, 2009 were antidilutive as the issue price of these units was higher than the Company’s average stock price during the respective periods and accordingly, was excluded from dilution computations. There were no restricted units (that are not participating securities) outstanding in 2008.
 
Additionally, options to purchase common stock of 141,034 for the three and nine months ended September 30, 2009 and 278,601 and 265,852 for the three and nine months ended September 30, 2008, respectively, were antidilutive as the strike price of these stock options was higher than the Company’s average stock price during the respective periods and accordingly was excluded from dilution computations.
 
The 2011 Exchangeable Notes issued during 2006, which are convertible into common shares of the Company at a price of $50.93, were not included in the computation of diluted EPS as our average stock price did not exceed the strike price of the conversion feature.
 
11.   Income Taxes
 
On August 24, 2009, the Company received a private letter ruling from the IRS granting favorable loss treatment under Sections 331 and 336 of the Internal Revenue Code on the tax liquidation of our old TRS. As a result, the Company completed a transaction on September 1, 2009 whereby approximately 75% of the assets formerly held by the old TRS are now held by FI LLC (which is wholly owned by the Operating Partnership). The remaining 25% of the assets are now held by FRIP (which is 99% owned by the new TRS). It is expected that the tax impact of the transaction will be a refund from the IRS of approximately $27,000, which the Company expects to receive before the end of the first quarter of 2010. However, the tax refund could be challenged by the IRS, or delayed by the Company’s filing of the necessary tax returns on a date that is later than anticipated, or by other reasons that the Company does not foresee, any of which may result in a delay or a diminution of the expected tax refund.


22


Table of Contents

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Deferred income taxes represent the tax effect of the temporary differences between the book and tax basis of assets and liabilities. Deferred tax assets (liabilities) of the TRSs include the following as of September 30, 2009 and December 31, 2008.
 
                 
    September 30,
    December 31,
 
    2009     2008  
 
Bad debt expense
  $     $ 196  
Investment in Joint Ventures
    1,793       19,621  
Fixed assets
    1,259       9,625  
Prepaid rent
    35       494  
Capitalized general and administrative expense under 263A
          3,711  
Deferred losses/gains
          71  
Accrued contingency loss
          377  
Restricted stock
          2,326  
Accrual for Restructuring Costs
          751  
Abandoned Project Costs
          1,150  
State net operating loss carrying forward
          131  
Valuation Allowance
    (3,059 )     (19,501 )
Other
    513       836  
                 
Total deferred tax assets
  $ 541     $ 19,788  
                 
Straight-line rent
    (541 )     (1,936 )
Fixed assets
          (53 )
Capitalized interest under 263A
          (362 )
Other
          (243 )
                 
Total deferred tax liabilities
  $ (541 )   $ (2,594 )
                 
Total net deferred tax asset
  $     $ 17,194  
                 
 
As of September 30, 2009 and December 31, 2008, the TRSs had net deferred tax assets of $0 and $17,194, after valuation allowances of $3,059 and $19,501 respectively. Included in net income for the TRS for the year ended December 31, 2008 is $39,073 of impairment loss in Equity in (Loss) Income of Joint Ventures. We recorded a valuation allowance to offset the deferred tax asset that was created by these impairments during the year ended December 31, 2008. The deferred tax assets and liabilities of the old TRS were eliminated on September 1, 2009 as FI LLC is a nontaxable entity. The deferred tax assets and liabilities as of September 30, 2009 represent those of the new TRS, and we have recorded a valuation allowance to offset the net deferred tax assets of the new TRS.
 
Michigan Tax Issue
 
As of December 31, 2008, we had paid approximately $1,400 (representing tax and interest for the years 1997-2000) to the State of Michigan regarding business loss carryforwards the appropriateness of which is the subject of current litigation initiated by us. On December 11, 2007, the Michigan Court of Claims rendered a decision against us regarding the business loss carryforwards. Also, the court ruled against us on an alternative position involving Michigan’s Capital Acquisition Deduction. We filed an appeal to the Michigan Appeals Court in January 2008; however, as a result of the lower court’s decision approximately $800 (representing tax and interest for the year 2001) had been accrued through June 30, 2009 for both tax and financial statement purposes.
 
On August 18, 2009, the Michigan Appeals Court issued a decision in our favor on the business loss carryforward issue. The Michigan Department of Treasury appealed the decision to the Michigan Supreme Court on


23


Table of Contents

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
September 29, 2009; however, we believe there is a very low probability that the Michigan Supreme Court will accept the case. Therefore, in September 2009 the Company reversed its accrual of $800 (related to the 2001 tax year) and set up a receivable of $1,400 for the amount paid in 2006 (related to the 1997-2000 tax years), resulting in an aggregate reversal of prior tax expense of $2,200.
 
12.   Impairment Charges
 
We adopted the fair value measurement provisions as of January 1, 2009, for the impairment of long-lived assets recorded at fair value. The new guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
 
In connection with the our periodic review of the carrying values of our properties and due to continuing softness of the economy in certain markets and indications of current market values for comparable properties, we determined in the third quarter of 2009 that an impairment loss in the amount of $6,934 should be recorded to a certain property comprised of 0.2 million square feet of GLA in the Inland Empire market in California.
 
Additionally, during the three months ended September 30, 2009, we recorded a $3,879 impairment charge on our 2006 Net Lease Co-Investment Program interest (see Note 4).
 
The following table presents information about our impairment charges that were measured on a fair value basis for the nine months ended September 30, 2009. The table indicates the fair value hierarchy of the valuation techniques we utilized to determine fair value.
 
                                         
        Fair Value Measurements at
   
        September 30, 2009 Using:    
        Quoted Prices in
           
        Active Markets for
  Significant Other
  Unobservable
  Total
    September 30,
  Identical Assets
  Observable Inputs
  Inputs
  Gains
Description
  2009   (Level 1)   (Level 2)   (Level 3)   (Losses)
 
Long-lived assets held and used
  $ 3,830                 $   3,830     $ (6,934 )
Unconsolidated Joint Venture investments
  $ 3,645                 $   3,645     $ (3,879 )
 
The non-cash impairment charge related to our consolidated asset is based upon the difference between the fair value of the property and its carrying value. The non-cash impairment charge related to our unconsolidated Joint Venture investments is based upon the difference between the fair value of our equity interest and our carrying value. The valuation of impaired real estate assets and investments is determined using widely accepted valuation techniques including discounted cash flow analysis on expected cash flows, the income capitalization approach considering prevailing market capitalization rates, analysis of recent comparable sale transactions and/or consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence. In general, we consider multiple valuation techniques when measuring the fair value of an investment, however; in certain circumstances, a single valuation technique may be appropriate.
 
13.   Restructuring Costs
 
On October 24, 2008, the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) committed the Company to a plan to reduce organizational and overhead costs (the “Plan”). On December 12, 2008, the Committee and on February 25, 2009, the Board committed the Company to certain modifications to the Plan consisting of further organizational and overhead cost reductions. On September 25, 2009, the Committee committed the Company to certain additional modifications to the Plan consisting of further


24


Table of Contents

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
organizational and overhead cost reductions. Implementation of these further cost reductions has begun and is expected to conclude during the fourth quarter of 2009.
 
For the three and nine months ended September 30, 2009, we recorded as restructuring costs a pre-tax charge of $1,380 and $6,196, respectively, to provide for employee severance and benefits ($1,203 and $5,284, respectively), costs associated with the termination of certain office leases ($(33) and $386, respectively) and other costs ($210 and $526, respectively) associated with implementing the restructuring plan. Included in employee severance costs is $219 and $2,978, respectively, of non-cash costs which represents the accelerated recognition of restricted stock expense for certain employees for the three and nine months ended September 30, 2009. At September 30, 2009, we have $2,493 included in Accounts Payable, Accrued Expenses and Other Liabilities, Net related to severance obligations, remaining lease payments and other costs incurred but not yet paid.
 
14.   Stock Based Compensation
 
We recognized $2,826 and $4,592 for the three months ended September 30, 2009 and September 30, 2008, respectively, and $10,873 and $12,776 for the nine months ended September 30, 2009 and September 30, 2008, respectively, in compensation expense related to restricted stock/unit awards, of which $0 and $484, respectively, was capitalized for the three months ended September 30, 2009 and September 30, 2008, and $45 and $1,255, respectively, was capitalized for the nine months ended September 30, 2009 and September 30, 2008, in connection with development activities. At September 30, 2009, we have $12,302 in unrecognized compensation related to unvested restricted stock/unit awards. The weighted average period that the unrecognized compensation is expected to be recognized is 1.21 years. We did not award options to our employees or our directors during the nine months ended September 30, 2009 and September 30, 2008 and all outstanding options are fully vested; therefore, no stock-based employee compensation expense related to options is included in Net (Loss) Income Available to First Industrial Realty Trust, Inc.’s Common Stockholders and Participating Securities.
 
