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MarketScreener Homepage  >  Equities  >  Nyse  >  First Industrial Realty Trust, Inc.    FR

FIRST INDUSTRIAL REALTY TRUST, INC.

(FR)
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FIRST INDUSTRIAL REALTY TRUST : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

10/23/2020 | 04:16pm EST
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and notes thereto appearing elsewhere in this Form 10-Q. Unless
stated otherwise or the context otherwise requires, the terms "we," "our" and
"us" refer to First Industrial Realty Trust, Inc. (the "Company") and its
subsidiaries, including First Industrial, L.P. (the "Operating Partnership") and
its consolidated subsidiaries.
Forward-Looking Statements
The following discussion may contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, and Section 21E of the
Securities Exchange Act of 1934 (the "Exchange Act"). We intend for such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995. Forward-looking statements are based on certain assumptions and
describe our future plans, strategies and expectations, and are generally
identifiable by use of the words "believe," "expect," "plan," "intend,"
"anticipate," "estimate," "project," "seek," "target," "potential," "focus,"
"may," "will," "should" or similar words. Although we believe the expectations
reflected in forward-looking statements are based upon reasonable assumptions,
we can give no assurance that our expectations will be attained or that results
will not materially differ.
Important factors that we think could cause our actual results to differ
materially from expected results are summarized below. One of the most
significant factors, however, is the ongoing impact of the current outbreak of
the novel coronavirus (COVID-19), on the U.S., regional and global economies and
the broader financial markets. The outbreak of COVID-19 has also impacted, and
is likely to continue to impact, directly or indirectly, many of the other
important factors below.
New factors emerge from time to time, and it is not possible for us to predict
which factors will arise. In addition, we cannot assess the impact of each
factor on our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements. In particular, it is difficult to fully assess
the impact of COVID-19 at this time due to, among other factors, uncertainty
regarding the severity and duration of the outbreak domestically and
internationally and the effectiveness of federal, state and local governments'
efforts to contain the spread of COVID-19 and respond to its direct and indirect
impact on the U.S. economy and economic activity.
Factors which could have a materially adverse effect on our operations and
future prospects include, but are not limited to:
•changes in national, international, regional and local economic conditions
generally and real estate markets specifically;
•changes in legislation/regulation (including changes to laws governing the
taxation of real estate investment trusts) and actions of regulatory
authorities;
•our ability to qualify and maintain our status as a real estate investment
trust;
•the availability and attractiveness of financing (including both public and
private capital) and changes in interest rates;
•the availability and attractiveness of terms of additional debt repurchases;
•our ability to retain our credit agency ratings;
•our ability to comply with applicable financial covenants;
•our competitive environment;
•changes in supply, demand and valuation of industrial properties and land in
our current and potential market areas;
•our ability to identify, acquire, develop and/or manage properties on favorable
terms;
•our ability to dispose of properties on favorable terms;
•our ability to manage the integration of properties we acquire;
•potential liability relating to environmental matters;
•defaults on or non-renewal of leases by our tenants;
•decreased rental rates or increased vacancy rates;
•higher-than-expected real estate construction costs and delays in development
or lease-up schedules;
•the uncertainty and economic impact of pandemics, epidemics or other public
health emergencies or fear of such events, such as the recent outbreak of
COVID-19;
•potential natural disasters and other potentially catastrophic events such as
acts of war and/or terrorism;
•litigation, including costs associated with prosecuting or defending claims and
any adverse outcomes;
•risks associated with our investments in joint ventures, including our lack of
sole decision-making authority; and
other risks and uncertainties described in this report, in Item 1A, "Risk
Factors" and elsewhere in our annual report on Form 10-K for the year ended
December 31, 2019 as well as those risks and uncertainties discussed from time
to time in our other Exchange Act reports and in our other public filings with
the Securities and Exchange Commission (the "SEC").
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We caution you not to place undue reliance on forward-looking statements, which
reflect our outlook only and speak only as of the date of this report. We assume
no obligation to update or supplement forward-looking statements.
General
The Company is a self-administered and fully integrated real estate company
which owns, manages, acquires, sells, develops and redevelops industrial real
estate. The Company is a Maryland corporation organized on August 10, 1993 and a
real estate investment trust ("REIT") as defined in the Internal Revenue Code of
1986 (the "Code").
We began operations on July 1, 1994. The Company's operations are conducted
primarily through the Operating Partnership, of which the Company is the sole
general partner (the "General Partner"), with an approximate 97.9% ownership
interest ("General Partner Units") at September 30, 2020. The Operating
Partnership also conducts operations through eight other limited partnerships
(the "Other Real Estate Partnerships"), numerous limited liability companies
("LLCs") and certain taxable REIT subsidiaries ("TRSs"), the operating data of
which, together with that of the Operating Partnership, is consolidated with
that of the Company as presented herein. The Operating Partnership holds at
least a 99% limited partnership interest in each of the Other Real Estate
Partnerships. The general partners of the Other Real Estate Partnerships are
separate corporations, wholly-owned by the Company, each with at least a .01%
general partnership interest in the Other Real Estate Partnerships. The Company
does not have any significant assets or liabilities other than its investment in
the Operating Partnership and its 100% ownership interest in the general
partners of the Other Real Estate Partnerships. The noncontrolling interest in
the Operating Partnership of approximately 2.1% at September 30, 2020 represents
the aggregate partnership interest held by the limited partners thereof
("Limited Partner Units" and together with the General Partner Units, the
"Units"). The limited partners of the Operating Partnership are persons or
entities who contributed their direct or indirect interests in properties to the
Operating Partnership in exchange for common units of the Operating Partnership
and/or recipients of RLP Units of the Operating Partnership (see Note 6)
pursuant to the Company's stock incentive plan.
We also own equity interests in, and provide various services to, two joint
ventures (the "Joint Ventures"), each through a wholly-owned TRS of the
Operating Partnership. The Joint Ventures are each accounted for under the
equity method of accounting. The operating data of the Joint Ventures is not
consolidated with that of the Operating Partnership or the Company as presented
herein. See Note 5 to the consolidated financial statements for more information
related to the Joint Ventures.
Profits, losses and distributions of the Operating Partnership, the LLCs, the
Other Real Estate Partnerships, the TRSs and the Joint Ventures are allocated to
the general partner and the limited partners, the members or the shareholders,
as applicable, of such entities in accordance with the provisions contained
within their respective organizational documents.
As of September 30, 2020, we owned 439 industrial properties located in
20 states, containing an aggregate of approximately 63.0 million square feet of
gross leasable area ("GLA"). Of the 439 properties owned on a consolidated
basis, none of them are directly owned by the Company.
Available Information
We maintain a website at www.firstindustrial.com. Information on this website
shall not constitute part of this Form 10-Q. Copies of our respective annual
reports on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K and amendments to such reports are available without charge on our
website as soon as reasonably practicable after such reports are filed with or
furnished to the SEC. You may also read and copy any document filed at the
public reference facilities of the SEC at 100 F Street, N.E., Washington, D.C.
20549. Please call the SEC at (800) SEC-0330 for further information about the
public reference facilities. These documents also may be accessed through the
SEC's Interactive Data Electronic Application via the SEC's home page on the
Internet (www.sec.gov). In addition, the Company's Corporate Governance
Guidelines, Code of Business Conduct and Ethics, Audit Committee Charter,
Compensation Committee Charter and Nominating/Corporate Governance Committee
Charter, along with supplemental financial and operating information prepared by
us, are all available without charge on the Company's website or upon request to
the Company. Amendments to, or waivers from, our Code of Business Conduct and
Ethics that apply to our executive officers or directors will also be posted to
our website. We also post or otherwise make available on our website from time
to time other information that may be of interest to our investors. Please
direct requests as follows:
                      First Industrial Realty Trust, Inc.1 N. Wacker Drive, Suite 4200
                               Chicago, IL 60606
                         Attention: Investor Relations

