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FIRST INDUSTRIAL REALTY TRUST INC - Annual Report: 2007 (Form 10-K)

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-K
 
     
þ
  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
    For the fiscal year ended December 31, 2007
or
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
(Address of principal executive offices)
  60606
(Zip Code)
 
(312) 344-4300
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Common Stock
(Title of class)
 
New York Stock Exchange
(Name of exchange on which registered)
 
Depositary Shares Each Representing 1/10,000 of a Share of 7.25% Series J Cumulative Preferred Stock
Depositary Shares Each Representing 1/10,000 of a Share of 7.25% Series K Cumulative Preferred Stock
(Title of class)
 
New York Stock Exchange
(Name of exchange on which registered)
 
Securities registered pursuant to Section 12(g) of the Act:
None
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes þ     No o
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.  Yes o     No þ
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No o
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  þ
 
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
(Do not check if a smaller reporting company)
  Smaller reporting company o
 
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
 
The aggregate market value of the voting and non-voting stock held by non-affiliates of the Registrant was approximately $1,706.2 million based on the closing price on the New York Stock Exchange for such stock on June 30, 2007.
 
At February 15, 2008, 43,574,385 shares of the Registrant’s Common Stock, $0.01 par value, were outstanding.
 
DOCUMENTS INCORPORATED BY REFERENCE
 
Part III incorporates certain information by reference to the Registrant’s definitive proxy statement expected to be filed with the Securities and Exchange Commission no later than 120 days after the end of the Registrant’s fiscal year.
 


 

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
TABLE OF CONTENTS
 
                 
        Page
 
PART I.
 
Item 1.
    Business     3  
 
Item 1A.
    Risk Factors     7  
 
Item 1B.
    Unresolved SEC Comments     13  
 
Item 2.
    Properties     13  
 
Item 3.
    Legal Proceedings     20  
 
Item 4.
    Submission of Matters to a Vote of Security Holders     20  
 
PART II.
 
Item 5.
    Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities     21  
 
Item 6.
    Selected Financial Data     25  
 
Item 7.
    Management’s Discussion and Analysis of Financial Condition and Results of Operations     26  
 
Item 7A.
    Quantitative and Qualitative Disclosures About Market Risk     41  
 
Item 8.
    Financial Statements and Supplementary Data     42  
 
Item 9.
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure     42  
 
Item 9A.
    Controls and Procedures     42  
 
Item 9B.
    Other Information     42  
 
PART III.
 
Item 10.
    Directors, Executive Officers and Corporate Governance     43  
 
Item 11.
    Executive Compensation     43  
 
Item 12.
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters     43  
 
Item 13.
    Certain Relationships and Related Transactions and Director Independence     43  
 
Item 14.
    Principal Accountant Fees and Services     43  
 
PART IV.
 
Item 15.
    Exhibits and Financial Statement Schedules     43  
Signatures
    S-31  
 
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. 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” or similar expressions. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects include, but are not limited to, changes in: international, national, regional and local economic conditions generally and the real estate market specifically, legislative/regulatory changes (including changes to laws governing the taxation of real estate investment trusts), availability of financing, interest rates, competition, supply and demand for industrial properties in our current and proposed market areas, potential environmental liabilities, slippage in development or lease-up schedules, tenant credit risks, higher-than-expected costs and changes in general accounting principles, policies and guidelines applicable to real estate investment trusts and risks related to doing business internationally (including foreign currency exchange risks). These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Further information concerning the Company and its business, including additional factors that could materially affect our financial results, is included in Item 1A, “Risk Factors” and in our other filings with the Securities and Exchange Commission. 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,” and our taxable REIT subsidiary, First Industrial Investment, Inc., as the “TRS.”


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PART I
 
THE COMPANY
 
Item 1.   Business
 
General
 
First Industrial Realty Trust, Inc. is a Maryland corporation organized on August 10, 1993, and is a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986 (the “Code”). We are a self-administered and fully integrated real estate company which owns, manages, acquires, sells, develops, and redevelops industrial real estate. As of December 31, 2007, our in-service portfolio consisted of 403 light industrial properties, 125 R&D/flex properties, 162 bulk warehouse properties, 89 regional warehouse properties and 25 manufacturing properties containing approximately 64.0 million square feet of gross leasable are (“GLA”) located in 28 states in the United States and one province in Canada. Our in-service portfolio includes all properties other than developed, redeveloped and acquired properties that have not yet reached stabilized occupancy (generally defined as properties that are 90% leased).
 
Our interests in our properties and land parcels are held through partnerships, corporations, and limited liability companies controlled, directly or indirectly, by the Company, including the Operating Partnership, of which we are the sole general partner with an approximate 87.1% and 87.3% ownership interest at December 31, 2007 and December 31, 2006, respectively, as well as, among others, the TRS which is a taxable REIT subsidiary of which the Operating Partnership is the sole stockholder, all of whose operating data is consolidated with that of the Company as presented herein.
 
We also own minority equity interests in, and provide various services to, five joint ventures which 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” and the “2006 Land/Development Joint Venture”). We also owned economic interests in and provided various services to a sixth joint venture, (the “1998 Core Joint Venture”). On January 31, 2007 we purchased the 90% equity interest from the institutional investor in the 1998 Core Joint Venture. Effective January 31, 2007, the assets and liabilities and results of operations of the 1998 Core Joint Venture are consolidated with the Company since we own 100% of the equity interest. Prior to January 31, 2007, the 1998 Core Joint Venture was accounted for under the equity method of accounting. Additionally, in December 2007, we entered into two new joint ventures with institutional investors to invest in, own, develop, redevelop and operate industrial properties, (the “2007 Canada Joint Venture” and the “2007 Europe Joint Venture” together with 2003 Net Lease Joint Venture, 2005 Development/Repositioning Joint Venture, 2005 Core Joint Venture, the 2006 Net Lease Co-Investment Program, the 2006 Land/Development Joint Venture and the 1998 Core Joint Venture, the “Joint Ventures”). We own a 10% interest in and will provide property management, asset management, development management and leasing management services to the 2007 Canada Joint Venture and the 2007 Europe Joint Venture. As of December 31, 2007, the 2007 Canada Joint Venture and the 2007 Europe Joint Venture did not own any properties.
 
The operating data of our Joint Ventures is not consolidated with that of the Company as presented herein. However, the operating data of the 2005 Development/Repositioning Joint Venture, referred to as FirstCal Industrial, LLC, is separately presented on a consolidated basis, separate from that of the Company.
 
We utilize an operating approach which combines the effectiveness of decentralized, locally-based property management, acquisition, sales and development functions with the cost efficiencies of centralized acquisition, sales and development support, capital markets expertise, asset management and fiscal control systems. At February 15, 2008, we had approximately 518 employees.
 
We have grown and will seek to continue to grow through the development and acquisition of additional industrial properties, through additional joint venture investments and through our corporate services program.
 