On October 23, 2008, we granted stock appreciation rights (“SARs”) to our former interim Chief Executive Officer (who is currently Chairman of the Board of Directors of the Company) that entitles him to a special cash payment equal to the appreciation in value of 75,000 shares of our common stock. The payment is to be based on the excess of the closing price of our common stock on October 22, 2009 over $7.94, the closing price on the grant date. The award fully vested during the three months ended December 31, 2008 upon his acceptance of the position. Since the closing price of our stock on October 22, 2009 was less than $7.94, no payment was made.
 
At September 30, 2009, the fair value of the stock appreciation rights was determined using the Black-Scholes option pricing model with the following assumptions:
 
         
    September 30,
    2009
 
Stock price
  $ 5.25  
Exercise price
  $ 7.94  
Expected dividend yield
    0.0 %
Expected stock volatility
    128.4 %
Risk-free interest rate
    0.41 %
Expected life (years)
    0.06  
Value
  $ 0.09  
 
For the three and nine months ended September 30, 2009, we recognized compensation expense of $(56) and $(190), respectively, based on the fair value of the SARs.
 
During the nine months ended September 30, 2009, we made a grant of 1,000,000 restricted stock units to our Chief Executive Officer and during the three months ended September 30, 2009, we made a grant of 473,600 restricted stock units to certain members of management (see Note 6).


25


Table of Contents

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
 
15.   Derivatives
 
Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish this objective, we primarily use interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps 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 January 2008, we entered into two forward starting swaps each with a notional value of $59,750, which fixed the interest rate on forecasted debt offerings. We designated both swaps as cash flow hedges. The rates on the forecasted debt issuances underlying the swaps locked on March 20, 2009 (the “Forward Starting Agreement 1”) and on April 6, 2009 (the “Forward Starting Agreement 2”), and as such, the swaps ceased to qualify for hedge accounting. On March 20, 2009, the fair value of Forward Starting Agreement 1 was a liability of $4,442 and on April 6, 2009, the fair value of Forward Starting Agreement 2 was a liability of $4,023. These amounts are included in Other Comprehensive Income (“OCI”) and will be amortized over five years, which is the life of the Forward Starting Agreement 1 and Forward Starting Agreement 2, as an increase to interest expense. On May 8, 2009, we settled the Forward Starting Agreement 1 and paid the counterparty $4,105 and on June 3, 2009 we settled the Forward Starting Agreement 2 and paid the counterparty $3,386. The change in value of Forward Starting Agreement 1 and Forward Starting Agreement 2 from the respective day the interest rate on the underlying debt was locked until settlement is $974 for the nine months ended September 30, 2009, respectively, and is included in Mark-to-Market Gain on Interest Rate Protection Agreements in the statement of operations.
 
The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in OCI 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 will amortize approximately $1,999 into net income by increasing interest expense for the Forward Starting Agreement 1 and Forward Starting Agreement 2 and similar interest rate protection agreements we settled in previous periods.
 
As of September 30, 2009, we also have an interest rate swap agreement with a notional value of $50,000 which fixed the LIBOR rate on a portion of our outstanding borrowings on our Unsecured Line of Credit at 2.4150% (the “Interest Rate Swap Agreement”). Monthly payments or receipts are treated as a component of interest expense. We designated the Interest Rate Swap Agreement as a cash flow hedge. We anticipate, based on ongoing evaluation of effectiveness, that the Interest Rate Swap Agreement will continue to be highly effective, and, as a result, the change in the fair value is shown in OCI.
 
The coupon rate of our Series F Preferred Stock resets every quarter beginning March 31, 2009 at 2.375% plus the greater of (i) the 30 year U.S. Treasury rate, (ii) the 10 year U.S. Treasury rate or (iii) 3-month LIBOR. On July 1, 2009, the new coupon rate was 6.685% (see Note 6). In October 2008, we entered into an interest rate swap agreement with a notional value of $50,000 to mitigate our exposure to floating interest rates related to the forecasted reset rate of the coupon rate of our Series F Preferred Stock (the “Series F Agreement”). This Series F Agreement fixes the 30-year U.S. Treasury rate at 5.2175%. Accounting guidance for derivatives does not permit hedge accounting treatment related to equity instruments and therefore the mark to market gains or losses related to this agreement are recorded in the statement of operations. Quarterly payments or receipts are treated as a component of the mark to market gains or losses.


26


Table of Contents

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The following is a summary of the terms of the forward starting swaps and the interest rate swaps and their fair values, which are included in Accounts Payable, Accrued Expenses and Other Liabilities, Net on the accompanying consolidated balance sheet as of September 30, 2009:
 
                                                 
                            Fair Value As of
    Fair Value As of
 
    Notional
    Fixed
    Trade
    Maturity
    September 30,
    December 31,
 
Hedge Product
  Amount     Pay Rate     Date     Date     2009     2008  
 
Derivatives designated as hedging instruments:
                                               
Forward-Starting Agreement 1
  $ 59,750       4.0725 %     January 2008       May 15, 2014     $     $ (3,429 )
Forward-Starting Agreement 2
    59,750       4.0770 %     January 2008       May 15, 2014             (3,452 )
Interest Rate Swap Agreement
    50,000       2.4150 %     March 2008       April 1, 2010       (519 )     (858 )
                                                 
Total derivatives designated as hedging instruments:
  $ 169,500                             $ (519 )   $ (7,739 )
Derivatives not designated as hedging instruments:
                                               
Series F Agreement*
    50,000       5.2175 %     October 2008       October 1, 2013       (867 )     (3,073 )
                                                 
Total Derivatives
  $ 219,500                       Total     $ (1,386 )   $ (10,812 )
                                                 
 
 
* * Fair value excludes quarterly settlement payment due on Series F Agreement. For the three months ended September 30, 2009, the quarterly payable was $116.
 
The following is a summary of the impact of the derivatives in cash flow hedging relationships on the statement of operations and the statement of OCI for the three and nine months ended September 30, 2009 and September 30, 2008.
 
                                     
        Three Months Ended   Nine Months Ended
        September 30,
  September 30,
  September 30,
  September 30,
Interest Rate Products*
  Location on Statement   2009   2008   2009   2008
 
Income (Loss) Recognized in OCI (Effective Portion)
  Mark-to-Market on Interest Rate
Protection Agreements (OCI)
  $ 163     $ (1,796 )   $ (1,245 )   $ 1,614  
Amortization Reclassified from OCI into Income
  Interest Expense   $ (479 )   $ 206     $ (311 )   $ 584  
Gain Recognized in Income (Unhedged Position)
  Mark-to-Market Gain on
Interest Rate Protection Agreements
  $     $     $ 974     $  
 
 
* Includes Forward Starting Agreement 1, Forward Starting Agreement 2, Interest Rate Swap Agreement and interest rate protection agreements settled in previous periods.
 
Additionally as of September 30, 2009, one of the Joint Ventures has interest rate protection agreements outstanding which effectively convert floating rate debt to fixed rate debt on a portion of its total variable debt. The hedge relationships are considered highly effective and as such, for the three and nine months ended September 30, 2009, we recorded $306 and $919 in unrealized gain, respectively, representing our 10% share, offset by $149 and $390 of income tax provision, respectively, which is shown in Mark-to-Market on Interest Rate Protection Agreements, Net of Income Tax, in OCI. For the three and nine months ended September 30, 2008, we recorded $(134) and $73 in unrealized (loss) gain, respectively, representing our 10% share, net of $52 and $(32) of income tax benefit (provision), respectively, which is shown in Mark-to-Market on Interest Rate Protection Agreements, Net of Income Tax, in OCI.
 
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.


27


Table of Contents

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
We adopted the fair value measurement provisions as of January 1, 2008, for financial instruments recorded at fair value. The new guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
 
The following table sets forth our financial liabilities that are accounted for at fair value on a recurring basis as of September 30, 2009:
 
                                 
        Fair Value Measurements at
        September 30, 2009 Using:
        Quoted Prices in
       
        Active Markets for
  Significant Other
  Unobservable
    September 30,
  Identical Assets
  Observable Inputs
  Inputs
Description
  2009   (Level 1)   (Level 2)   (Level 3)
 
Liabilities:
                               
Interest Rate Swap Agreement
  $ 519           $ 519        
Series F Agreement
  $ 983                 $ 983  
 
The valuation of the Interest Rate Swap Agreement is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the instrument. This analysis reflects the contractual terms of the agreement, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. In adjusting the fair value of the interest rate protection agreement for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements. To comply with the provisions of fair value measurement, we incorporated a credit valuation adjustment (“CVA”) to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. However, assessing significance of inputs is a matter of judgment that should consider a variety of factors. One factor we consider is the CVA and its materiality to the overall valuation of the derivatives on the balance sheet and to their related changes in fair value. We believe the inputs obtained related to our CVAs are observable and therefore fall under Level 2 of the fair value hierarchy. Accordingly, the liabilities related to the Interest Rate Swap Agreement are classified as Level 2 amounts.
 