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Management's Overview
We believe our financial condition and results of operations are, primarily, a
function of our performance in four key areas: leasing of industrial properties,
acquisition and development of additional industrial properties, disposition of
industrial properties and access to external capital.
We generate revenue primarily from rental income and tenant recoveries from
operating leases of our industrial properties. Such revenue is offset by certain
property specific operating expenses, such as real estate taxes, repairs and
maintenance, property management, utilities and insurance expenses, along with
certain other costs and expenses, such as depreciation and amortization costs
and general and administrative and interest expenses. Our revenue growth is
dependent, in part, on our ability to: (i) increase rental income, through
increasing either or both occupancy rates and rental rates at our properties;
(ii) maximize tenant recoveries; and (iii) minimize operating and certain other
expenses. Revenues generated from our leases are a significant source of funds,
in addition to income generated from gains on the sale of our properties (as
discussed below), for our liquidity. The leasing of property, in general, and
occupancy rates, rental rates, operating expenses and certain non-operating
expenses, in particular, are impacted, variously, by property specific, market
specific, general economic and other conditions, many of which are beyond our
control. The leasing of property also entails various risks, including the risk
of tenant default. If we were unable to maintain or increase occupancy rates and
rental rates at our properties or to maintain tenant recoveries and operating
and certain other expenses consistent with historical levels and proportions,
our revenue would decline. Further, if a significant number of our tenants were
unable to pay rent (including tenant recoveries) or if we were unable to rent
our properties on favorable terms, our financial condition, results of
operations, cash flow and ability to make distributions to our stockholders and
Unitholders, the market price of the Company's common stock and the market value
of the Units would be adversely affected.
Our revenue growth is also dependent, in part, on our ability to acquire
existing and develop new industrial properties on favorable terms. We seek to
identify opportunities to acquire existing industrial properties on favorable
terms, and, when conditions permit, also seek to acquire and develop new
industrial properties on favorable terms. Existing properties, as they are
acquired, and acquired and developed properties, as they are leased, generate
revenue from rental income, tenant recoveries and fees, which, as discussed
above, are sources of funds for our distributions to our stockholders and
Unitholders. The acquisition and development of properties is impacted,
variously, by property specific, market specific, general economic and other
conditions, many of which are beyond our control. The acquisition and
development of properties also entails various risks, including the risk that
our investments may not perform as expected. For example, acquired existing and
acquired and developed new properties may not sustain and/or achieve anticipated
occupancy and rental rate levels. With respect to acquired and developed new
properties, we may not be able to complete construction on schedule or within
budget, resulting in increased debt service expense and construction costs and
delays in leasing the properties. Also, we face significant competition for
attractive acquisition and development opportunities from other well-capitalized
real estate investors, including publicly-traded REITs and private investors.
Further, as discussed below, we may not be able to finance the acquisition and
development opportunities we identify. If we were unable to acquire and develop
sufficient additional properties on favorable terms, or if such investments did
not perform as expected, our revenue growth would be limited and our financial
condition, results of operations, cash flow and ability to make distributions to
our stockholders and Unitholders, the market price of the Company's common stock
and the market value of the Units would be adversely affected.
We also generate income from the sale of our properties (including existing
buildings, buildings which we have developed or re-developed on a merchant basis
and land). The gain or loss on, and fees from, the sale of such properties are
included in our income and can be a significant source of funds, in addition to
revenues generated from rental income and tenant recoveries. Proceeds from sales
are used to repay outstanding debt and, market conditions permitting, may be
used to fund the acquisition of existing industrial properties, and the
acquisition and development of new industrial properties. The sale of properties
is impacted, variously, by property specific, market specific, general economic
and other conditions, many of which are beyond our control. The sale of
properties also entails various risks, including competition from other sellers
and the availability of attractive financing for potential buyers of our
properties. Further, our ability to sell properties is limited by safe harbor
rules applying to REITs under the Code which relate to the number of properties
that may be disposed of in a year, their tax bases and the cost of improvements
made to the properties, along with other tests which enable a REIT to avoid
punitive taxation on the sale of assets. If we are unable to sell properties on
favorable terms, our income growth would be limited and our financial condition,
results of operations, cash flow and ability to make distributions to our
stockholders and Unitholders, the market price of the Company's common stock and
the market value of the Units could be adversely affected.
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We utilize a portion of the net sales proceeds from property sales, borrowings
under our unsecured credit facility (the "Unsecured Credit Facility") and
proceeds from the issuance, when and as warranted, of additional debt and equity
securities to refinance debt and finance future acquisitions and developments.
Access to external capital on favorable terms plays a key role in our financial
condition and results of operations, as it impacts our cost of capital and our
ability and cost to refinance existing indebtedness as it matures and our
ability to fund acquisitions and developments. Our ability to access external
capital on favorable terms is dependent on various factors, including general
market conditions, interest rates, credit ratings on our debt, the market's
perception of our growth potential, our current and potential future earnings
and cash distributions and the market price of the Company's common stock. If we
were unable to access external capital on favorable terms, our financial
condition, results of operations, cash flow and ability to make distributions to
our stockholders and Unitholders, the market price of the Company's common stock
and the market value of the Units could be adversely affected.