We maintain a website at www.firstindustrial.com. Information on this website shall not constitute part of this Form 10-K. Copies of our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports


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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 (the “SEC”). 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 shall also be posted to our website. Please direct requests as follows:
 
First Industrial Realty Trust, Inc.
311 S. Wacker, Suite 4000
Chicago, IL 60606
Attn: Investor Relations
 
Business Objectives and Growth Plans
 
Our fundamental business objective is to maximize the total return to our stockholders through increases in per share distributions and increases in the value of our properties and operations. Our growth plans include the following elements:
 
  •  Internal Growth.  We seek to grow internally by (i) increasing revenues by renewing or re-leasing spaces subject to expiring leases at higher rental levels; (ii) increasing occupancy levels at properties where vacancies exist and maintaining occupancy elsewhere; (iii) controlling and minimizing property operating and general and administrative expenses; (iv) renovating existing properties; and (v) increasing ancillary revenues from non-real estate sources.
 
  •  External Growth.  We seek to grow externally through (i) the development of industrial properties; (ii) the acquisition of portfolios of industrial properties, industrial property businesses or individual properties which meet our investment parameters and target markets; (iii) additional joint venture investments; and (iv) the expansion of our properties.
 
  •  Corporate Services.  Through our corporate services program, we build for, purchase from, and lease and sell industrial properties to companies that need industrial facilities. We seek to grow this business by targeting both large and middle-market public and private companies.
 
Business Strategies
 
We utilize the following six strategies in connection with the operation of our business:
 
  •  Organization Strategy.  We implement our decentralized property operations strategy through the deployment of experienced regional management teams and local property managers. Each operating region is headed by a managing director who is a senior executive officer of, and has an equity interest in, the Company. We provide acquisition, development and financing assistance, asset management oversight and financial reporting functions from our headquarters in Chicago, Illinois to support our regional operations. We believe the size of our portfolio enables us to realize operating efficiencies by spreading overhead among many properties and by negotiating purchasing discounts.
 
  •  Market Strategy.  Our market strategy is to concentrate on the top industrial real estate markets in the United States and select industrial real estate markets in Canada, the Netherlands and Belgium. These markets have one or more of the following characteristic: (i) strong industrial real estate fundamentals, including increased industrial demand expectations; (ii) a history of and outlook for continued economic growth and industry diversity; and (iii) sufficient size to provide for ample transaction volume.
 
  •  Leasing and Marketing Strategy.  We have an operational management strategy designed to enhance tenant satisfaction and portfolio performance. We pursue an active leasing strategy, which includes broadly marketing available space, seeking to renew existing leases at higher rents per square foot and seeking leases which provide for the pass-through of property-related expenses to the tenant. We also


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  have local and national marketing programs which focus on the business and real estate brokerage communities and national tenants.
 
  •  Acquisition/Development Strategy.  Our acquisition/development strategy is to invest in properties and other assets with higher yield potential in the top industrial real estate markets in the United States and select industrial real estate markets in Canada, the Netherlands and Belgium. Of the 804 industrial properties in our in-service portfolio at December 31, 2007, 112 properties have been developed by us or our former management. We will continue to leverage the development capabilities of our management, many of whom are leading industrial property developers in their respective markets.
 
  •  Disposition Strategy.  We continuously evaluate local market conditions and property-related factors in all of our markets for purposes of identifying assets suitable for disposition.
 
  •  Financing Strategy.  We plan on utilizing a portion of net sales proceeds from property sales, borrowings under our 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. We also continually evaluate joint venture arrangements as another source of capital. As of February 15, 2008, we had approximately $47.9 million available for additional borrowings under our unsecured line of credit (the “Unsecured Line of Credit”).
 
Recent Developments
 
In 2007, we acquired or placed in-service developments totaling 119 industrial properties and acquired several parcels of land for a total investment of approximately $609.8 million. We also sold 164 industrial properties and several parcels of land for a gross sales price of approximately $881.3 million. At December 31, 2007, we owned 804 in-service industrial properties containing approximately 64.0 million square feet of GLA.
 
In December 2007, we entered into two new joint ventures, the 2007 Canada Joint Venture and the 2007 Europe Joint Venture.
 
During the year ended December 31, 2007, we repurchased 1,797,714 shares of our own stock at an average price per share of $38.62, including brokerage commissions.
 
During 2007, in conjunction with the acquisition of several industrial properties, we assumed mortgage loans payable in the aggregate of $38.6 million; these mortgage loans payable were paid off and retired in 2007.
 
On May 7, 2007, we issued $150.0 million of senior unsecured debt which matures on May 15, 2017 and bears interest at a rate of 5.95% (the “2017 II Notes”). The issue price of the 2017 II Notes was 99.730%. In April 2006, we entered into interest rate protection agreements to fix the interest rate on the 2017 II Notes prior to issuance. The effective portion of the interest rate protection agreements were settled on May 1, 2007 for a payment of $4.3 million, which is included in other comprehensive income and will be amortized over the life of the notes.
 
On May 15, 2007, we paid off and retired our 7.60% 2007 Unsecured Notes in the amount of $150.0 million.
 
On September 28, 2007, we amended and restated our Unsecured Line of Credit. The Unsecured Line of Credit matures on September 28, 2012, has a borrowing capacity of $500.0 million (with the right, subject to certain conditions, to increase the borrowing capacity up to $700.0 million) and bears interest at a floating rate of LIBOR plus 0.475%, or the prime rate, at our election. Up to $100.0 million of the $500.0 million capacity may be borrowed in foreign currencies, including the Canadian dollar, Euro, British Sterling and Japanese Yen.
 
On January 31, 2007, we purchased the 90% equity interest in the 1998 Core Joint Venture from our partner. We paid $18.5 million in cash and assumed $30.3 million in mortgage loans payable. As of December 31, 2007, all of these mortgage loans payable were paid off and retired.


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On February 27, 2007, we redeemed the 85% equity interest in one legal entity which owned one property from the institutional investor in the 2003 Net Lease Joint Venture. In connection with the redemption, we assumed a $8.3 million mortgage loan payable and $3.0 million in other liabilities. The mortgage loan payable was subsequently paid off in February 2007.
 
Future Property Acquisitions, Developments and Property Sales
 
We have an active acquisition and development program through which we are continually engaged in identifying, negotiating and consummating portfolio and individual industrial property acquisitions and developments. As a result, we are currently engaged in negotiations relating to the possible acquisition and development of certain industrial properties.
 
We also sell properties based on market conditions and property related factors. As a result, we are currently engaged in negotiations relating to the possible sale of certain industrial properties in our portfolio.
 