The valuation of the Series F Agreement utilizes the same valuation technique as the Interest Rate Swap Agreement, however, we consider the Series F Agreement to be classified as Level 3 in the fair value hierarchy due to a significant number of unobservable inputs. The Series F Agreement swaps a fixed rate 5.2175% for floating rate payments based on the 30-year Treasury. No market observable prices exist for long-dated Treasuries past 30 years. Therefore, we have classified the Series F Agreement in its entirety as a Level 3.
 
The following table presents a reconciliation of our liabilities classified as Level 3 at September 30, 2009:
 
                 
    Fair Value Measurements
       
    Using Significant
       
    Unobservable Inputs
       
    (Level 3)
       
    Derivatives        
 
Beginning liability balance at December 31, 2008
  $ (3,073 )        
Total unrealized gains:
               
Mark-to-Market Gain on Series F Agreement
    2,090          
                 
Ending liability balance at September 30, 2009
  $ (983 )        
                 


28


Table of Contents

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
 
16.   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.
 
Currently, we are the defendant in a suit brought in February 2009 by the trustee in the bankruptcy of a former tenant. The trustee is seeking the return of $5,000 related to letters of credit that we drew down when the tenant defaulted on its leases. The suit is in the early stages and, at this time, we are not in a position to assess what, if any, ultimate liability we may have to the bankruptcy estate. We plan to vigorously defend the suit.
 
At December 31, 2008 our investment in the 2005 Development/Repositioning Joint Venture was $0. This investment balance was written down to $0 due to impairment losses we recorded in the year ended December 31, 2008. At September 30, 2009 our investment in the 2005 Development/Repositioning Joint Venture is $(2,471) and is included within Accounts Payable, Accrued Expenses and Other Liabilities, Net due to our current commitment to fund operations to this venture.
 
At September 30, 2009, we had 16 letters of credit outstanding in the aggregate amount of $5,003. These letters of credit expire between December 2009 and September 2010.
 
17.   Subsequent Events
 
Subsequent events have been evaluated and disclosed herein relating to events that have occurred from October 1, 2009 through the filing date of this Quarterly Report on Form 10-Q, November 9, 2009.
 
From October 1, 2009 to November 9, 2009, we sold one industrial property for approximately $3,800 of gross proceeds. There were no industrial properties acquired.
 
Subsequent to October 1, 2009, we repurchased and retired an aggregate $12,590 of our senior unsecured debt at a weighted average repurchase price of 85.069% of par. In connection with the partial retirements, we will recognize approximately $1,392 as gain on early retirement of debt.
 
Subsequent to October 1, 2009, we obtained three mortgage loans in the amounts of $27,780, $14,818 and $11,375. The mortgages are collateralized by 14 industrial properties totaling approximately 1.9 million square feet of GLA . The mortgages bear interest at fixed rates between 6.75% and 7.60%. The mortgages mature between September 30, 2012 and November 5, 2014.
 
On October 5, 2009, we issued 13,635,700 shares of the Company’s common stock. See Note 6 for further information.
 
On November 6, 2009, legislation was signed that allows businesses with net operating losses for 2008 or 2009 to carry back those losses for up to five years. Previously, net operating losses could be carried back only two years. As a result of the new law, the Company expects to file for a carryback of additional losses that would result in an additional tax refund of approximately $10,000 to $15,000 from the tax liquidation of the old TRS. This additional loss carryback will result in a tax benefit to be recorded in the fourth quarter of 2009.


29


Table of Contents

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 financial statements and notes thereto appearing elsewhere in this Form 10-Q.
 
This report contains certain 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 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, and are including this statement for purposes of complying with those safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “seek,” “target,” or similar expressions. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have an 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), our ability to qualify and maintain our status as a real estate investment trust, availability and attractiveness of financing (including both public and private capital) to us and to our potential counterparties, availability and attractiveness of terms of additional debt repurchases, interest rates, our credit agency ratings, our ability to comply with applicable financial covenants, competition, changes in supply and demand for industrial properties (including land, the supply and demand for which is inherently more volatile than other types of industrial property) in the Company’s current and proposed market areas, difficulties in consummating acquisitions and dispositions, risks related to our investments in properties through joint ventures, environmental liabilities, slippages in development or lease-up schedules, tenant creditworthiness, higher-than-expected costs, changes in asset valuations and related impairment charges, changes in general accounting principles, policies and guidelines applicable to real estate investment trusts, international business risks and those additional factors described under the heading “Risk Factors” and elsewhere in the Company’s annual report on Form 10-K for the year ended December 31, 2008 (“2008 Form 10-K”), in the Company’s subsequent quarterly reports on Form 10-Q, and in Item 1A, “Risk Factors,” in this quarterly report. We caution you not to place undue reliance on forward looking statements, which reflect our analysis only and speak only as of the date of this report or the dates indicated in the statements. Unless the context otherwise requires, the terms “Company,” “we,” “us,” and “our” refer to First Industrial Realty Trust, Inc., First Industrial, L.P. and their controlled subsidiaries. We refer to our operating partnership, First Industrial, L.P., as the “Operating Partnership.” Effective September 1, 2009 , our taxable REIT subsidiary, First Industrial Investment, Inc. (the “old TRS”) merged into First Industrial Investment II, LLC (“FI LLC”), which is wholly owned by the Operating Partnership. Immediately thereafter, certain assets and liabilities of FI LLC were contributed to a new subsidiary, FR Investment Properties, LLC (“FRIP”). FRIP is 1% owned by FI LLC and 99% owned by a new taxable REIT subsidiary, First Industrial Investment Properties, Inc. (the “new TRS,” which, collectively with the old TRS, will be referred to as the “TRSs”), which is wholly owned by FI LLC (see Note 11 to the Consolidated Financial Statements).
 
GENERAL
 
The Company was organized in the state of Maryland on August 10, 1993. We are a real estate investment trust (“REIT”) as defined in the Internal Revenue Code of 1986 (the “Code”).
 
We began operations on July 1, 1994. Our operations are conducted primarily through the Operating Partnership, of which we are the sole general partner with an approximate 89.7% and 87.6% ownership interest at September 30, 2009 and September 30, 2008, respectively, and through the old TRS prior to September 1, 2009, and FI LLC, the new TRS and FRIP subsequent to September 1, 2009. We also conduct operations through other partnerships, corporations, and limited liability companies, the operating data of which, together with that of the Operating Partnership, FI LLC, FRIP and the TRSs, are consolidated with that of the Company, as presented herein. Noncontrolling interest at September 30, 2009 and September 30, 2008 of approximately 10.3% and 12.4%, respectively, represents the aggregate partnership interest in the Operating Partnership held by the limited partners thereof.


30


Table of Contents

We also own noncontrolling equity interests in, and provide services to, seven joint ventures whose purpose is to invest in industrial properties (the “2003 Net Lease Joint Venture,” the “2005 Development/Repositioning Joint Venture,” the “2005 Core Joint Venture,” the “2006 Net Lease Co-Investment Program” the “2006 Land/Development Joint Venture,” the “2007 Canada Joint Venture” and the “2007 Europe Joint Venture,” together the “Joint Ventures”). The Joint Ventures are accounted for under the equity method of accounting. The 2007 Europe Joint Venture does not own any properties.
 
The operating data of the Joint Ventures is not consolidated with that of the Company as presented herein.
 
As of September 30, 2009, we owned 787 industrial properties (inclusive of developments in process) located in 28 states in the United States and one province in Canada, containing an aggregate of approximately 69.7 million square feet of gross leaseable area (“GLA”).
 
We maintain a website at www.firstindustrial.com. Information on this website shall not constitute part of this Form 10-Q. Copies of our annual report 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 Securities and Exchange Commission. In addition, our Corporate Governance Guidelines, Code of Business Conduct and Ethics, Audit Committee Charter, Compensation Committee Charter, Nominating/Corporate Governance Committee Charter, along with supplemental financial and operating information prepared by us, are all available without charge on our website or upon request to us. 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, Suite 4000
Chicago, IL 60606
Attn: Investor Relations
 
MANAGEMENT’S OVERVIEW
 
We believe our financial condition and results of operations are, primarily, a function of our performance and our Joint Ventures’ performance in four key areas: leasing of industrial properties, acquisition and development of additional industrial properties, redeployment of internal capital and access to external capital.
 
We generate revenue primarily from rental income and tenant recoveries from long-term (generally three to six years) operating leases of our industrial properties and our Joint Ventures’ 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 and our Joint Ventures’ 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/losses on the sale of our properties and our Joint Ventures’ properties (as discussed below), for our distributions. 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 and our Joint Ventures’ 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 and our Joint Ventures’ tenants were unable to pay rent (including tenant recoveries) or if we or our Joint Ventures were unable to rent our properties on favorable terms, our


31


Table of Contents

financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, our common stock would be adversely affected.
 