                                       33
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Impact of COVID-19


The following discussion is intended to provide stockholders with certain
information regarding the impacts of the COVID-19 pandemic on our business and
management's efforts to respond to those impacts. While our results for the
first nine months of 2020 were in line with our expectations, the COVID-19
pandemic and the significant and wide-ranging response of international,
federal, state and local public health and governmental authorities in regions
across the United States and the world, including quarantines, "stay-at-home"
orders and other mandates for many individuals to substantially restrict daily
activities and for many businesses to curtail or cease normal operations, and
the volatile economic, business and financial market conditions resulting
therefrom, could negatively impact our results of operations during the
remainder of 2020 and in future periods. Further discussion of the potential
risks facing our business from the COVID-19 pandemic is provided below under
Part II, Item 1A - Risk Factors.

•As of October 22, 2020, our overall monthly rental billing collection rate for
the second and third quarters of 2020 is 99%. Such collection rate may not be
indicative of collections in any future period.

•During the nine months ended September 30, 2020, we granted rent deferral
requests to 18 tenants totaling $1.0 million at our properties. All of these
deferral requests require full repayment by December 31, 2020 and do not impact
revenue recognition. As of October 22, 2020, $0.3 million of the $1.0 million of
rent deferrals is outstanding.

•During the nine months ended September 30, 2020, we recorded a reserve or did
not recognize cash rental revenue due to converting certain tenants to cash
basis in a previous period in the amount of $1.2 million. Additionally, during
the same period, we reversed $1.4 million of deferred rent receivables since our
assessment that full collection of future contractual lease payments is no
longer probable.

We have taken a number of proactive measures to maintain the strength of our
business and manage the impact of
COVID-19 on our operations and liquidity, including the following:

•The health and safety of our employees and their families is a top priority. We
have adapted our operations to protect employees, including enabling our IT
systems so that employees can work remotely. At September 30, 2020,
approximately 60% of our employees continue to work remotely on a full or part
time basis.

•We have approximately $63 million of mortgage debt maturing in October 2021 and
a $200.0 million term loan maturing in July 2021, however, the term loan has
two, one-year extension options at our election, subject to the satisfaction of
certain conditions. As of October 23, 2020, we have approximately $140 million
in cash and cash equivalents and $724.6 million available under our Unsecured
Credit Facility. Our Unsecured Credit Facility matures in October 2021, however,
it is extendable for one year, at our election, subject to the satisfaction of
certain conditions.

•During the first quarter 2020, we temporarily suspended all new speculative
vertical development projects other than completing development and
redevelopment properties that were already in progress and expenditures required
to obtain permits and other horizontal construction work. However, based on
favorable market conditions, we will commence construction on two new
speculative development projects in the South Florida market ("First Park Miami
and First 95 Distribution Center") starting in the fourth quarter of 2020. Our
total projected costs to complete construction and stabilize the developments
and redevelopments under construction (including First Park Miami, First 95
Distribution Center and a build-to-suit project that commenced during the third
quarter 2020), to fund developments that are complete but not fully funded and
to complete ongoing permitting and other planned horizontal construction work at
one of our land sites, is approximately $50 million for the remainder of 2020
and approximately $100 million for 2021 and beyond.



                                       34
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Summary of Significant Transactions During the Nine Months Ended September 30,
2020
During the nine months ended September 30, 2020, we completed the following:
Real Estate Transactions:
•We acquired seven industrial properties comprised of approximately 0.9 million
square feet of GLA located in the Baltimore, Los Angeles and Northern California
markets for an aggregate purchase price of $111.8 million, excluding
transactions costs.
•We acquired approximately 128.8 acres of land for development located in the
Miami, Orlando, Seattle and Southern California markets, for an aggregate
purchase price of $69.6 million, excluding transaction costs.
•We commenced development construction of a 0.2 million square-foot
build-to-suit building in the Inland Empire.
•We sold 14 industrial properties comprising approximately 1.2 million square
feet of GLA for gross sales proceeds of $110.9 million, which includes the
receipt of a sales-type lease receivable.
•We entered into a joint venture through which we acquired, for a purchase price
of $70.5 million, approximately 569 net developable acres of land located in
Phoenix for the purpose of developing, leasing, and operating industrial
properties and potentially selling land.
•We leased 100% of a 0.6 million square foot development forward in Baltimore
that was acquired during the three months ended March 31, 2020. We leased 100%
of a 0.1 million square foot development in South Florida that will be complete
in the fourth quarter.
Financing Transactions:
•We issued 1,842,281 shares of our common stock, through "at-the-market" ("ATM")
offerings, resulting in net proceeds of $78.7 million.
•We issued $100.0 million of ten-year private placement notes at a rate of 2.74%
and $200.0 million of twelve-year private placement notes at a rate of 2.84%.
•We paid off $15.1 million in mortgage loans payable.
•We entered into a new unsecured term loan facility that refinanced our $200.0
million term loan facility previously scheduled to mature in January 2021. The
new loan has an initial maturity of July 15, 2021 and includes two, one-year
extensions at our election. The new loan is interest only and currently bears an
interest rate based of LIBOR plus 150 basis points.
•We declared first, second and third quarter cash dividends of $0.25 per common
share or Unit per quarter, an increase of 8.7% from the 2019 quarterly rate.