When evaluating potential industrial property acquisitions and developments, as well as potential industrial property sales, we will consider such factors as: (i) the geographic area and type of property; (ii) the location, construction quality, condition and design of the property; (iii) the potential for capital appreciation of the property; (iv) the ability of the Company to improve the property’s performance through renovation; (v) the terms of tenant leases, including the potential for rent increases; (vi) the potential for economic growth and the tax and regulatory environment of the area in which the property is located; (vii) the potential for expansion of the physical layout of the property and/or the number of sites; (viii) the occupancy and demand by tenants for properties of a similar type in the vicinity; and (ix) competition from existing properties and the potential for the construction of new properties in the area.
 
INDUSTRY
 
Industrial properties are typically used for the design, assembly, packaging, storage and distribution of goods and/or the provision of services. As a result, the demand for industrial space in the United States is related to the level of economic output. Historically, occupancy rates for industrial property in the United States have been higher than those for other types of commercial property. We believe that the higher occupancy rate in the industrial property sector is a result of the construction-on-demand nature of, and the comparatively short development time required for, industrial property. For the five years ended December 31, 2007, the occupancy rates for industrial properties in the United States have ranged from 88.2%* to 90.8%*, with an occupancy rate of 90.6%* at December 31, 2007.
 
 
* Source: Torto Wheaton Research


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Item 1A.   Risk Factors
 
Risk Factors
 
Our operations involve various risks that could adversely affect our financial condition, results of operations, cash flow, ability to pay distributions on our common stock and the market price of our common stock. These risks, among others contained in our other filings with the SEC, include:
 
Real estate investments’ value fluctuates depending on conditions in the general economy and the real estate business. These conditions may limit the Company’s revenues and available cash.
 
The factors that affect the value of our real estate and the revenues we derive from our properties include, among other things:
 
  •  general economic conditions;
 
  •  local, regional, national and international economic conditions and other events and occurrences that affect the markets in which we own properties;
 
  •  local conditions such as oversupply or a reduction in demand in an area;
 
  •  the attractiveness of the properties to tenants;
 
  •  tenant defaults;
 
  •  zoning or other regulatory restrictions;
 
  •  competition from other available real estate;
 
  •  our ability to provide adequate maintenance and insurance; and
 
  •  increased operating costs, including insurance premiums and real estate taxes.
 
Many real estate costs are fixed, even if income from properties decreases.
 
Our financial results depend on leasing space to tenants on terms favorable to us. Our income and funds available for distribution to our stockholders will decrease if a significant number of our tenants cannot pay their rent or we are unable to lease properties on favorable terms. In addition, if a tenant does not pay its rent, we may not be able to enforce our rights as landlord without delays and we may incur substantial legal costs. Costs associated with real estate investment, such as real estate taxes and maintenance costs, generally are not reduced when circumstances cause a reduction in income from the investment.
 
The Company may be unable to sell properties when appropriate because real estate investments are not as liquid as certain other types of assets.
 
Real estate investments generally cannot be sold quickly and, therefore, will tend to limit our ability to adjust our property portfolio promptly in response to changes in economic or other conditions. The inability to respond promptly to changes in the performance of our property portfolio could adversely affect our financial condition and ability to service debt and make distributions to our stockholders. In addition, like other companies qualifying as REITs under the Internal Revenue Code (the “Code”), we must comply with the safe harbor rules relating to the number of properties disposed of in a year, their tax basis and the cost of improvements made to the properties, or meet other tests which enable a REIT to avoid punitive taxation on the sale of assets. Thus, our ability at any time to sell assets may be restricted.
 
The Company may be unable to sell properties on advantageous terms.
 
We have sold to third parties a significant number of properties in recent years and, as part of our business, we intend to continue to sell properties to third parties. Our ability to sell properties on advantageous terms depends on factors beyond our control, including competition from other sellers and the availability of attractive financing for potential buyers of our properties. If we are unable to sell properties on favorable terms


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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.
 
We have also sold to our joint ventures a significant number of properties in recent years and, as part of our business, we intend to continue to sell or contribute properties to our joint ventures as opportunities arise. If we do not have sufficient properties available that meet the investment criteria of current or future joint ventures, or if the joint ventures have reduced or do not have access to capital on favorable terms, then such sales could be delayed or prevented, adversely affecting our financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, our common stock.
 
The Company may be unable to acquire properties on advantageous terms or acquisitions may not perform as the Company expects.
 
We acquire and intend to continue to acquire primarily industrial properties. The acquisition of properties entails various risks, including the risks that our investments may not perform as expected and that our cost estimates for bringing an acquired property up to market standards may prove inaccurate. Further, we face significant competition for attractive investment opportunities from other well-capitalized real estate investors, including both publicly-traded REITs and private investors. This competition increases as investments in real estate become attractive relative to other forms of investment. As a result of competition, we may be unable to acquire additional properties as we desire or the purchase price may be elevated. In addition, we expect to finance future acquisitions through a combination of borrowings under the Unsecured Line of Credit, proceeds from equity or debt offerings by the Company and proceeds from property sales, which may not be available and which could adversely affect our cash flow. Any of the above risks could adversely affect our financial condition, results of operations, cash flow and ability to pay dividends on, and the market value of, our common stock.
 
The Company may be unable to complete development and re-development projects on advantageous terms.
 
As part of our business, we develop new and re-develop existing properties. In addition, we have sold to third parties or sold to our joint ventures a significant number of development and re-development properties in recent years, and we intend to continue to sell such properties to third parties or to sell or contribute such properties to our joint ventures as opportunities arise. The real estate development and re-development business involves significant risks that could adversely affect our financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of our common stock, which include:
 
  •  we may not be able to obtain financing for development projects on favorable terms and complete construction on schedule or within budget, resulting in increased debt service expense and construction costs and delays in leasing the properties and generating cash flow;
 
  •  we may not be able to obtain, or may experience delays in obtaining, all necessary zoning, land-use, building, occupancy and other governmental permits and authorizations;
 
  •  the properties may perform below anticipated levels, producing cash flow below budgeted amounts and limiting our ability to sell such properties to third parties or to sell such properties to our joint ventures.
 
The Company may be unable to renew leases or find other lessees.
 
We are subject to the risks that, upon expiration, leases may not be renewed, the space subject to such leases may not be relet or the terms of renewal or reletting, including the cost of required renovations, may be less favorable than expiring lease terms. If we were unable to promptly renew a significant number of expiring leases or to promptly relet the space covered by such leases, or if the rental rates upon renewal or reletting were significantly lower than the current rates, our financial condition, results of operation, cash flow and ability to pay dividends on, and the market price of our common stock could be adversely affected. As of


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December 31, 2007, leases with respect to approximately 12.6 million, 10.1 million and 9.6 million square feet of GLA, representing 21%, 17% and 16% of GLA, expire in 2008, 2009 and 2010, respectively.
 
The Company might fail to qualify or remain qualified as a REIT.
 