Our revenue growth is also dependent, in part, on our ability and our Joint Ventures’ ability to acquire existing, and acquire and develop new, additional industrial properties on favorable terms. The Company itself, and through our various Joint Ventures, continually seeks to acquire existing industrial properties on favorable terms, and, when conditions permit, also seeks 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, income from which, as discussed above, is a source of funds for our distributions. 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 and our Joint Ventures’ 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, as well as our Joint Ventures, face significant competition for attractive acquisition and development opportunities from other well-capitalized real estate investors, including both publicly-traded REITs and private investors. Further, as discussed below, we and our Joint Ventures may not be able to finance the acquisition and development opportunities we identify. If we and our Joint Ventures 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 pay dividends on, and the market price of, our common stock would be adversely affected.
 
We also generate income from the sale of our properties and our Joint Ventures’ properties (including existing buildings, buildings which we or our Joint Ventures have developed or re-developed on a merchant basis and land). The Company itself and through our various Joint Ventures is continually engaged in, and our income growth is dependent in part on, systematically redeploying capital from properties and other assets with lower yield potential into properties and other assets with higher yield potential. As part of that process, we and our Joint Ventures sell, on an ongoing basis, select properties or land. The gain/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, for our operations. Also, a significant portion of our proceeds from such sales is used to fund the acquisition of existing, 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 and our Joint Ventures’ 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 and our Joint Ventures were 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 pay dividends on, and the market price of, our common stock would be adversely affected.
 
We utilize a portion of the net sales proceeds from property sales, borrowings under our unsecured line of credit (the “Unsecured Line of Credit”) and proceeds from the issuance, when and as warranted, of additional debt and equity securities to finance future acquisitions and developments, refinance debt and to fund our equity commitments to our Joint Ventures. 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 to fund acquisitions, developments and contributions to our Joint Ventures or through the issuance, when and as warranted, of additional equity securities. Our ability to access external capital on favorable terms is dependent on various factors, including general market conditions, interest rates, credit ratings on our capital stock and debt, the market’s perception of our growth potential, our current and potential future earnings and cash distributions and the market price of our capital stock. If we were unable to access external capital on


32


Table of Contents

favorable terms, our financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, our common stock would be adversely affected.
 
Current Business Risks and Uncertainties
 
The real estate markets have been significantly impacted by recent events in the global capital markets. The current recession has resulted in downward pressure on our net operating income and has impaired our ability to sell properties.
 
Our Unsecured Line of Credit and the indentures under which our senior unsecured indebtedness is, or may be, issued contain certain financial covenants, including, among other things, coverage ratios and limitations on our ability to incur total indebtedness and secured and unsecured indebtedness. Consistent with our prior practice, we will, in the future, continue to interpret and certify our performance under these covenants in a good faith manner that we deem reasonable and appropriate. However, these financial covenants are complex and there can be no assurance that these provisions would not be interpreted by our lenders in a manner that could impose and cause us to incur material costs. Any violation of these covenants would subject us to higher finance costs and fees, or accelerated maturities. In addition, our credit facilities and senior debt securities contain certain cross-default provisions, which are triggered in the event that our other material indebtedness is in default. Under the Unsecured Line of Credit, an event of default can also 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 agreement.
 
We believe that we were in compliance with our financial covenants as of September 30, 2009, and we anticipate that we will be able to operate in compliance with our financial covenants for the remainder of 2009. However, our ability to meet our financial covenants may be reduced if economic and credit market conditions limit our property sales and reduce our net operating income below our projections. We plan to enhance our liquidity, and reduce our indebtedness, through a combination of capital retention, mortgage and equity financing, asset sales and the repayment of outstanding debt.
 
  •  Capital Retention — We plan to retain capital by distributing the minimum amount of dividends required to maintain our REIT status. We did not pay a common dividend in April 2009, July 2009 or October 2009 and may not pay dividends for the last quarter of 2009 depending on our taxable income. If we are required to pay common stock dividends for 2009, we may elect to satisfy this obligation by distributing a combination of cash and common shares.
 
  •  Mortgage Financing — During the three and nine months ended September 30, 2009, we originated $47.1 and $201.3 million, respectively, in mortgage financings with maturities ranging from September 2014 to July 2019 and interest rates ranging from 6.42% to 7.87% (see Note 5 to the Consolidated Financial Statements). We believe these mortgage financings comply with all covenants contained in our Unsecured Line of Credit and our senior debt securities, including coverage ratios and total indebtedness, total unsecured indebtedness and total secured indebtedness limitations. We are in active discussions with various lenders regarding the origination of additional mortgage financing and the terms and conditions thereof. We expect to use proceeds from our mortgage financings to pay down our debt. No assurances can be made that additional mortgage financing will be obtained.
 
  •  Equity Financing — During the three and nine months ended September 30, 2009, we sold 3,034,120 shares of the company’s common stock, generating approximately $15.9 million in net proceeds, under the direct stock purchase component of the Company’s Dividend Reinvestment and Direct Stock Purchase Plan (“DRIP”). On September 29, 2009, we agreed to sell in an underwritten public offering 12,500,000 shares, with an underwriters overallotment option to purchase up to 1,875,000 additional shares, of the Company’s common stock at a price to the public of $5.25 per share (see Note 6). We may opportunistically access the equity markets again, subject to contractual restrictions, and may continue to issue shares under the direct stock purchase component of the DRIP. We expect to use the proceeds from our equity sales to reduce our indebtedness.


33


Table of Contents

 
  •  Asset Sales — During the three and nine months ended September 30, 2009 we sold five industrial properties and several land parcels, and 11 industrial properties and several land parcels, respectively, for gross proceeds of $23.8 million and $57.2 million, respectively. We are in various stages of discussions with third parties for the sale of additional properties for the remainder of 2009 and plan to continue to market other properties for sale throughout 2009. We expect to use sales proceeds to pay down additional debt. If we are unable to sell properties on an advantageous basis, this may impair our liquidity and our ability to meet our financial covenants.
 
  •  Debt Reduction — During the three and nine months ended September 30, 2009, we repurchased $123.7 million and $158.7 million, respectively, of our senior unsecured notes (including $19.3 million of our 2009 Notes prior to their repayment at maturity on June 15, 2009) (see Note 5 to the Consolidated Financial Statements) at a discount to the principal amounts of the notes. We may from time to time repay additional amounts of our outstanding debt. Any repayments would depend upon prevailing market conditions, our liquidity requirements, contractual restrictions and other factors we consider important. Future repayments may materially impact our liquidity, future tax liability and results of operations.
 
Although we believe we will be successful in meeting our liquidity needs through a combination of capital retention, mortgage and equity financing and asset sales, if we were to be unsuccessful in executing one or more of the strategies outlined above, we could be materially adversely affected.
 
RESULTS OF OPERATIONS
 
Comparison of Nine Months Ended September 30, 2009 to Nine Months Ended September 30, 2008
 
Our net (loss) income available to First Industrial Realty Trust, Inc.’s common stockholders and participating securities was $(25.1) million and $92.9 million for the nine months ended September 30, 2009 and September 30, 2008, respectively. Basic and diluted net (loss) income available to First Industrial Realty Trust, Inc.’s common stockholders were $(0.56) per share and $2.10 per share for the nine months ended September 30, 2009, and September 30, 2008, respectively.
 
The tables below summarize our revenues, property and construction expenses and depreciation and other amortization by various categories for the nine months ended September 30, 2009 and September 30, 2008. Same store properties are properties owned prior to January 1, 2008 and held as an operating property through September 30, 2009 and developments and redevelopments that were placed in service prior to January 1, 2008 or were substantially completed for 12 months prior to January 1, 2008. Properties which are at least 75% occupied at acquisition are placed in service. All other properties 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 completion. Acquired properties are properties that were acquired subsequent to December 31, 2007 and held as an operating property through September 30, 2009. Sold properties are properties that were sold subsequent to December 31, 2007. (Re)Developments and land are land parcels and developments and redevelopments that were not a) substantially complete 12 months prior to January 1, 2008 or b) placed in service prior to January 1, 2008. Other revenues are derived from the operations of our maintenance company, fees earned from our Joint Ventures and other miscellaneous revenues. Construction revenues and expenses represent revenues earned and expenses incurred in connection with the TRSs acting as general contractor or development manager to construct industrial properties and also includes revenues and expenses related to the development and sale of properties built for third parties. Other expenses are derived from the operations of our maintenance company and other miscellaneous regional expenses.
 
Our future financial condition and results of operations, including rental revenues, may be impacted by the future acquisition and sale of properties. Our future revenues and expenses may vary materially from historical rates.


34


Table of Contents

For the nine months ended September 30, 2009 and September 30, 2008, the occupancy rates of our same store properties were 84.4% and 88.5%, respectively.
 