                                       35
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Results of Operations
The tables below summarize our revenues, property expenses and depreciation and
other amortization by various categories for the three and nine months ended
September 30, 2020 and 2019. Same store properties are properties owned prior to
January 1, 2019 and held as an in-service property through September 30, 2020
and developments and redevelopments that were placed in service prior to
January 1, 2019. Properties which are at least 75% occupied at acquisition are
placed in service, unless we anticipate tenant move-outs within two years of
ownership would drop occupancy below 75%. Acquisitions that are less than 75%
occupied at the date of acquisition and developments and redevelopments are
placed in service as they reach the earlier of a) stabilized occupancy (defined
as 90% occupied), or b) one year subsequent to acquisition or
development/redevelopment construction completion. Acquired properties with
occupancy greater than 75% at acquisition, but with tenants that we anticipate
will move out within two years of ownership, will be placed in service upon the
earlier of reaching 90% occupancy or twelve months after move out. Properties
are moved from the same store classification to the redevelopment classification
when capital expenditures for a project are estimated to exceed 25% of the
undepreciated gross book value of the property. Acquired properties are
properties that were acquired subsequent to December 31, 2018 and held as an
operating property through September 30, 2020. Sold properties are properties
that were sold subsequent to December 31, 2018. (Re)Developments include
developments and redevelopments that were not: a) substantially complete
12 months prior to January 1, 2019; or b) stabilized prior to January 1, 2019.
Other revenues are derived from the operations of properties not placed in
service under one of the categories discussed above, the operations of our
maintenance company and other miscellaneous revenues. Other property expenses
are derived from the operations of properties not placed in service under one of
the categories discussed above, the operations of our maintenance company,
vacant land expenses and other miscellaneous regional expenses.
Our future financial condition and results of operations, including rental
revenues, may be impacted by the future acquisition, (re)development and sale of
properties. Our future revenues and expenses may vary materially from historical
rates.
                                       36
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Comparison of Nine Months Ended September 30, 2020 to Nine Months Ended
September 30, 2019
Our net income was $114.7 million and $145.1 million for the nine month ended
September 30, 2020 and 2019, respectively.
For the nine month ended September 30, 2020 and 2019, the average daily
occupancy rate of our same store properties was 97.1% and 97.6%, respectively.
                               Nine Months Ended September 30,
                                     2020                     2019         $ Change      % Change
                                                       ($ in 000's)
REVENUES
Same Store Properties   $        286,961$ 280,142$  6,819          2.4  %
Acquired Properties                5,021                         786         4,235        538.8  %
Sold Properties                    4,647                      27,965       (23,318)       (83.4) %
(Re)Developments                  26,434                       2,484        23,950        964.2  %
Other                             12,676                       3,849         8,827        229.3  %

Total Revenues          $        335,739$ 315,226$ 20,513          6.5  %


Revenues from same store properties increased $6.8 million primarily due to an
increase in rental rates and tenant recoveries, offset by an increase in
reserves taken on tenant accounts receivable and deferred rent receivable
amounts for tenants due to our assessment that full collection of future
contractual lease payments is no longer probable and a decrease in occupancy.
Revenues from acquired properties increased $4.2 million due to the 16
industrial properties acquired subsequent to December 31, 2018 totaling
approximately 1.4 million square feet of GLA. Revenues from sold properties
decreased $23.3 million due to the 54 industrial properties sold subsequent to
December 31, 2018 totaling approximately 6.4 million square feet of GLA.
Revenues from (re)developments increased $24.0 million due to an increase in
occupancy. Revenues from other increased $8.8 million primarily due to final
insurance settlement proceeds of $6.5 million received and recorded as revenue
related to two properties that were destroyed by fire in 2016 and 2017, the
acquisition of partially occupied properties during 2018 that were not yet
stabilized at December 31, 2018 and therefore are not yet included in the same
store pool and the acquisition of a land site during 2019 on which we intend to
develop industrial buildings in the future but currently we are leasing it to
tenants and collecting ground lease rent.
                                  Nine Months Ended September 30,
                                        2020                      2019        $ Change      % Change
                                                         ($ in 000's)
PROPERTY EXPENSES
Same Store Properties     $         69,869                     $ 69,148$    721          1.0  %
Acquired Properties                  1,620                          325         1,295        398.5  %
Sold Properties                        979                        8,256        (7,277)       (88.1) %
(Re)Developments                     7,550                        1,569         5,981        381.2  %
Other                                7,469                        6,645           824         12.4  %

Total Property Expenses   $         87,487                     $ 85,943$  1,544          1.8  %


Property expenses include real estate taxes, repairs and maintenance, property
management, utilities, insurance and other property related expenses. Property
expenses from same store properties increased $0.7 million primarily due to an
increase in real estate taxes and insurance, substantially offset by a decrease
in repairs and maintenance and snow removal costs. Property expenses from
acquired properties increased $1.3 million due to properties acquired subsequent
to December 31, 2018. Property expenses from sold properties decreased $7.3
million due to properties sold subsequent to December 31, 2018. Property
expenses from (re)developments increased $6.0 million primarily due to the
substantial completion of developments. Property expenses from other increased
by $0.8 million primarily due to an increase in real estate tax expense on
developable land and the acquisition of partially occupied properties during
2018 that were not stabilized at December 31, 2018 and therefore are not yet
included in the same store pool and certain miscellaneous expenses, offset by a
decrease in maintenance company expenses.
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General and administrative expense increased by $4.4 million, or 21.6%,
primarily due to severance expense ($0.9 million) associated with the closing of
our Indianapolis regional office during the nine months ended September 30, 2020
as well as an increase in incentive compensation during the nine months ended
September 30, 2020 as compared to the nine months ended September 30, 2019.
                                                       Nine Months Ended September
                                                                   30,
                                                          2020              2019            $ Change             % Change
                                                                                   ($ in 000's)
DEPRECIATION AND OTHER AMORTIZATION
Same Store Properties                                 $  80,665$ 77,821$  2,844                    3.7  %
Acquired Properties                                       3,430               783             2,647                  338.1  %
Sold Properties                                             582             7,206            (6,624)                 (91.9) %
(Re) Developments                                         9,908             2,102             7,806                  371.4  %
Corporate Furniture, Fixtures and Equipment and Other     2,947             2,066               881                   42.6  %
Total Depreciation and Other Amortization             $  97,532$ 89,978$  7,554                    8.4  %


Depreciation and other amortization from same store properties increased $2.8
million primarily due to accelerated depreciation and amortization taken during
the nine months ended September 30, 2020 attributable to the early termination
of certain tenants' leases. Depreciation and other amortization from acquired
properties increased $2.6 million due to properties acquired subsequent to
December 31, 2018. Depreciation and other amortization from sold properties
decreased $6.6 million due to properties sold subsequent to December 31, 2018.
Depreciation and other amortization from (re)developments increased $7.8 million
primarily due to an increase in depreciation and amortization related to
completed developments. Depreciation from corporate furniture, fixtures and
equipment and other increased $0.9 million primarily due to depreciation related
to properties acquired during 2018 that were not yet stabilized at December 31,
2018 and therefore are not yet included in the same store pool as well as
depreciation on land improvements related to the acquisition of a land site
during 2019. We intend to develop industrial buildings on such land site in the
future, but currently we are leasing to tenants and collecting ground lease
rent.
For the nine months ended September 30, 2020, we recognized $29.6 million of
gain on sale of real estate related to the sale of 14 industrial properties
comprised of approximately 1.2 million square feet of GLA. For the nine months
ended September 30, 2019, we recognized $53.4 million of gain on sale of real
estate related to the sale of ten industrial properties comprised of
approximately 1.7 million square feet of GLA as well as gain related to a
reclassification of an operating lease to a sales-type lease which was triggered
by a tenant that exercised an option in its lease to purchase a 0.6 million
square foot building from us located in our Phoenix market.
Interest expense remained relatively unchanged. However, the small increase was
caused by an increase in the weighted average debt balance outstanding for the
nine months ended September 30, 2020 ($1,587.5 million) as compared to the nine
months ended September 30, 2019 ($1,372.4 million), substantially offset by a
decrease in the weighted average interest rate for the nine months ended
September 30, 2020 (3.61%) as compared to the nine months ended September 30,
2019 (4.06%) and an increase in capitalized interest of $0.9 million caused by
an increase in development costs eligible for capitalization during the nine
months ended September 30, 2020 as compared to the nine months ended September
30, 2019.
Amortization of debt issuance costs remained relatively unchanged.
Equity in loss of Joint Ventures for the nine months ended September 30, 2020
was not significant. Equity in income of Joint Ventures for the nine months
ended September 30, 2019 of $16.3 million includes our pro-rata share of gain
related to a sale of land by the Joint Ventures and $4.9 million of accrued
incentive fees.
Income tax expense decreased by $3.3 million, or 96.9%, during the nine months
ended September 30, 2020 as compared to the nine months ended September 30,
2019, primarily due to a decrease in our pro-rata share of gain from the sale of
land by the Joint Ventures as well as accrued incentive fees we earned from the
Joint Ventures.