We intend to operate so as to qualify as a REIT under the Code. Although we believe that we are organized and will operate in a manner so as to qualify as a REIT, qualification as a REIT involves the satisfaction of numerous requirements, some of which must be met on a recurring basis. These requirements are established under highly technical and complex Code provisions of which there are only limited judicial or administrative interpretations and involve the determination of various factual matters and circumstances not entirely within our control.
 
If we were to fail to qualify as a REIT in any taxable year, we would be subject to federal income tax, including any applicable alternative minimum tax, on our taxable income at corporate rates. This could result in a discontinuation or substantial reduction in dividends to stockholders and in cash to pay interest and principal on debt securities that we issue. Unless entitled to relief under certain statutory provisions, we would be disqualified from electing treatment as a REIT for the four taxable years following the year during which we failed to qualify as a REIT.
 
Certain property transfers may generate prohibited transaction income, resulting in a penalty tax on the gain attributable to the transaction.
 
As part of our business, we sell properties to third parties or sell properties to our joint ventures as opportunities arise. Under the Code, a 100% penalty tax could be assessed on the gain resulting from sales of properties that are deemed to be prohibited transactions. The question of what constitutes a prohibited transaction is based on the facts and circumstances surrounding each transaction. The IRS could contend that certain sales of properties by us are prohibited transactions. While we do not believe that the IRS would prevail in such a dispute, if the matter were successfully argued by the IRS, the 100% penalty tax could be assessed against the profits from these transactions. In addition, any income from a prohibited transaction may adversely affect our ability to satisfy the income tests for qualification as a REIT.
 
The REIT distribution requirements may require the Company to turn to external financing sources.
 
We could, in certain instances, have taxable income without sufficient cash to enable us to meet the distribution requirements of the REIT provisions of the Code. In that situation, we could be required to borrow funds or sell properties on adverse terms in order to meet those distribution requirements. In addition, because we must distribute to our stockholders at least 90% of our REIT taxable income each year, our ability to accumulate capital may be limited. Thus, in connection with future acquisitions, we may be more dependent on outside sources of financing, such as debt financing or issuances of additional capital stock, which may or may not be available on favorable terms. Additional debt financings may substantially increase our leverage and additional equity offerings may result in substantial dilution of stockholders’ interests.
 
Debt financing, the degree of leverage and rising interest rates could reduce the Company’s cash flow.
 
Where possible, we intend to continue to use leverage to increase the rate of return on our investments and to allow us to make more investments than we otherwise could. Our use of leverage presents an additional element of risk in the event that the cash flow from our properties is insufficient to meet both debt payment obligations and the distribution requirements of the REIT provisions of the Code. In addition, rising interest rates would reduce our cash flow by increasing the amount of interest due on our floating rate debt and on our fixed rate debt as it matures and is refinanced.
 
Cross-collateralization of mortgage loans could result in foreclosure on substantially all of the Company’s properties if the Company is unable to service its indebtedness.
 
If the Operating Partnership decides to obtain additional debt financing in the future, it may do so through mortgages on some or all of its properties. These mortgages may be issued on a recourse, non-recourse or


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cross-collateralized basis. Cross-collateralization makes all of the subject properties available to the lender in order to satisfy our debt. Holders of indebtedness that is so secured will have a claim against these properties. To the extent indebtedness is cross-collateralized, lenders may seek to foreclose upon properties that are not the primary collateral for their loan, which may, in turn, result in acceleration of other indebtedness secured by properties. Foreclosure of properties would result in a loss of income and asset value to us, making it difficult for us to meet both debt payment obligations and the distribution requirements of the REIT provisions of the Code. As of December 31, 2007, none of our current indebtedness was cross-collateralized.
 
The Company may have to make lump-sum payments on its existing indebtedness.
 
We are required to make the following lump-sum or “balloon” payments under the terms of some of our indebtedness, including indebtedness of the Operating Partnership:
 
  •  $50.0 million aggregate principal amount of 7.75% Notes due 2032 (the “2032 Notes”)
 
  •  $200.0 million aggregate principal amount of 7.60% Notes due 2028 (the “2028 Notes”)
 
  •  approximately $15.0 million aggregate principal amount of 7.15% Notes due 2027 (the “2027 Notes”)
 
  •  $150.0 million aggregate principal amount of 5.95% Notes due 2017 (the “2017 II Notes”)
 
  •  $100.0 million aggregate principal amount of 7.50% Notes due 2017 (the “2017 Notes”)
 
  •  $200.0 million aggregate principal amount of 5.75% Notes due 2016 (the “2016 Notes”)
 
  •  $125.0 million aggregate principal amount of 6.42% Notes due 2014 (the “2014 Notes”)
 
  •  $200.0 million aggregate principal amount of 6.875% Notes due 2012 (the “2012 Notes”)
 
  •  $200.0 million aggregate principal amount of 4.625% Notes due 2011 (the “2011 Exchangeable Notes”)
 
  •  $200.0 million aggregate principal amount of 7.375% Notes due 2011 (the “2011 Notes”)
 
  •  $125.0 million aggregate principal amount of 5.25% Notes due 2009 (the “2009 Notes”)
 
  •  $500.0 million Unsecured Line of Credit under which we may borrow to finance the acquisition of additional properties and for other corporate purposes, including working capital.
 
The Unsecured Line of Credit provides for the repayment of principal in a lump-sum or “balloon” payment at maturity in 2012. Under the Unsecured Line of Credit, we have the right, subject to certain conditions, to increase the aggregate commitment by up to $200.0 million. As of December 31, 2007, $322.1 million was outstanding under the Unsecured Line of Credit at a weighted average interest rate of 5.787%.
 
Our ability to make required payments of principal on outstanding indebtedness, whether at maturity or otherwise, may depend on our ability either to refinance the applicable indebtedness or to sell properties. We have no commitments to refinance the 2009 Notes, the 2011 Notes, the 2011 Exchangeable Notes, the 2012 Notes, the 2014 Notes, the 2016 Notes, the 2017 Notes, the 2017 II Notes, the 2027 Notes, the 2028 Notes, the 2032 Notes or the Unsecured Line of Credit. Some of our existing debt obligations, other than those discussed above, are secured by our properties, and therefore such obligations will permit the lender to foreclose on those properties in the event of a default.
 
There is no limitation on debt in the Company’s organizational documents.
 
Our organizational documents do not contain any limitation on the amount or percentage of indebtedness we may incur. Accordingly, we could become more highly leveraged, resulting in an increase in debt service that could adversely affect our ability to make expected distributions to stockholders and in an increased risk of default on our obligations. As of December 31, 2007, our ratio of debt to our total market capitalization was 49.2%. We compute that percentage by calculating our total consolidated debt as a percentage of the aggregate market value of all outstanding shares of our common stock, assuming the exchange of all limited


10


 

partnership units of the Operating Partnership for common stock, plus the aggregate stated value of all outstanding shares of preferred stock and total consolidated debt.
 