                                 
    Nine Months
    Nine Months
             
    Ended
    Ended
             
    September 30, 2009     September 30, 2008     $ Change     % Change  
    ($ in 000’s)  
 
REVENUES
                               
Same Store Properties
  $ 222,937     $ 238,615     $ (15,678 )     (6.6 )%
Acquired Properties
    21,083       7,927       13,156       166.0 %
Sold Properties
    1,730       30,519       (28,789 )     (94.3 )%
(Re)Developments and Land, Not Included Above
    17,090       8,111       8,979       110.7 %
Other
    13,912       22,422       (8,510 )     (38.0 )%
                                 
    $ 276,752     $ 307,594     $ (30,842 )     (10.0 )%
Discontinued Operations
    (5,563 )     (34,663 )     29,100       (84.0 )%
                                 
Subtotal Revenues
  $ 271,189     $ 272,931     $ (1,742 )     (0.6 )%
                                 
Construction Revenues
    52,703       101,600       (48,897 )     (48.1 )%
                                 
Total Revenues
  $ 323,892     $ 374,531     $ (50,639 )     (13.5 )%
                                 
 
Revenues from same store properties decreased $15.7 million due primarily to a decrease in occupancy, a decrease in tenant recoveries and a decrease of $1.6 million in lease termination fees. Revenues from acquired properties increased $13.2 million due to the 26 industrial properties acquired subsequent to December 31, 2007 totaling approximately 3.1 million square feet of GLA, as well as acquisitions of land parcels in September and October 2008 for which we receive ground rents. Revenues from sold properties decreased $28.8 million due to the 125 industrial properties sold subsequent to December 31, 2007 totaling approximately 10.5 million square feet of GLA. Revenues from (re)developments and land increased $9.0 million primarily due to an increase in occupancy. Other revenues decreased $8.5 million due primarily to a decrease in fees earned from our Joint Ventures and a decrease in fees earned related to us assigning our interest in certain purchase contracts to third parties for consideration. Construction revenues decreased $48.9 million primarily due to the substantial completion of certain development projects for which we were acting in the capacity of development manager, offset by a development project that commenced in August 2008 for which we are acting in the capacity of development manager.
 
                                 
    Nine Months
    Nine Months
             
    Ended
    Ended
             
    September 30, 2009     September 30, 2008     $ Change     % Change  
    ($ in 000’s)  
 
PROPERTY AND CONSTRUCTION EXPENSES
                               
Same Store Properties
  $ 72,696     $ 76,758     $ (4,062 )     (5.3 )%
Acquired Properties
    5,021       1,540       3,481       226.0 %
Sold Properties
    542       10,534       (9,992 )     (94.9 )%
(Re)Developments and Land, Not Included Above
    6,471       5,147       1,324       25.7 %
Other
    10,959       11,805       (846 )     (7.2 )%
                                 
    $ 95,689     $ 105,784     $ (10,095 )     (9.5 )%
Discontinued Operations
    (1,601 )     (12,611 )     11,010       (87.3 )%
                                 
Total Property Expenses
  $ 94,088     $ 93,173     $ 915       1.0 %
                                 
Construction Expenses
    50,567       96,628       (46,061 )     (47.7 )%
                                 
Total Property and Construction Expenses
  $ 144,655     $ 189,801     $ (45,146 )     (23.8 )%
                                 


35


Table of Contents

Property expenses include real estate taxes, repairs and maintenance, property management, utilities, insurance and other property related expenses. Property expenses from same store properties decreased $4.1 million due primarily to a decrease in real estate tax expense and repairs and maintenance expense. Property expenses from acquired properties increased $3.5 million due to properties acquired subsequent to December 31, 2007. Property expenses from sold properties decreased $10.0 million due to properties sold subsequent to December 31, 2007. Property expenses from (re)developments and land increased $1.3 million due to an increase in the substantial completion of developments. Expenses are no longer capitalized to the basis of a property once the development is substantially complete. The $0.8 million decrease in other expense is primarily attributable to a decrease in compensation resulting from a decrease in employee headcount. Construction expenses decreased $46.1 million primarily due to the substantial completion of certain development projects for which we were acting in the capacity of development manager, offset by a development project that commenced in August 2008 for which we are acting in the capacity of development manager.
 
General and administrative expense decreased $34.2 million, or 53.2%, due primarily to a decrease in compensation resulting from a decrease in employee headcount and a decrease in incentive compensation, as well as a decrease in professional services, marketing and travel and entertainment expenses.
 
During the first quarter of 2009, the Board of Directors committed the Company to a plan to further reduce organizational and overhead costs. On September 25, 2009, the Compensation Committee committed the Company to certain additional modifications to the plan consisting of further organizational and overhead cost reductions. Implementation of these further cost reductions has begun and is expected to conclude during the fourth quarter of 2009. For the nine months ended September 30, 2009, we incurred $6.2 million in restructuring charges related to employee severance and benefits ($5.3 million), costs associated with the termination of certain office leases ($0.4 million) and other costs ($0.5 million) associated with implementing the restructuring plan. Due to the timing of certain related expenses, we expect to record a total of approximately $0.8 million of additional restructuring charges in subsequent quarters. We also anticipate a reduction of general and administrative expense in the remainder of 2009 compared to 2008 as a result of the employee terminations and office closings that have been a part of our restructuring plan.
 
In connection with our periodic review of the carrying values of our properties and due to continuing softness of the economy in certain markets, we determined in the third quarter of 2009 that an impairment loss in the amount of $6.9 million should be recorded to a certain property in the Inland Empire market. The non-cash impairment charge is based upon the difference between the fair value of the property and its carrying value. Additional impairments may be necessary in the future in the event that market conditions continue to deteriorate and impact the factors used to estimate fair value.
 
                                 
    Nine Months
    Nine Months
             
    Ended
    Ended
             
    September 30, 2009     September 30, 2008     $ Change     % Change  
    ($ in 000’s)  
 
DEPRECIATION and OTHER AMORTIZATION
                               
Same Store Properties
  $ 93,218     $ 106,396     $ (13,178 )     (12.4 )%
Acquired Properties
    10,195       6,760       3,435       50.8 %
Sold Properties
    745       7,387       (6,642 )     (89.9 )%
(Re)Developments and Land, Not Included Above and Other
    8,197       5,432       2,765       50.9 %
Corporate Furniture, Fixtures and Equipment
    1,669       1,513       156       10.3 %
                                 
    $ 114,024     $ 127,488     $ (13,464 )     (10.6 )%
Discontinued Operations
    (2,292 )     (9,056 )     6,764       (74.7 )%
                                 
Total Depreciation and Other Amortization
  $ 111,732     $ 118,432     $ (6,700 )     (5.7 )%
                                 
 
Depreciation and other amortization for same store properties decreased $13.2 million due primarily to accelerated depreciation and amortization taken during the nine months ended September 30, 2008 attributable to certain tenants who terminated their lease early. Depreciation and other amortization from acquired properties


36


Table of Contents

increased $3.4 million due to properties acquired subsequent to December 31, 2007. Depreciation and other amortization from sold properties decreased $6.6 million due to properties sold subsequent to December 31, 2007. Depreciation and other amortization for (re)developments and land and other increased $2.8 million due primarily to an increase in the substantial completion of developments.
 
Interest income decreased $0.8 million, or 28.5%, primarily due to a decrease in the weighted average interest rate earned on our cash accounts during the nine months ended September 30, 2009, as compared to the nine months ended September 30, 2008.
 
Interest expense increased approximately $2.3 million, or 2.7%, primarily due to a decrease in capitalized interest for the nine months ended September 30, 2009 as compared to the nine months ended September 30, 2008 and an increase in the weighted average debt balance outstanding for the nine months ended September 30, 2009 ($2,075.0 million), as compared to the nine months ended September 30, 2008 ($2,021.1 million), partially offset by a decrease in the weighted average interest rate for the nine months ended September 30, 2009 (5.60%), as compared to the nine months ended September 30, 2008 (6.01%).
 
Amortization of deferred financing costs remained relatively unchanged.
 
For the nine months ended September 30, 2009, we recognized a $22.2 million gain from early retirement of debt due to the partial repurchase of seven series of our senior unsecured debt. For the nine months ended September 30, 2008, we recognized a $2.7 million gain from early retirement of debt due to the partial repurchase of two series of our senior unsecured debt.
 
In October 2008, we entered into an interest rate swap agreement (the “Series F Agreement”) to mitigate our exposure to floating interest rates related to the coupon reset of the Company’s Series F Preferred Stock. The Series F Agreement has a notional value of $50.0 million and is effective from April 1, 2009 through October 1, 2013. The Series F Agreement fixes the 30-year U.S. Treasury rate at 5.2175%. We recorded $2.2 million in mark to market gain, offset by a $0.3 million quarterly payment, which is included in Mark-to-Market Gain on Interest Rate Protection Agreements for the nine months ended September 30, 2009.
 
In January 2008, we entered into two forward starting swaps each with a notional value of $59.8 million, which fixed the interest rate on forecasted debt offerings. We designated both swaps as cash flow hedges. The rates on the forecasted debt issuances underlying the swaps locked on March 20, 2009 (the “Forward Starting Agreement 1”) and on April 6, 2009 (the “Forward Starting Agreement 2”), and as such, the swaps ceased to qualify for hedge accounting. The change in value of Forward Starting Agreement 1 and Forward Starting Agreement 2 from the respective day the interest rate on the underlying debt locked until settlement is $1.0 million and is included in Mark-to-Market Gain on Interest Rate Protection Agreements for the nine months ended September 30, 2009.
 