                                       38
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Comparison of Three Months Ended September 30, 2020 to Three Months Ended
September 30, 2019
Our net income was $36.7 million and $80.0 million for the three months ended
September 30, 2020 and 2019, respectively.
For the three months ended September 30, 2020 and 2019, the average daily
occupancy rate of our same store properties was 96.8% and 97.7%, respectively.
                                Three Months Ended September 30,
                                      2020                      2019         $ Change      % Change
                                                        ($ in 000's)
REVENUES
Same Store Properties   $          96,406                    $  94,042$  2,364          2.5  %
Acquired Properties                 2,536                          642         1,894        295.0  %
Sold Properties                       523                        8,833        (8,310)       (94.1) %
(Re)Developments                    8,674                        1,545         7,129        461.4  %
Other                               8,055                        1,528         6,527        427.2  %

Total Revenues          $         116,194                    $ 106,590$  9,604          9.0  %


Revenues from same store properties increased $2.4 million primarily due to an
increase in rental rates and tenant recoveries, offset by a decrease in
occupancy. Revenues from acquired properties increased $1.9 million due to the
16 industrial properties acquired subsequent to December 31, 2018 totaling
approximately 1.4 million square feet of GLA. Revenues from sold properties
decreased $8.3 million due to the 54 industrial properties sold subsequent to
December 31, 2018 totaling approximately 6.4 million square feet of GLA.
Revenues from (re)developments increased $7.1 million due to an increase in
occupancy. Revenues from other increased $6.5 million primarily due to final
insurance settlement proceeds of $5.4 million received and recorded as revenue
related to a property that was destroyed by fire in 2017, the acquisition of
partially occupied properties during 2018 that were not yet stabilized at
December 31, 2018 and therefore are not yet included in the same store pool and
the acquisition of a land site during 2019 on which we intend to develop
industrial buildings in the future, but currently we are leasing it to tenants
and collecting ground lease rent.
                                  Three Months Ended September 30,
                                         2020                      2019        $ Change      % Change
                                                          ($ in 000's)
PROPERTY EXPENSES
Same Store Properties     $         24,075                      $ 22,595$  1,480          6.6  %
Acquired Properties                    815                           131           684        522.1  %
Sold Properties                        162                         2,770        (2,608)       (94.2) %
(Re)Developments                     3,267                           688         2,579        374.9  %
Other                                2,036                         2,212          (176)        (8.0) %

Total Property Expenses   $         30,355                      $ 28,396$  1,959          6.9  %


Property expenses include real estate taxes, repairs and maintenance, property
management, utilities, insurance and other property related expenses. Property
expenses from same store properties increased $1.5 million due to increases in
real estate taxes and insurance. Property expenses from acquired properties
increased $0.7 million due to properties acquired subsequent to December 31,
2018. Property expenses from sold properties decreased $2.6 million due to
properties sold subsequent to December 31, 2018. Property expenses from
(re)developments increased $2.6 million primarily due to the substantial
completion of developments. Property expenses from other remained relatively
unchanged.
General and administrative expense increased by $0.5 million, or 7.8% primarily
due to an increase in incentive compensation during the three months ended
September 30, 2020 as compared to the three months ended September 30, 2019.
                                       39
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                                                       Three Months Ended September
                                                                   30,
                                                          2020              2019            $ Change             % Change
                                                                                   ($ in 000's)
DEPRECIATION AND OTHER AMORTIZATION
Same Store Properties                                 $  28,306$ 25,829$  2,477                    9.6  %
Acquired Properties                                       1,496               649               847                  130.5  %
Sold Properties                                             107             2,126            (2,019)                 (95.0) %
(Re) Developments                                         3,466               890             2,576                  289.4  %
Corporate Furniture, Fixtures and Equipment and Other       994               655               339                   51.8  %
Total Depreciation and Other Amortization             $  34,369$ 30,149$  4,220                   14.0  %


Depreciation and other amortization from same store properties increased $2.5
million primarily due to accelerated depreciation and amortization taken during
the three months ended September 30, 2020 attributable to the early termination
of certain tenants' leases. Depreciation and other amortization from acquired
properties increased $0.8 million due to properties acquired subsequent to
December 31, 2018. Depreciation and other amortization from sold properties
decreased $2.0 million due to properties sold subsequent to December 31, 2018.
Depreciation and other amortization from (re)developments increased $2.6 million
primarily due to an increase in depreciation and amortization related to
completed developments. Depreciation from corporate furniture, fixtures and
equipment and other increased $0.3 million primarily due to depreciation related
to properties acquired during 2018 that were not yet stabilized at December 31,
2018 and therefore are not yet included in the same store pool as well as
depreciation on land improvements related to the acquisition of a land site
during 2019. We intend to develop industrial buildings on such land site in the
future, but currently we are leasing to tenants and collecting ground lease
rent.
For the three months ended September 30, 2020, we recognized $6.5 million of
gain on sale of real estate related to the sale of two industrial properties
comprised of approximately 0.8 million square feet of GLA. For the three months
ended September 30, 2019, we recognized $52.5 million of gain on sale of real
estate related to the sale of eight industrial property comprised of
approximately 1.6 million square feet of GLA as well as gain related to a
reclassification of an operating lease to a sales-type lease which was triggered
by a tenant that exercised an option in its lease to purchase a 0.6 million
square foot building from us located in our Phoenix market.
Interest expense remained relatively unchanged. However, the small increase was
caused by an increase in the weighted average debt balance outstanding for the
three months ended September 30, 2020 ($1,604.8 million) as compared to the
three months ended September 30, 2019 ($1,431.3 million) substantially offset by
a decrease in the weighted average interest rate for the three months ended
September 30, 2020 (3.56%) as compared to the three months ended September 30,
2019 (3.97%) and an increase in capitalized interest of $0.3 million caused by
an increase in development costs eligible for capitalization during the three
months ended September 30, 2020 as compared to the three months ended September
30, 2019.
Amortization of debt issuance costs remained relatively unchanged.
Equity in loss of Joint Ventures for both the three months ended September 30,
2020 and 2019 was not significant.
Income tax benefit (provision) for both the three months ended September 30,
2020 and 2019 was not significant.