Rising interest rates on the Company’s Unsecured Line of Credit could decrease the Company’s available cash.
 
Our Unsecured Line of Credit bears interest at a floating rate. As of December 31, 2007, our Unsecured Line of Credit had an outstanding balance of $322.1 million at a weighted average interest rate of 5.787%. Our Unsecured Line of Credit bears interest at the prime rate or at the LIBOR plus 0.475%, at our election. Based on an outstanding balance on our Unsecured Line of Credit as of December 31, 2007, a 10% increase in interest rates would increase interest expense by $1.9 million on an annual basis. Increases in the interest rate payable on balances outstanding under our Unsecured Line of Credit would decrease our cash available for distribution to stockholders.
 
Earnings and cash dividends, asset value and market interest rates affect the price of the Company’s common stock.
 
As a REIT, the market value of our common stock, in general, is based primarily upon the market’s perception of our growth potential and our current and potential future earnings and cash dividends. The market value of our common stock is based secondarily upon the market value of our underlying real estate assets. For this reason, shares of our common stock may trade at prices that are higher or lower than our net asset value per share. To the extent that we retain operating cash flow for investment purposes, working capital reserves, or other purposes, these retained funds, while increasing the value of our underlying assets, may not correspondingly increase the market price of our common stock. Our failure to meet the market’s expectations with regard to future earnings and cash dividends likely would adversely affect the market price of our common stock. Further, the distribution yield on the common stock (as a percentage of the price of the common stock) relative to market interest rates may also influence the price of our common stock. An increase in market interest rates might lead prospective purchasers of our common stock to expect a higher distribution yield, which would adversely affect the market price of our common stock. Additionally, if the market price of our common stock declines significantly, then we might breach certain covenants with respect to our debt obligations, which could adversely affect our liquidity and ability to make future acquisitions and our ability to pay dividends to our stockholders.
 
The Company may incur unanticipated costs and liabilities due to environmental problems.
 
Under various federal, state and local laws, ordinances and regulations, an owner or operator of real estate may be liable for the costs of clean-up of certain conditions relating to the presence of hazardous or toxic materials on, in or emanating from a property, and any related damages to natural resources. Environmental laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of hazardous or toxic materials. The presence of such materials, or the failure to address those conditions properly, may adversely affect the ability to rent or sell the property or to borrow using a property as collateral. Persons who dispose of or arrange for the disposal or treatment of hazardous or toxic materials may also be liable for the costs of clean-up of such materials, or for related natural resource damages, at or from an off-site disposal or treatment facility, whether or not the facility is owned or operated by those persons. No assurance can be given that existing environmental assessments with respect to any of our properties reveal all environmental liabilities, that any prior owner or operator of any of the properties did not create any material environmental condition not known to us or that a material environmental condition does not otherwise exist as to any of our Company’s properties.
 
The Company’s insurance coverage does not include all potential losses.
 
We currently carry comprehensive insurance coverage including property, boiler & machinery, liability, fire, flood, terrorism, earthquake, extended coverage and rental loss as appropriate for the markets where each of our properties and their business operations are located. The insurance coverage contains policy specifications and insured limits customarily carried for similar properties and business activities. We believe our


11


 

properties are adequately insured. However, there are certain losses, including losses from earthquakes, hurricanes, floods, pollution, acts of war, acts of terrorism or riots, that are not generally insured against or that are not generally fully insured against because it is not deemed to be economically feasible or prudent to do so. If an uninsured loss or a loss in excess of insured limits occurs with respect to one or more of our properties, we could experience a significant loss of capital invested and potential revenues from these properties, and could potentially remain obligated under any recourse debt associated with the property.
 
The Company is subject to risks and liabilities in connection with its investments in properties through joint ventures.
 
As of December 31, 2007, five of our joint ventures owned approximately 19.9 million square feet of properties. As of December 31, 2007, our investment in joint ventures exceeded $57.5 million in the aggregate, and for the year ended December 31, 2007, our equity in income of joint ventures exceeded $30.0 million. Our organizational documents do not limit the amount of available funds that we may invest in joint ventures and we intend to continue to develop and acquire properties through joint ventures with other persons or entities when warranted by the circumstances. Joint venture investments, in general, involve certain risks, including:
 
  •  co-members or joint venturers may share certain approval rights over major decisions;
 
  •  co-members or joint venturers might fail to fund their share of any required capital commitments;
 
  •  co-members or joint venturers might have economic or other business interests or goals that are inconsistent with our business interests or goals that would affect our ability to operate the property;
 
  •  co-members or joint venturers may have the power to act contrary to our instructions, requests, policies or objectives, including our current policy with respect to maintaining our qualification as a real estate investment trust;
 
  •  the joint venture agreements often restrict the transfer of a member’s or joint venturer’s interest or “buy-sell” or may otherwise restrict our ability to sell the interest when we desire or on advantageous terms;
 
  •  disputes between us and our co-members or joint venturers may result in litigation or arbitration that would increase our expenses and prevent our officers and directors from focusing their time and effort on our business and subject the properties owned by the applicable joint venture to additional risk; and
 
  •  we may in certain circumstances be liable for the actions of our co-members or joint venturers.
 
The occurrence of one or more of the events described above could adversely affect our financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, our common stock.
 
In addition, joint venture investments in real estate involve all of the risks related to the ownership, acquisition, development, sale and financing of real estate discussed in the risk factors above. To the extent our investments in joint ventures are adversely affected by such risks 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.
 
We are subject to risks associated with our international operations.
 
Under our market strategy, we plan to acquire and develop properties outside of the United States, including in Canada, the Netherlands and Belgium. Our international operations will be subject to risks inherent in doing business abroad, including:
 
  •  exposure to the economic fluctuations in the locations in which we invest;
 
  •  difficulties and costs associated with complying with a wide variety of complex laws, treaties and regulations;


12


 

 
  •  revisions in tax treaties or other laws and regulations, including those governing the taxation of our international revenues;
 
  •  obstacles to the repatriation of earnings and funds;
 
  •  currency exchange rate fluctuations between the United States dollar and foreign currencies;
 
  •  restrictions on the transfer of funds; and
 
  •  national, regional and local political uncertainty.
 
We also have offices outside of the United States. Our ability to effectively establish, staff and manage these offices is subject to risks associated with employment practices, labor issues, and cultural factors that differ from those with which we are familiar. In addition, we may be subject to regulatory requirements and prohibitions that differ between jurisdictions. As we continue to expand our business globally, we may have difficulty anticipating and effectively managing these and other risks that our international operations may face, which may adversely affect our business outside the United States and our financial condition and results of operations.
 
Acquired properties may be located in new markets, where we may face risks associated with investing in an unfamiliar market.
 