Equity in income of Joint Ventures decreased approximately $11.6 million, or 159.1%, due primarily to impairment losses of $5.6 million we recorded to the 2006 Net Lease Co-Investment Program as a result of adverse conditions in the credit and real estate markets, as well as a decrease in our economic share of gains and earn outs on property sales as a result of a decline in property sales from the 2005 Development/Repositioning Joint Venture during the nine months ended September 30, 2009 as compared to the nine months ended September 30, 2008.
 
The income tax benefit (included in continuing operations, discontinued operations and gain on sale) increased $9.9 million, or 998.6%, due primarily to a loss carryback generated from the tax liquidation of the old TRS, a decrease in state income taxes due to the reversal of prior tax expense related to a favorable court decision on business loss carryforwards in the State of Michigan, a decrease in gain on sale of real estate, a decrease in our pro rata share of gain on sale of real estate from our Joint Ventures and restructuring charges taken during the nine months ended September 30, 2009, substantially offset by a decrease in general and administrative expense within the TRSs for the nine months ended September 30, 2009.


37


Table of Contents

The following table summarizes certain information regarding the industrial properties included in our discontinued operations for the nine months ended September 30, 2009 and September 30, 2008:
 
                 
    Nine Months
    Nine Months
 
    Ended
    Ended
 
    September 30, 2009     September 30, 2008  
    ($ in 000’s)  
 
Total Revenues
  $ 5,563     $ 34,663  
Property Expenses
    (1,601 )     (12,611 )
Depreciation and Amortization
    (2,292 )     (9,056 )
Gain on Sale of Real Estate
    15,054       166,393  
Benefit (Provision) for Income Taxes
    30       (3,379 )
                 
Income from Discontinued Operations
  $ 16,754     $ 176,010  
                 
 
Income from discontinued operations, net of income taxes, for the nine months ended September 30, 2009 reflects the results of operations and gain on sale of real estate relating to 11 industrial properties that were sold during the nine months ended September 30, 2009 and the results of operations of seven properties that were identified as held for sale at September 30, 2009.
 
Income from discontinued operations, net of income taxes, for the nine months ended September 30, 2008 reflects the gain on sale of real estate relating to 107 industrial properties that were sold during the nine months ended September 30, 2008 and reflects the results of operations of the 113 industrial properties that were sold during the year ended December 31, 2008, 11 industrial properties that were sold during the nine months ended September 30, 2009, and seven industrial properties identified as held for sale at September 30, 2009.
 
The $0.7 million gain on sale of real estate for the nine months ended September 30, 2009 resulted from the sale of several land parcels that do not meet the criteria established for inclusion in discontinued operations. The $12.0 million gain on sale of real estate for the nine months ended September 30, 2008 resulted from the sale of one industrial property and several land parcels that do not meet the criteria established for inclusion in discontinued operations.
 
Comparison of Three Months Ended September 30, 2009 to Three Months Ended September 30, 2008
 
Our net (loss) income available to First Industrial Realty Trust, Inc.’s common stockholders and participating securities was $(1.9) million and $3.6 million for the three months ended September 30, 2009 and September 30, 2008, respectively. Basic and diluted net (loss) income available to First Industrial Realty Trust, Inc.’s common stockholders were $(0.04) per share for the three months ended September 30, 2009 and $0.08 per share for the three months ended September 30, 2008.
 
The tables below summarize our revenues, property and construction expenses and depreciation and other amortization by various categories for the three months ended September 30, 2009 and September 30, 2008. Same store properties are properties owned prior to January 1, 2008 and held as an operating property through September 30, 2009 and developments and redevelopments that were placed in service prior to January 1, 2008 or were substantially completed for 12 months prior to January 1, 2008. Properties which are at least 75% occupied at acquisition are placed in service. All other properties 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 completion. Acquired properties are properties that were acquired subsequent to December 31, 2007 and held as an operating property through September 30, 2009. Sold properties are properties that were sold subsequent to December 31, 2007. (Re)Developments and land are land parcels and developments and redevelopments that were not a) substantially complete 12 months prior to January 1, 2008 or b) placed in service prior to January 1, 2008. Other revenues are derived from the operations of our maintenance company, fees earned from our Joint Ventures and other miscellaneous revenues. Construction revenues and expenses represent revenues earned and expenses incurred in connection with the TRSs acting as general contractor or development manager to construct industrial properties and also includes revenues and expenses related to the development and sale of properties built for third parties. Other expenses are derived from the operations of our maintenance company and other miscellaneous regional expenses.


38


Table of Contents

Our future financial condition and results of operations, including rental revenues, may be impacted by the future acquisition and sale of properties. Our future revenues and expenses may vary materially from historical rates.
 
For the three months ended September 30, 2009 and September 30, 2008, the occupancy rates of our same store properties were 83.1% and 88.3%, respectively.
 
                                 
    Three Months
    Three Months
             
    Ended
    Ended
             
    September 30, 2009     September 30, 2008     $ Change     % Change  
    ($ in 000’s)  
 
REVENUES
                               
Same Store Properties
  $ 72,757     $ 77,052     $ (4,295 )     (5.6 )%
Acquired Properties
    6,965       4,186       2,779       66.4 %
Sold Properties
    108       3,632       (3,524 )     (97.0 )%
(Re)Developments and Land, Not Included Above
    5,555       3,574       1,981       55.4 %
Other
    5,103       7,701       (2,598 )     (33.7 )%
                                 
    $ 90,488     $ 96,145     $ (5,657 )     (5.9 )%
Discontinued Operations
    (1,344 )     (5,046 )     3,702       (73.4 )%
                                 
Subtotal Revenues
  $ 89,144     $ 91,099     $ (1,955 )     (2.1 )%
                                 
Construction Revenues
    15,954       45,202       (29,248 )     (64.7 )%
                                 
Total Revenues
  $ 105,098     $ 136,301     $ (31,203 )     (22.9 )%
                                 
 
Revenues from same store properties decreased $4.3 million due primarily to a decrease in occupancy and a decrease in tenant recoveries. Revenues from acquired properties increased $2.8 million due to the 26 industrial properties acquired subsequent to December 31, 2007 totaling approximately 3.1 million square feet of GLA, as well as acquisitions of land parcels in September and October 2008 for which we receive ground rents. Revenues from sold properties decreased $3.5 million due to the 125 industrial properties sold subsequent to December 31, 2007 totaling approximately 10.5 million square feet of GLA. Revenues from (re)developments and land increased $2.0 million primarily due to an increase in occupancy. Other revenues decreased $2.6 million due primarily to a decrease in fees earned related to us assigning our interest in certain purchase contracts to third parties for consideration and a decrease in fees earned from our Joint Ventures. Construction revenues decreased $29.2 million primarily due to the substantial completion of certain development projects for which we were acting in the capacity of development manager, offset by a development project that commenced in August 2008 for which we are acting in the capacity of development manager.
 
                                 
    Three Months
    Three Months
             
    Ended
    Ended
             
    September 30, 2009     September 30, 2008     $ Change     % Change  
    ($ in 000’s)  
 
PROPERTY AND CONSTRUCTION EXPENSES
Same Store Properties
  $ 23,217     $ 24,389     $ (1,172 )     (4.8 )%
Acquired Properties
    2,126       740       1,386       187.3 %
Sold Properties
    (158 )     1,310       (1,468 )     (112.1 )%
(Re)Developments and Land, Not Included Above
    1,510       1,760       (250 )     (14.2 )%
Other
    3,873       3,725       148       4.0 %
                                 
    $ 30,568     $ 31,924     $ (1,356 )     (4.2 )%
Discontinued Operations
    (197 )     (1,810 )     1,613       (89.1 )%
                                 
Total Property Expenses
  $ 30,371     $ 30,114     $ 257       0.9 %
                                 
Construction Expenses
    14,895       41,895       (27,000 )     (64.4 )%
                                 
Total Property and Construction Expenses
  $ 45,266     $ 72,009     $ (26,743 )     (37.1 )%
                                 


39


Table of Contents

Property expenses include real estate taxes, repairs and maintenance, property management, utilities, insurance and other property related expenses. Property expenses from same store properties decreased $1.2 million primarily due to a decrease in real estate tax expense. Property expenses from acquired properties increased $1.4 million due to properties acquired subsequent to December 31, 2007. Property expenses from sold properties decreased $1.5 million due to properties sold subsequent to December 31, 2007. Property expenses from (re)developments and land decreased $0.3 million due to a decrease in real estate tax expense and bad debt expense. Other expense remained relatively unchanged. Construction expenses decreased $27.0 million primarily due to the substantial completion of certain development projects for which we were acting in the capacity of development manager, offset by a development project that commenced in August 2008 for which we are acting in the capacity of development manager.
 
General and administrative expense decreased $9.7 million, or 53.6%, due primarily to a decrease in compensation resulting from a decrease in employee headcount, as well as a decrease in professional services, marketing and travel and entertainment expenses.
 