                                       40
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Leasing Activity
The following table provides a summary of our commenced leases for the three and
nine months ended September 30, 2020. The table does not include month-to-month
leases or leases with terms less than twelve months.
                                     Number of             Square Feet                                                                            Weighted               Lease Costs                 Weighted
                                      Leases                Commenced              Net Rent Per               Straight Line Basis               Average Lease            Per Square               Average Tenant
Three Months Ended                   Commenced             (in 000's)             Square Foot (A)               Rent  Growth (B)                  Term (C)                Foot (D)                 Retention (E)
New Leases                                24                    766             $           8.71                               43.8  %                5.0              $       4.97                                N/A
Renewal Leases                            35                  1,232             $           8.16                               28.1  %                3.7              $       2.06                            68.4  %

Total / Weighted Average                  59                  1,998             $           8.37                               33.9  %                4.2              $       3.18                            68.4  %

Nine Months Ended
New Leases                                66                  1,846             $           7.36                               37.1  %                4.8              $       4.32                                N/A
Renewal Leases                           105                  4,046             $           6.89                               28.6  %                5.9              $       2.08                            75.2  %
Development / Acquisition Leases           7                  1,622             $           6.46                                   N/A               10.2                          N/A                             N/A
Total / Weighted Average                 178                  7,514             $           6.91                               31.3  %                6.6              $       2.78                            75.2  %


_______________
(A)  Net rent is the average base rent calculated in accordance with GAAP, over
the term of the lease.
(B)  Straight Line basis rent growth is a ratio of the change in net rent
(including straight line rent adjustments) on a new or renewal lease compared to
the net rent (including straight line rent adjustments) of the comparable lease.
New leases where there were no prior comparable leases are excluded.
(C)  The lease term is expressed in years. Assumes no exercise of lease renewal
options, if any.
(D)  Lease costs are comprised of the costs incurred or capitalized for
improvements of vacant and renewal spaces, as well as the commissions paid and
costs capitalized for leasing transactions. Lease costs per square foot
represent the total turnover costs expected to be incurred on the leases that
commenced during the period and do not reflect actual expenditures for the
period.
(E)  Represents the weighted average square feet of tenants renewing their
respective leases.

The following table provides a summary of our leases that commenced during the
three and nine months ended September 30, 2020, which included rent concessions
during the lease term.
                                                              Number of
                                                               Leases                   Square Feet          Rent Concessions
Three Months Ended                                      With Rent Concessions           (in 000's)                 ($)
New Leases                                                         16                        416             $       1,108
Renewal Leases                                                      5                        144                       324

Total                                                              21                        560             $       1,432

Nine Months Ended
New Leases                                                         46                      1,106             $       2,186
Renewal Leases                                                     11                        524                       645
Development / Acquisition Leases                                    6                      1,521                     2,537
Total                                                              63                      3,151             $       5,368


                                       41
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Liquidity and Capital Resources
At September 30, 2020, our cash and cash equivalents was approximately $171.1
million. We also had $724.6 million available for additional borrowings under
our Unsecured Credit Facility as of September 30, 2020.
We have considered our short-term (through September 30, 2021) liquidity needs
and the adequacy of our estimated cash flow from operations and other expected
liquidity sources to meet these needs. We have a $200.0 million term loan
maturing in July 2021. In connection with this maturity, we have two, one-year
extension options at our election, subject to the satisfaction of certain
conditions. With the exception of this payment obligation, 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, the minimum
distributions required to maintain the Company's REIT qualification under the
Code and distributions approved by the Company's Board of Directors. We
anticipate that these needs will be met with cash on hand, cash flows provided
by operating activities as well as the disposition of select assets. These needs
may also be met by the issuance of additional equity or debt securities, subject
to market condition and contractual restrictions or borrowings under our
Unsecured Credit Facility.
We expect to meet long-term (after September 30, 2021) 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, subject to market conditions.
As of October 23, 2020, we had approximately $724.6 million available for
additional borrowings under our Unsecured Credit Facility. Our Unsecured Credit
Facility 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, 2020, and we
anticipate that we will be able to operate in compliance with our financial
covenants for the next twelve months.
As discussed above, the COVID-19 pandemic outbreak has adversely impacted states
and cities where our tenants operate their businesses and where our properties
are located. The COVID-19 pandemic could have a material adverse effect on our
financial condition, results of operations and cash flows as the reduced
economic activity severely impacts certain of our tenants' business, financial
condition and liquidity and may cause certain tenants to be unable to meet their
obligations to us in full. To be judicious with our capital, with a near-term
emphasis on maintaining liquidity, during the first quarter 2020, we suspended
all new speculative vertical development projects other than completing
development and redevelopment properties that were already in progress and
expenditures required to obtain permits and other horizontal construction work.
However, based on favorable market conditions, we will commence construction on
First Park Miami and First 95 Distribution Center starting in the fourth quarter
of 2020. Our total projected costs to complete construction and stabilize the
developments and redevelopments under construction (including First Park Miami,
First 95 Distribution Center and a build-to-suit project that commenced during
the third quarter 2020), to fund developments that are complete but not fully
funded and to complete ongoing permitting and other planned horizontal
construction work at one of our land sites, is approximately $50 million for the
remainder of 2020 and approximately $100 million for 2021 and beyond.
Our senior unsecured notes have been assigned credit ratings from Standard &
Poor's, Moody's and Fitch Ratings of BBB/Stable, Baa2/Stable and BBB/Stable,
respectively. In the event of a downgrade, we believe we would continue to have
access to sufficient capital. However, our cost of borrowing would increase and
our ability to access certain financial markets may be limited.
                                       42
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Cash Flow Activity
The following table summarizes our cash flow activity for the Company for the
nine months ended September 30, 2020 and 2019:
                                                             2020           