When we acquire properties located outside of the United States, we may face risks associated with a lack of market knowledge or understanding of the local economy, forging new business relationships in the area and unfamiliarity with local government and permitting procedures. We work to mitigate such risks through extensive diligence and research and associations with experienced partners; however, there can be no guarantee that all such risks will be eliminated.
 
Potential fluctuations in exchange rates between the U.S. dollar and the currencies of the other countries in which we invest may adversely affect our results of operations and financial position.
 
Owning, operating and developing industrial property outside of the United States exposes the Company to the possibility of volatile movements in foreign exchange rates. Changes in foreign currencies can affect the operating results of international operations reported in US dollars and the value of the foreign assets reported in US 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. A significant depreciation in the value of the currency of one or more countries where we have a significant investment may materially affect our results of operations.
 
Item 1B.   Unresolved SEC Comments
 
None.
 
Item 2.   Properties
 
General
 
At December 31, 2007, we owned 804 in-service industrial properties containing an aggregate of approximately 64.0 million square feet of GLA in 28 states and one province in Canada, with a diverse base of more than 2,300 tenants engaged in a wide variety of businesses, including manufacturing, retail, wholesale trade, distribution and professional services. The properties are generally located in business parks that have convenient access to interstate highways and/or rail and air transportation. The weighted average age of the properties as of December 31, 2007 was approximately 20 years. We maintain insurance on our properties that we believe is adequate.
 
We classify our properties into five industrial categories: light industrial, R&D/flex, bulk warehouse, regional warehouse and manufacturing. While some properties may have characteristics which fall under more than one property type, we use what we believe is the most dominant characteristic to categorize the property.


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The following describes, generally, the different industrial categories:
 
  •  Light industrial properties are of less than 100,000 square feet, have a ceiling height of 16-21 feet, are comprised of 5%-50% of office space, contain less than 50% of manufacturing space and have a land use ratio of 4:1. The land use ratio is the ratio of the total property area to the area occupied by the building.
 
  •  R&D/flex buildings are of less than 100,000 square feet, have a ceiling height of less than 16 feet, are comprised of 50% or more of office space, contain less than 25% of manufacturing space and have a land use ratio of 4:1.
 
  •  Bulk warehouse buildings are of more than 100,000 square feet, have a ceiling height of at least 22 feet, are comprised of 5%-15% of office space, contain less than 25% of manufacturing space and have a land use ratio of 2:1.
 
  •  Regional warehouses are of less than 100,000 square feet, have a ceiling height of at least 22 feet, are comprised of 5%-15% of office space, contain less than 25% of manufacturing space and have a land use ratio of 2:1.
 
  •  Manufacturing properties are a diverse category of buildings that have a ceiling height of 10-18 feet, are comprised of 5%-15% of office space, contain at least 50% of manufacturing space and have a land use ratio of 4:1.


14


 

 
Each of the properties is wholly owned by us or our consolidated subsidiaries. The following tables summarize certain information as of December 31, 2007, with respect to our in-service properties.
 
Property Summary
 
                                                                                 
    Light Industrial     R&D/Flex     Bulk Warehouse     Regional Warehouse     Manufacturing  
          Number of
          Number of
          Number of
          Number of
          Number of
 
Metropolitan Area
  GLA     Properties     GLA     Properties     GLA     Properties     GLA     Properties     GLA     Properties  
 
Atlanta, GA(a)
    696,922       12       206,826       5       2,650,542       11       393,535       5       847,950       4  
Baltimore, MD
    989,634       16       169,660       5       383,135       3                   171,000       1  
Central PA(b)
    541,722       7                   897,000       3       117,599       3              
Chicago, IL
    1,019,409       18       174,841       3       2,346,598       12       169,989       4       421,000       2  
Cincinnati, OH
    604,389       7                   1,525,130       7       130,870       2              
Cleveland, OH
    64,000       1                   608,740       4                          
Columbus, OH(c)
    217,612       2                   2,442,967       7       98,800       1              
Dallas, TX
    2,475,044       49       454,963       18       1,762,736       16       677,433       10       128,478       1  
Denver, CO
    1,248,829       21       1,016,054       23       1,399,876       8       521,664       8       126,384       1  
Detroit, MI
    2,361,883       85       452,376       15       530,843       5       710,308       17       116,250       1  
Houston, TX
    330,322       7       111,111       5       2,233,064       13       355,793       5              
Indianapolis, IN(d,e,f,g)
    909,253       18       38,200       3       3,348,469       13       222,710       5       71,600       2  
Inland Empire, CA
                            595,940       2                          
Los Angeles, CA
    460,820       10                   374,702       3       199,555       3              
Louisville, KY
                            124,935       1                          
Miami, FL
                                        228,726       5              
Milwaukee, WI
    263,567       6       93,705       2       838,129       6       129,557       2              
Minneapolis/St. Paul, MN(h,i)
    1,567,075       18       419,834       5       1,810,141       9       321,305       4       994,077       9  
Nashville, TN
    204,918       3                   870,323       5                   109,058       1  
N. New Jersey
    1,159,629       20       413,167       7       441,467       3       58,585       1              
Philadelphia, PA
    878,456       18       127,802       5       732,265       3       211,228       4       30,000       1  
Phoenix, AZ
    61,538       2                   131,000       1       256,615       4              
Salt Lake City, UT
    706,201       35       146,937       6       648,625       4                          
San Diego, CA
    112,773       5                               69,985       2              
S. New Jersey(j)
    1,356,377       20                   281,100       2       118,496       2       22,738       1  
St. Louis, MO(k)
    545,747       7                   1,887,790       8       96,392       1              
Tampa, FL(l)
    234,679       7       486,192       23       209,500       1                          
Toronto, ON
    57,540       1                   897,954       3                          
Other(m)
    696,547       8                   1,727,328       9       88,000       1       36,000       1  
                                                                                 
Total
    19,764,886       403       4,311,668       125       31,700,299       162       5,177,145       89       3,074,535       25  
                                                                                 
 
 
(a) One property collateralizes a $2.8 million mortgage loan which matures on May 1, 2016.
 
(b) One property collateralizes a $14.7 million mortgage loan which matures on December 1, 2010.
 
(c) One property collateralizes a $5.0 million mortgage loan which matures on December 1, 2019.
 
(d) Twelve properties collateralize a $1.1 million mortgage loan which matures on September 1, 2009.
 
(e) One property collateralizes a $1.4 million mortgage loan which matures on January 1, 2013.
 
(f) One property collateralizes a $2.4 million mortgage loan which matures on January 1, 2012.
 
(g) One property collateralizes a $1.7 million mortgage loan which matures on June 1, 2014.
 
(h) One property collateralizes a $5.1 million mortgage loan which matures on December 1, 2019.
 
(i) One property collateralizes a $1.8 million mortgage loan which matures on September 30, 2024.
 
(j) One property collateralizes a $6.4 million mortgage loan which matures on March 1, 2011.