The Board of Directors committed the Company to a plan to reduce organizational and overhead costs. For the three months ended September 30, 2009, we incurred $1.4 million in restructuring charges primarily related to employee severance and benefits.
 
During the three months ended September 30, 2009, we recorded an impairment loss in the amount of $6.9 million on one industrial property in Inland Empire, California as a result of adverse conditions in the credit and real estate markets.
 
                                 
    Three Months
    Three Months
             
    Ended
    Ended
             
    September 30, 2009     September 30, 2008     $ Change     % Change  
    ($ in 000’s)  
 
DEPRECIATION and OTHER AMORTIZATION
                               
Same Store Properties
  $ 30,835     $ 32,955     $ (2,120 )     (6.4 )%
Acquired Properties
    3,274       3,862       (588 )     (15.2 )%
Sold Properties
    49       1,102       (1,053 )     (95.6 )%
(Re)Developments and Land, Not Included Above and Other
    2,800       1,909       891       46.7 %
Corporate Furniture, Fixtures and Equipment
    526       539       (13 )     (2.4 )%
                                 
    $ 37,484     $ 40,367     $ (2,883 )     (7.1 )%
Discontinued Operations
    (451 )     (1,654 )     1,203       (72.7 )%
                                 
Total Depreciation and Other Amortization
  $ 37,033     $ 38,713     $ (1,680 )     (4.3 )%
                                 
 
Depreciation and other amortization for same store properties decreased $2.1 million primarily due to accelerated depreciation and amortization taken during the three months ended September 30, 2008 attributable to certain tenants who terminated their lease early. Depreciation and other amortization from acquired properties decreased $0.6 million primarily due to accelerated depreciation and amortization taken during the three months ended September 30, 2008 attributable to a tenant that did not renew its lease. Depreciation and other amortization from sold properties decreased $1.0 million due to properties sold subsequent to December 31, 2007. Depreciation and other amortization for (re)developments and land and other increased $0.9 million due primarily to an increase in the substantial completion of developments.
 
Interest income decreased $0.3 million, or 30.6%, primarily due to a decrease in the weighted average interest rate earned on our cash accounts, partially offset by an increase in the average mortgage loans receivable outstanding at September 30, 2009 as compared to September 30, 2008.
 
Interest expense increased approximately $2.1 million, or 7.7%, primarily due to a decrease in capitalized interest for the three months ended September 30, 2009 as compared to the three months ended September 30, 2008 and an increase in the weighted average debt balance outstanding for the three months ended September 30, 2009 ($2,041.6 million), as compared to the three months ended September 30, 2008 ($1,984.8 million), partially offset


40


Table of Contents

by a decrease in the weighted average interest rate for the three months ended September 30, 2009 (5.66%), as compared to the three months ended September 30, 2008 (5.90%).
 
Amortization of deferred financing costs remained relatively unchanged.
 
For the three months ended September 30, 2009, we recognized an $18.2 million gain from early retirement of debt due to partial repurchases of six series of our senior unsecured debt. For the three months ended September 30, 2008, we recognized a $1.3 million gain from early retirement of debt due to the partial repurchase of a series of our senior unsecured debt.
 
We recorded $0.5 million in mark to market loss, as well as a $0.1 million quarterly payment, on the Series F Agreement which is included in Mark-to-Market Loss on Interest Rate Protection Agreements in earnings for the three months ended September 30, 2009.
 
Equity in income of Joint Ventures decreased approximately $6.6 million, or 912.3%, due primarily to impairment losses of $5.6 million we recorded to the 2006 Net Lease Co-Investment Program as a result of adverse conditions in the credit and real estate markets, as well as a decrease in our economic share of gains and earn-outs on property sales as a result of a decline in property sales from the 2005 Development/Repositioning Joint Venture and the 2005 Core Joint Venture during the three months ended September 30, 2009 as compared to the three months ended September 30, 2008.
 
The income tax benefit (included in continuing operations, discontinued operations and gain on sale) increased $4.4 million, or 220.1%, due primarily to a loss carryback generated from the tax liquidation of the old TRS, a decrease in fees earned from our Joint Ventures and a decrease in state income taxes due to the reversal of prior tax expense related to a favorable court decision on business loss carryforwards in the State of Michigan, substantially offset by a decrease in general and administrative expense within the TRS for the three months ended September 30, 2009.
 
The following table summarizes certain information regarding the industrial properties included in our discontinued operations for the three months ended September 30, 2009 and September 30, 2008:
 
                 
    Three Months
    Three Months
 
    Ended
    Ended
 
    September 30, 2009     September 30, 2008  
    ($ in 000’s)  
 
Total Revenues
  $ 1,344     $ 5,046  
Property Expenses
    (197 )     (1,810 )
Depreciation and Amortization
    (451 )     (1,654 )
Gain on Sale of Real Estate
    6,734       22,548  
Provision for Income Taxes
    (96 )     (75 )
                 
Income from Discontinued Operations
  $ 7,334     $ 24,055  
                 
 
Income from discontinued operations, net of income taxes, for the three months ended September 30, 2009 reflects the results of operations and gain on sale of real estate relating to five industrial properties that were sold during the three months ended September 30, 2009 and the results of operations of seven properties that were identified as held for sale at June 30, 2009.
 
Income from discontinued operations, net of income taxes, for the three months ended September 30, 2008 reflects the gain on sale of real estate relating to 18 industrial properties that were sold during the three months ended September 30, 2008 and reflects the results of operations of the 113 industrial properties that were sold during the year ended December 31, 2008, five industrial properties that were sold during the three months ended September 30, 2009 and seven industrial properties identified as held for sale at September 30, 2009.
 
The $0.3 million gain on sale of real estate for the three months ended September 30, 2009 resulted from the sale of several land parcels that do not meet the criteria established for inclusion in discontinued operations.


41


Table of Contents

LIQUIDITY AND CAPITAL RESOURCES
 
At September 30, 2009, our cash was approximately $19.1 million.
 
We have considered our short-term (one year or less) liquidity needs and the adequacy of our estimated cash flow from operations and other expected liquidity sources to meet these needs. We believe that our principal short-term liquidity needs are to fund normal recurring expenses, property acquisitions, developments, renovations, expansions and other nonrecurring capital improvements, debt service requirements and the minimum distributions required to maintain our REIT qualification under the Code. We anticipate that these needs will be met with cash flows provided from operating and investing activities, including the disposition of select assets. In addition, we plan to retain capital by distributing the minimum amount of dividends required to maintain our REIT status. We did not pay a common dividend in April 2009, July 2009 or October 2009 and may not pay dividends in the last quarter of 2009 depending on our taxable income. If we are required to pay common stock dividends in 2009, we may elect to satisfy this obligation by distributing a combination of cash and common shares.
 
We expect to meet long-term (greater than one year) liquidity requirements such as property acquisitions, developments, scheduled debt maturities, major renovations, expansions and other nonrecurring capital improvements through the disposition of select assets, long-term unsecured and secured indebtedness and the issuance of additional equity securities.
 
At September 30, 2009, borrowings under our Unsecured Line of Credit bore interest at a weighted average interest rate of 1.281%. Our Unsecured Line of Credit currently bears interest at a floating rate of LIBOR plus 1.0% or the prime rate plus 0.15%, at our election. As of November 9, 2009, we had approximately $137.9 million available for additional borrowings under the Unsecured Line of Credit. Our Unsecured Line of Credit contains certain financial covenants including limitations on incurrence of debt and debt service coverage. Our access to borrowings may be limited if we fail to meet any of these covenants. We believe that we were in compliance with our financial covenants as of September 30, 2009, and we anticipate that we will be able to operate in compliance with our financial covenants for the remainder of 2009. However, these financial covenants are complex and there can be no assurance that these provisions would not be interpreted by our lenders in a manner that could impose and cause us to incur material costs. In addition, our ability to meet our financial covenants may be reduced if 2009 economic and credit market conditions limit our property sales and reduce our net operating income below our plan. Any violation of these covenants would subject us to higher finance costs and fees, or accelerated maturities. In addition, our credit facilities and senior debt securities contain certain cross-default provisions, which are triggered in the event that our other material indebtedness is in default.
 
We currently have credit ratings from Standard & Poor’s, Moody’s and Fitch Ratings of BB/Ba3/BB-, respectively. In the event of a downgrade, we believe we would continue to have access to sufficient capital; however, our cost of borrowing could increase and our ability to access certain financial markets may be limited.
 
Nine Months Ended September 30, 2009
 
Net cash provided by operating activities of approximately $80.5 million for the nine months ended September 30, 2009 was comprised primarily of the non-cash adjustments of approximately $95.8 million and distributions from Joint Ventures of $1.1 million, partially offset by the net loss before noncontrolling interest of approximately $13.5 million and the net change in operating assets and liabilities of approximately $2.9 million. The adjustments for the non-cash items of approximately $95.8 million are primarily comprised of depreciation and amortization of approximately $128.4 million, the provision for bad debt of approximately $2.9 million, the impairment of real estate of $6.9 million and equity in loss of Joint Ventures of approximately $4.3 million, partially offset by the gain on sale of real estate of approximately $15.8 million, the gain on the early retirement of debt of approximately $22.2 million, mark to market gain related to the Series F Agreement and the Forward Starting Swap Agreement 1 and Forward Starting Agreement 2 of approximately $2.9 million and the effect of the straight-lining of rental income of approximately $5.8 million.