2019

                                                                (In 

thousands)

Net cash provided by operating activities $ 190,139$ 190,179

          Net cash used in investing activities            (274,355)      

(214,935)

Net cash provided by financing activities 102,619 18,655

The following table summarizes our cash flow activity for the Operating Partnership for the nine months ended September 30, 2020 and 2019:

                                                   2020           2019
                                                      (In thousands)

Net cash provided by operating activities $ 190,699$ 190,264 Net cash used in investing activities

            (274,355)      (214,935)

Net cash provided by financing activities 102,059 18,570




Changes in cash flow for the nine months ended September 30, 2020, compared to
the prior year comparable period are described as follows:
Operating Activities: Cash provided by operating activities decreased $0.04
million for the Company (increased $0.4 million for the Operating Partnership),
primarily due to the following:
•decrease in accounts payable, accrued expenses, other liabilities, rents
received in advance and security deposits due to timing of cash payments; and
•decrease in distributions from our Joint Ventures of $16.0 million in 2020 as
compared to 2019; offset by
•decrease in tenant accounts receivable, prepaid expenses and other assets due
to timing of cash receipts;
•decrease in payments to settle derivative instruments of $3.1 million; and
•increase in NOI from same store properties, acquired properties and recently
developed properties of $27.0 million offset by a decrease in NOI due to the
disposition of real estate of $16.0 million.
Investing Activities: Cash used in investing activities increased $59.4 million,
primarily due to the following:
•increase of $15.9 million related to the acquisition and development of real
estate as well as payments for improvements and leasing commissions in 2020 as
compared to 2019;
•increase of $51.4 million related to net contributions made to our Joint
Ventures in 2020 as compared to 2019; offset by:
•increase of $6.5 million related to the collection of insurance settlement
proceeds; and
•increase of $7.3 million in net proceeds received from the disposition of real
estate and collection of a sales-type lease receivable in 2020 as compared to
2019.
Financing Activities: Cash provided by financing activities increased $84.0
million for the Company (increased $83.5 million for the Operating Partnership),
primarily due to the following:
•increase of $150.0 million related to the issuance of unsecured notes in a
private placement in 2020;
•increase of $78.7 million related to net proceeds from the issuance of
1,842,281 shares of the Company's common stock under our ATM in 2020;
•decrease in repayments of Mortgage Loans Payable of $97.9 million in 2020
compared to 2019; offset by:
•increase in net repayments of our Unsecured Credit Facility of $236.0 million
in 2020 compared to 2019; and
•increase in dividend and unit distributions of $7.0 million due to the Company
increasing the dividend rate in 2020.
                                       43
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Market Risk
The following discussion about our risk-management activities includes
"forward-looking statements" that involve risk and uncertainties. Actual results
could differ materially from those projected in the forward-looking statements.
Our business subjects us to market risk from interest rates, as described below.
Interest Rate Risk
The following analysis presents the hypothetical gain or loss in earnings, cash
flows or fair value of the financial instruments and derivative instruments
which are held by us at September 30, 2020 that are sensitive to changes in
interest rates. While this analysis may have some use as a benchmark, it should
not be viewed as a forecast.
In the normal course of business, we also face risks that are either
non-financial or non-quantifiable. Such risks principally include credit risk
and legal risk and are not represented in the following analysis.
At September 30, 2020, $1,614.2 million or 100% of our total debt, excluding
unamortized debt issuance costs, was fixed rate debt. At December 31, 2019,
$1,332.9 million or 89.4% of our total debt, excluding unamortized debt issuance
costs, was fixed rate debt. As of the same date, $158.0 million or 10.6% of our
total debt, excluding unamortized debt issuance costs, was variable rate debt.
At September 30, 2020 and December 31, 2019, the fixed rate debt amounts
includes variable rate debt that has been effectively swapped to a fixed rate
through the use of derivative instruments with an aggregate notional amount
outstanding of $460.0 million, that mitigate our exposure to our Unsecured Term
Loans' variable interest rates, which are based on LIBOR.
At September 30, 2020, we also have a derivative with a notional amount of
$150.0 million that mitigates the exposure on $150.0 million of the outstanding
balance of our Unsecured Credit Facility (the "2020 Swap"), for which the
interest rate is variable and based upon one-month LIBOR. The 2020 Swap
commenced April 1, 2020, matures on April 1, 2021 and fixes the one-month LIBOR
rate component of the interest rate of our Unsecured Credit Facility at 0.42%.
At September 20, 2020, the Unsecured Credit Facility did not have an outstanding
balance. We initially designated the 2020 Swap as a cash flow hedge. During the
three months ended September 30, 2020, however, we accelerated the
reclassification of the fair value of the 2020 Swap from other comprehensive
income to earnings since the hedged forecasted transaction is no longer expected
to be probable to occur. The accelerated loss recorded on the 2020 Swap for the
three months ended September 30, 2020 was not significant. Also, during the nine
months ended September 30, 2020, in anticipation of refinancing our $200.0
million Unsecured Term Loan maturing in January 2021 (see Note 4), we entered
into interest rate swaps (the "2021 Swaps") with an aggregate notional value of
$200.0 million which fix the one-month LIBOR rate at 0.99%. The 2021 Swap's
effective period commences February 1, 2021 and matures on February 2, 2026. We
designated the 2021 Swaps as cash flow hedges.
The use of derivative financial instruments allows us to manage the risks
increases in interest rates would have on our earnings and cash flows.
Currently, we do not enter into financial instruments for trading or other
speculative purposes.
For fixed rate debt, changes in interest rates generally affect the fair value
of the debt, but not our earnings or cash flows. Conversely, for variable rate
debt, changes in the base interest rate used to calculate the all-in interest
rate generally do not impact the fair value of the debt, but would affect our
future earnings and cash flows. The interest rate risk and changes in fair
market value of fixed rate debt generally do not have a significant impact on us
until we are required to refinance such debt. See Note 4 to the Consolidated
Financial Statements for a discussion of the maturity dates of our various fixed
rate debt.
Our variable rate debt is subject to risk based upon prevailing market interest
rates. If the LIBOR rates relevant to our variable rate debt were to have
increased 10%, we estimate that our interest expense during the nine months
ended September 30, 2020 would have increased by approximately $0.09 million
based on our average outstanding floating-rate debt during the nine months ended
September 30, 2020. Additionally, if weighted average interest rates on our
weighted average fixed rate debt during the nine months ended September 30, 2020
were to have increased by 10% due to refinancing, interest expense would have
increased by approximately $4.1 million during the nine months ended September
30, 2020.
As of September 30, 2020, the estimated fair value of our debt was approximately
$1,712.4 million based on our estimate of the then-current market interest
rates.