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(k) One property collateralizes a $13.8 million mortgage loan and a $11.7 million mortgage loan which both mature on January 1, 2014.
 
(l) Six properties collateralize a $5.7 million mortgage loan which matures on July 1, 2009.
 
(m) Properties are located in Wichita, KS, Grand Rapids, MI, Austin, TX, Orlando, FL, Johnson County, MS, Horn Lake, MS, Shreveport, LA, Kansas City, MO, San Antonio, TX, Birmingham, AL, Portland, OR, Des Moines, IA, Sumner, IA, Omaha, NE, and Winchester, VA.
 
Property Summary Totals
 
                                 
    Totals  
                Average
    GLA as a%
 
          Number of
    Occupancy at
    of Total
 
Metropolitan Area
  GLA     Properties(b)     12/31/07(b)     Portfolio(b)  
 
Atlanta, GA
    4,795,775       37       93 %     7.5 %
Baltimore, MD
    1,713,429       25       100 %     2.7 %
Central, PA
    1,556,321       13       100 %     2.4 %
Chicago, IL
    4,131,837       39       97 %     6.5 %
Cincinnati, OH
    2,260,389       16       98 %     3.5 %
Cleveland, OH
    672,740       5       100 %     1.1 %
Columbus, OH
    2,759,379       10       90 %     4.3 %
Dallas, TX/Ft. Worth, TX
    5,498,654       94       91 %     8.6 %
Denver, CO
    4,312,807       61       91 %     6.7 %
Detroit, MI
    4,171,660       123       81 %     6.5 %
Houston, TX
    3,030,290       30       99 %     4.7 %
Indianapolis, IN
    4,590,232       41       97 %     7.2 %
Inland Empire, CA
    595,940       2       100 %     0.9 %
Los Angeles, CA
    1,035,077       16       85 %     1.6 %
Louisville, KY
    124,935       1       100 %     0.2 %
Miami, FL
    228,726       5       99 %     0.4 %
Milwaukee, WI
    1,324,958       16       91 %     2.1 %
Minneapolis/St. Paul, MN
    5,112,432       45       95 %     8.0 %
Nashville, TN
    1,184,299       9       93 %     1.8 %
N. New Jersey
    2,072,848       31       95 %     3.2 %
Philadelphia, PA
    1,979,751       31       98 %     3.1 %
Phoenix, AZ
    449,153       7       100 %     0.7 %
Salt Lake City, UT
    1,501,763       45       94 %     2.3 %
San Diego, CA
    182,758       7       92 %     0.3 %
S. New Jersey
    1,778,711       25       98 %     2.8 %
St. Louis, MO
    2,529,929       16       99 %     4.0 %
Tampa, FL
    930,371       31       93 %     1.5 %
Toronto, ON
    955,494       4       100 %     1.5 %
Other(a)
    2,547,875       19       100 %     4.0 %
                                 
Total or Average
    64,028,533       804       95 %     100.0 %
                                 
 
 
(a) Properties are located in Wichita, KS, Grand Rapids, MI, Austin, TX, Orlando, FL, Johnson County, KS, Horn Lake, MS, Shreveport, LA, Kansas City, MO, San Antonio, TX, Birmingham, AL, Portland, OR, Des Moines, IA, Sumner, IA, Omaha, NE, and Winchester, VA.
 
(b) Includes only in-service properties.


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Property Acquisition Activity
 
During 2007, we acquired 105 industrial properties totaling approximately 8.6 million square feet of GLA at a total purchase price of approximately $399.1 million, or approximately $46.41 per square foot. We also purchased several land parcels for an aggregate purchase price of approximately $71.7 million. The 105 industrial properties acquired have the following characteristics:
 
                                 
                      Average
 
    Number of
                Occupancy at
 
Metropolitan Area
  Properties     GLA    
Property Type
    12/31/2007(b)  
 
Atlanta, GA
    2       972,125       Bulk Warehouse       N/A  
Chicago, IL
    3       276,643       Lt. Ind./Bulk/Regional Warehouse       100 %
Cincinnati, OH
    6       329,070       Lt. Ind./Regional Warehouse       99 %
Columbus, OH(a)
    1       340,000       Bulk Warehouse       N/A  
Columbus, OH
    2       547,406       Bulk Warehouse       N/A  
Dallas, TX
    1       106,210       Bulk Warehouse       100 %
Houston, TX(a)
    31       1,070,233       Various       N/A  
Houston, TX
    14       451,370       Lt. Ind./Regional Warehouse/R&D Flex       85 %
Inland Empire, CA
    2       595,940       Bulk Warehouse       100 %
Los Angeles, CA(a)
    1       27,692       Regional Warehouse       N/A  
Los Angeles, CA
    12       918,974       Lt. Ind./Bulk/Regional Warehouse       100 %
Miami, FL
    7       424,730       Bulk/Regional Warehouse       99 %
Milwaukee, WI
    4       192,941       Light Industrial       N/A  
Minneapolis, MN
    1       132,000       Bulk Warehouse       N/A  
Nashville, TN
    1       76,016       Light Industrial       100 %
Philadelphia, PA(a)
    1       137,036       Bulk Warehouse       N/A  
Philadelphia, PA
    2       560,728       Bulk/Regional Warehouse       100 %
Phoenix, AZ
    1       39,360       Regional Warehouse       100 %
S. New Jersey(a)
    2       157,450       Bulk/Regional Warehouse       N/A  
S. New Jersey
    3       360,638       Bulk/Regional Warehouse       100 %
Salt Lake City, UT
    3       185,000       Light Industrial       100 %
San Diego, CA
    2       70,414       Regional Warehouse       100 %
St. Louis, MO(a)
    1       226,576       Bulk Warehouse       N/A  
St. Louis
    1       115,200       Bulk Warehouse       N/A  
Toronto, ON
    1       276,124       Bulk Warehouse       100 %
                                 
Total
    105       8,589,876                  
                                 
 
 
(a) Property was sold in 2007.
 
(b) Includes only in-service properties.


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Property Development Activity
 
During 2007, we placed in-service 14 developments totaling approximately 2.6 million square feet of GLA at a total cost of approximately $139.0 million, or approximately $53.46 per square foot. The developments placed in-service have the following characteristics:
 
                         
                Average
 
                Occupancy
 
Metropolitan Area
  GLA    
Property Type
    at 12/31/07  
 
Baltimore, MD
    300,000       Bulk Warehouse       100 %
Baltimore, MD(a)
    130,200       Bulk Warehouse       N/A  
Dallas, TX(a)
    125,085       Bulk Warehouse       N/A  
Denver, CO
    20,320       R&D/Flex       100 %
Denver, CO
    39,434       Light Industrial       100 %
Indianapolis, IN
    71,753       Light Industrial       100 %
Indianapolis, IN
    177,600       Bulk Warehouse       100 %
Indianapolis, IN(a)
    241,824       Bulk Warehouse       N/A  
Kansas City, KS
    446,500       Bulk Warehouse       100 %
Louisville, KY
    118,159       Bulk Warehouse       100 %
Minneapolis, MN
    170,824       Bulk Warehouse       100 %
Minneapolis/St. Paul, MN(a)
    340,478       Bulk Warehouse       N/A  
Phoenix, AZ(a)
    335,039       Bulk Warehouse       N/A  
Salt Lake City, UT(a)
    92,290       Regional Warehouse       N/A  
                         
Total
    2,609,506                  
                         
 
 
(a) Property was sold in 2007.
 