42


Table of Contents

Net cash used in investing activities of approximately $14.5 million for the nine months ended September 30, 2009 was comprised primarily of the development and acquisition of real estate, capital expenditures related to the improvement of existing real estate and contributions to, and investments in, our Joint Ventures, partially offset by the net proceeds from the sale of real estate, distributions from our Joint Ventures and the repayments on our mortgage loan receivables.
 
We invested approximately $3.2 million in, and received total distributions of approximately $8.0 million from, our Joint Ventures. As of September 30, 2009, our industrial real estate Joint Ventures owned 118 industrial properties comprising approximately 22.6 million square feet of GLA and several land parcels.
 
During the nine months ended September 30, 2009, we sold 11 industrial properties comprising approximately 1.3 million square feet of GLA and several land parcels. Net proceeds from the sales of the 11 industrial properties and several land parcel were approximately $41.2 million.
 
Net cash used in financing activities of approximately $50.2 million for the nine months ended September 30, 2009 was derived primarily of repayments on our unsecured notes and mortgage loans payable, payments of debt issuance costs, other costs from the origination of mortgages, common and preferred stock dividends and unit distributions and repurchase of the equity component of the exchangeable notes, offering costs and the repurchase of restricted stock from our employees to pay for withholding taxes on the vesting of restricted stock, offset by proceeds from ten new mortgage financings, proceeds from the issuance of common stock and borrowings on our Unsecured Line of Credit.
 
During the nine months ended September 30, 2009, we received proceeds from the origination of $201.3 million in mortgage financing. During the nine months ended September 30, 2009, we paid off and retired the remaining $105.7 million outstanding 2009 Notes at their maturity. Prior to the payoff and retirement of the 2009 Notes, we repurchased and retired $19.3 million of our 2009 Notes for a purchase price of $19.1 million. Additionally, during the nine months ended September 30, 2009, we repurchased and retired $139.4 million of our other Unsecured Notes at a purchase price of $116.1 million.
 
On August 8, 2008, the Company’s DRIP became effective. During the nine months ended September 30, 2009, we issued 3,034,120 shares under the direct stock purchase component of the DRIP for approximately $15.9 million.
 
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, and to a much lesser extent, foreign currency fluctuations.
 
Interest Rate Risk
 
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 September 30, 2009, approximately $1,571.4 million (approximately 78.9% of total debt at September 30, 2009) of our debt was fixed rate debt (including $50.0 million of borrowings under the Unsecured Line of Credit in which the interest rate was fixed via an interest rate protection agreement) and approximately $419.6 million (approximately 21.1% of total debt at September 30, 2009) was variable rate debt.
 
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 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 5 to the consolidated financial statements for a discussion of the maturity dates of our various fixed rate debt.


43


Table of Contents

Based upon the amount of variable rate debt outstanding at September 30, 2009, a 10% increase or decrease in the interest rate on our variable rate debt would decrease or increase, respectively, future net income and cash flows by approximately $0.5 million per year. The foregoing calculation assumes an instantaneous increase or decrease in the rates applicable to the amount of borrowings outstanding under our Unsecured Line of Credit at September 30, 2009. One consequence of the recent turmoil in the capital markets has been sudden and dramatic changes in LIBOR, which could result in an increase to such rates. In addition, the calculation does not account for our option to elect the lower of two different interest rates under our borrowings or other possible actions, such as prepayment, that we might take in response to any rate increase.
 
The use of derivative financial instruments allows us to manage risks of increases in interest rates with respect to the effect these fluctuations would have on our earnings and cash flows. As of September 30, 2009, we had one outstanding interest rate protection agreement with a notional amount of $50.0 million which fixes the interest rate on borrowings on our Unsecured Line of Credit and one outstanding interest rate protection agreement with a notional amount of $50.0 million which mitigates our exposure to floating interest rates related to the reset rate of our Series F Preferred Stock. See Note 15 to the consolidated financial statements.
 
Foreign Currency Exchange Rate Risk
 
Owning, operating and developing industrial property outside of the United States exposes us to the possibility of volatile movements in foreign exchange rates. Changes in foreign currencies can affect the operating results of international operations reported in U.S. dollars and the value of the foreign assets reported in U.S. dollars. The economic impact of foreign exchange rate movements is complex because such changes are often linked to variability in real growth, inflation, interest rates, governmental actions and other factors. At September 30, 2009, we owned one industrial property and several land parcels for which the U.S. dollar was not the functional currency. This property and the land parcels are located in Ontario, Canada and use the Canadian dollar as their functional currency. Additionally, the 2007 Canada Joint Venture owned two industrial properties and several land parcels for which the functional currency is the Canadian dollar.
 
Recent Accounting Pronouncements
 
Refer to Note 3 to the September 30, 2009 Consolidated Financial Statements.
 
Subsequent Events
 
Subsequent events have been evaluated and disclosed herein relating to events that have occurred from October 1, 2009 through the filing date of this Quarterly Report on Form 10-Q, November 9, 2009.
 
From October 1, 2009 to November 9, 2009, we sold one industrial property for approximately $3.8 million of gross proceeds. There were no industrial properties acquired.
 
Subsequent to October 1, 2009, we repurchased and retired an aggregate $12.6 million of our senior unsecured debt at a weighted average repurchase price of 85.069% of par. In connection with the partial retirements, we will recognize approximately $1.4 million as gain on early retirement of debt.
 
Subsequent to October 1, 2009, we obtained three mortgage loans in the amounts of $27.8 million, $14.8 million and $11.4 million. The mortgages are collateralized by 14 industrial properties totaling approximately 1.9 million square feet of GLA. The mortgages bear interest at fixed rates between 6.75% and 7.60%. The mortgages mature between September 30, 2012 and November 5, 2014.
 
On October 5, 2009, we issued 13,635,700 shares of the Company’s common stock. See Note 6 to the Consolidated Financial Statements for further information.
 
On November 6, 2009, legislation was signed that allows businesses with net operating losses for 2008 or 2009 to carry back those losses for up to five years. Previously, net operating losses could be carried back only two years. As a result of the new law, the Company expects to file for a carryback of additional losses that would result in an additional tax refund of approximately $10.0 million to $15.0 million from the tax liquidation of the old TRS. This additional loss carryback will result in a tax benefit to be recorded in the fourth quarter of 2009.


44


Table of Contents

Item 3.   Quantitative and Qualitative Disclosures About Market Risk
 
Response to this item is included in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” above.
 
Item 4.   Controls and Procedures
 
Our principal executive officer and principal financial officer, in evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report, based on the evaluation of these controls and procedures required by Exchange Act Rules 13a-15(b) or 15d-15(b), have concluded that as of the end of such period our disclosure controls and procedures were effective.
 
There has been no change in our internal control over financial reporting that occurred during the fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


45


Table of Contents

 
PART II. OTHER INFORMATION
 
Item 1.   Legal Proceedings
 
None.
 
Item 1A.   Risk Factors.
 
The Company’s mortgages may impact the Company’s ability to sell encumbered properties on advantageous terms or at all.
 
As part of our plan to enhance liquidity and pay down our debt, we have originated several mortgage financings and we are in active discussions with various lenders regarding the origination of additional mortgage financings. Certain of our mortgages contain, and it is anticipated that some future mortgages will contain, substantial prepayment premiums which we would have to pay upon the sale of a property, thereby reducing the net proceeds to us from the sale of any such property. As a result, our willingness to sell certain properties and the price at which we may desire to sell a property may be impacted by the terms of any mortgage financing encumbering a property. If we are unable to sell properties on favorable terms or redeploy the proceeds of property sales in accordance with our business strategy, then our financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, our common stock could be adversely affected.
 
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds
 
None.
 
Item 3.   Defaults Upon Senior Securities
 
None.
 
Item 4.   Submission of Matters to a Vote of Security Holders
 
None.
 
Item 5.   Other Information
 
Not Applicable.


46


Table of Contents

Item 6.   Exhibits
 
         
Exhibit
   
Number
 
Description
 
  31 .1*   Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
  31 .2*   Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
  32 .1**   Certification of the Principal Executive Officer and the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes -Oxley Act of 2002.
 
 
* Filed herewith
 
** Furnished herewith


47


Table of Contents

 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
  By: 
/s/  Scott A. Musil
Scott A. Musil
Chief Financial Officer
(Principal Financial Officer)
 
Date: November 9, 2009


48


Table of Contents

 
EXHIBIT INDEX
 
         
Exhibit
   
Number
 
Description
 
  31 .1*   Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
  31 .2*   Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
  32 .1**   Certification of the Principal Executive Officer and the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes -Oxley Act of 2002.
 
 
* Filed herewith
 
** Furnished herewith


49