                                       44
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Supplemental Earnings Measure
Investors in and industry analysts following the real estate industry utilize
funds from operations ("FFO") and net operating income ("NOI") as supplemental
operating performance measures of an equity REIT. Historical cost accounting for
real estate assets in accordance with accounting principles generally accepted
in the United States of America ("GAAP") implicitly assumes that the value of
real estate assets diminishes predictably over time through depreciation. Since
real estate values instead have historically risen or fallen with market
conditions, many industry analysts and investors prefer to supplement operating
results that use historical cost accounting with measures such as FFO and NOI,
among others. We provide information related to FFO and same store NOI ("SS
NOI") both because such industry analysts are interested in such information,
and because our management believes FFO and SS NOI are important performance
measures. FFO and SS NOI are factors used by management in measuring our
performance, including for purposes of determining the compensation of our
executive officers under our 2020 incentive compensation plan.
Neither FFO nor SS NOI should be considered as a substitute for net income, or
any other measures derived in accordance with GAAP. Neither FFO nor SS NOI
represents cash generated from operating activities in accordance with GAAP and
neither should be considered as an alternative to cash flow from operating
activities as a measure of our liquidity, nor is either indicative of funds
available for our cash needs, including our ability to make cash distributions.
Funds From Operations
The National Association of Real Estate Investment Trusts ("NAREIT") has
recognized and defined for the real estate industry a supplemental measure of
REIT operating performance, FFO, that excludes historical cost depreciation,
among other items, from net income determined in accordance with GAAP. FFO is a
non-GAAP financial measure. FFO is calculated by us in accordance with the
definition adopted by the Board of Governors of NAREIT and may not be comparable
to other similarly titled measures of other companies. In accordance with the
restated NAREIT definition of FFO, we calculate FFO to be equal to net income
available to First Industrial Realty Trust, Inc.'s common stockholders and
participating securities, plus depreciation and other amortization of real
estate, plus impairment of real estate, minus gain or plus loss on sale of real
estate, net of any income tax provision or benefit associated with the sale of
real estate. We also exclude the same adjustments from our share of net income
from unconsolidated joint ventures.
Management believes that the use of FFO available to common stockholders and
participating securities, combined with net income (which remains the primary
measure of performance), improves the understanding of operating results of
REITs among the investing public and makes comparisons of REIT operating results
more meaningful. Management believes that, by excluding gains or losses related
to sales of real estate assets, impairment of real estate assets and real estate
asset depreciation and amortization, investors and analysts are able to identify
the operating results of the long-term assets that form the core of a REIT's
activity and use these operating results for assistance in comparing these
operating results between periods or to those of different companies.
The following table shows a reconciliation of net income available to common
stockholders and participating securities to the calculation of FFO available to
common stockholders and participating securities for the three and nine months
ended September 30, 2020 and 2019.
                                                                                                                Nine Months Ended
                                                  Three Months Ended September 30,                                September 30,
                                                      2020                2019               2020                   2019
                                                           (In thousands)                                         (In thousands)
Net Income Available to First Industrial Realty
Trust, Inc.'s Common Stockholders and
Participating Securities                          $   35,959$  78,311$ 112,262          $         141,914
Adjustments:
Depreciation and Other Amortization of Real
Estate                                                34,152             29,993             96,921                     89,451

Gain on Sale of Real Estate                           (6,525)           (52,489)           (29,594)                   (53,378)
Gain on Sale of Real Estate from Joint Ventures            -                  -                  -                    (16,714)
Income Tax Provision - Allocable to Gain on Sale
of Real Estate from Joint Ventures                         -                  -                  -                      3,095
Noncontrolling Interest Share of Adjustments            (578)               541             (1,401)                      (463)
Funds from Operations Available to First
Industrial Realty Trust, Inc.'s Common
Stockholders and Participating Securities         $   63,008$  56,356$ 178,188          $         163,905


                                       45
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Same Store Net Operating Income
SS NOI is a non-GAAP financial measure that provides a measure of rental
operations and, as calculated by us, that does not factor in depreciation and
amortization, general and administrative expense, interest expense, income tax
benefit and expense, and equity in income or loss from our joint ventures. We
define SS NOI as revenues minus property expenses such as real estate taxes,
repairs and maintenance, property management, utilities, insurance and other
expenses, minus the NOI of properties that are not same store properties and
minus the impact of straight-line rent, above and below market rent amortization
and lease termination fees. We exclude straight-line rent and above (below)
market rent in calculating SS NOI because we believe it provides a better
measure of actual cash basis rental growth for a year-over-year comparison. As
so defined, SS NOI may not be comparable to same store net operating income or
similar measures reported by other REITs that define same store properties or
NOI differently. The major factors influencing SS NOI are occupancy levels,
rental rate increases or decreases and tenant recoveries increases or decreases.
Our success depends largely upon our ability to lease space and to recover the
operating costs associated with those leases from our tenants.
The following table shows a reconciliation of the same store revenues and
property expenses disclosed in the results of operations (and reconciled to
revenues and expenses reflected on the statements of operations) to SS NOI for
the three and nine months ended September 30, 2020 and 2019.
                                      Three Months Ended September
                                                  30,                                                            Nine Months Ended September 30,
                                         2020              2019             % Change             2020                2019               % Change
                                             (In thousands)                                                               (In thousands)
Same Store Revenues                  $  96,406$ 94,042$ 286,961$    280,142
Same Store Property Expenses           (24,075)          (22,595)                              (69,869)              (69,148)
Same Store Net Operating Income
Before Same Store Adjustments        $  72,331$ 71,447              1.2%           $ 217,092$    210,994              2.9%
Same Store Adjustments:

Straight-line Rent                        (357)              (95)                                 (383)               (4,826)
Above / Below Market Rent
Amortization                              (231)             (265)                                 (711)                 (789)
Lease Termination Fees                     (15)             (246)                                 (717)                 (711)

Same Store Net Operating Income      $  71,728$ 70,841              1.3%           $ 215,281$    204,668              5.2%



Subsequent Events
From October 1, 2020 to October 23, 2020, we sold two industrial properties for
gross proceeds of $5.6 million, excluding transaction costs.
From October 1, 2020 to October 23, 2020, Joint Venture I sold two land parcels
for gross proceeds of $22.4 million, excluding transaction costs.


                                       46

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