At December 31, 2007, we had 17 development projects not placed in service, totaling an estimated 4.8 million square feet and with an estimated completion cost of approximately $256.0 million. There can be no assurance that we will place these projects in service in 2008 or that the actual completion cost will not exceed the estimated completion cost stated above.


18


 

Property Sales
 
During 2007, we sold 164 industrial properties totaling approximately 13.7 million square feet of GLA and several land parcels. Total gross sales proceeds approximated $881.3 million. The 164 industrial properties sold have the following characteristics:
 
                         
    Number of
             
Metropolitan Area
  Properties     GLA    
Property Type
 
 
Atlanta, GA
    4       421,036       Light Industrial/Bulk/Regional Warehouse  
Baltimore, MD
    2       657,800       Bulk Warehouse  
Central, PA
    1       49,350       Light Industrial  
Chicago, IL
    8       1,003,748       Light Industrial/Bulk/Regional Warehouse  
Cincinnati, OH
    1       240,000       Bulk Warehouse  
Columbus, OH
    1       340,000       Bulk Warehouse  
Dallas, TX
    4       1,189,403       Light Industrial/Bulk Warehouse  
Denver, CO
    25       966,117       R&D Flex/Light Industrial  
Detroit, MI
    3       154,011       Light Industrial/R&D/Flex  
Houston, TX
    36       1,437,659       Lt. Ind/R&D/Flex/Regional  
Indianapolis, IN
    9       1,022,376       Bulk/Lt. Ind/R&D/Flex/Regional  
Los Angeles, CA
    5       482,833       Regional/Bulk Warehouse/Lt. Ind.  
Louisville, KY
    2       443,500       Bulk Warehouse  
Minneapolis/St. Paul, MN
    5       415,882       Light Industrial/R&D/Flex  
N. New Jersey
    2       154,965       Bulk Warehouse  
Nashville, TN
    5       866,121       Light Industrial/Bulk Warehouse  
Philadelphia, PA
    2       160,086       Bulk Warehouse/R&D Flex  
Phoenix, AZ
    10       780,601       Regional/Bulk Warehouse/Light Industrial  
S. New Jersey
    5       273,076       Light Industrial/Regional/Bulk Warehouse  
Salt Lake City, UT
    3       363,562       Regional/Bulk Warehouse  
San Diego, CA
    9       672,009       Regional/Bulk Warehouse  
Tampa, FL
    19       686,092       R&D/Flex/Light Industrial  
Other(a)
    3       922,576       Regional/Bulk Warehouse  
                         
Total
    164       13,702,803          
                         
 
 
(a) Properties are located in Shreveport, LA, McAllen, TX, and Kansas City, MO.
 
Property Acquisitions, Developments and Sales Subsequent to Year End
 
From January 1, 2008 to February 15, 2008, we acquired 11 industrial properties and several land parcels for a total estimated investment of approximately $79.1 million. We also sold three industrial properties and one land parcel for approximately $3.6 million of gross proceeds during this period.


19


 

Tenant and Lease Information
 
We have a diverse base of more than 2,300 tenants engaged in a wide variety of businesses including manufacturing, retail, wholesale trade, distribution and professional services. Most leases have an initial term of between three and six years and provide for periodic rent increases that are either fixed or based on changes in the Consumer Price Index. Industrial tenants typically have net or semi-net leases and pay as additional rent their percentage of the property’s operating costs, including the costs of common area maintenance, property taxes and insurance. As of December 31, 2007, approximately 95% of the GLA of the in-service industrial properties was leased, and no single tenant or group of related tenants accounted for more than 1.6% of our rent revenues, nor did any single tenant or group of related tenants occupy more than 2.5% of our total GLA as of December 31, 2007.
 
The following table shows scheduled lease expirations for all leases for our in-service properties as of December 31, 2007.
 
                                         
    Number of
          Percentage of
    Annual Base Rent
    Percentage of Total
 
Year of
  Leases
    GLA
    GLA
    Under Expiring
    Annual Base Rent
 
Expiration(1)
  Expiring     Expiring(2)     Expiring     Leases     Expiring(2)  
                (In thousands)        
 
2008
    657       12,568,701       21 %     54,285       20 %
2009
    478       10,086,353       17 %     47,399       17 %
2010
    469       9,595,302       16 %     44,412       16 %
2011
    279       7,710,427       13 %     37,761       14 %
2012
    213       6,097,906       10 %     29,083       11 %
2013
    83       3,632,234       6 %     15,358       6 %
2014
    36       1,814,585       3 %     8,712       3 %
2015
    35       2,556,108       4 %     8,064       3 %
2016
    23       1,414,386       2 %     5,474       2 %
2017
    14       1,310,972       2 %     5,905       2 %
Thereafter
    33       4,112,248       7 %     16,077       6 %
                                         
Total
    2,320       60,899,222       100.0 %   $ 272,530       100.0 %
                                         
 
 
(1) Lease expirations as of December 31, 2007 assume tenants do not exercise existing renewal, termination or purchase options.
 
(2) Does not include existing vacancies of 3,129,311 aggregate square feet.
 
Item 3.   Legal Proceedings
 
We are involved in legal proceedings arising in the ordinary course of business. All such proceedings, taken together, are not expected to have a material impact on the results of operations, financial position or liquidity of the Company.
 
Item 4.   Submission of Matters to a Vote of Security Holders
 
None.


20


 

 
PART II
 
Item 5.   Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
 
Market Information
 
The following table sets forth for the periods indicated the high and low closing prices per share and distributions declared per share for our common stock, which trades on the New York Stock Exchange under the trading symbol “FR”.
 
                         
                Distribution
 
Quarter Ended
  High     Low     Declared  
 
December 31, 2007
  $ 42.71     $ 34.60     $ 0.7200  
September 30, 2007
  $ 41.28     $ 37.63     $ 0.7100  
June 30, 2007
  $ 45.77     $ 38.76     $ 0.7100  
March 31, 2007
  $ 49.51     $ 44.44     $ 0.7100  
December 31, 2006
  $ 50.52     $ 43.70     $ 0.7100  
September 30, 2006
  $ 44.25     $ 37.25     $ 0.7000  
June 30, 2006
  $ 41.79     $ 36.50     $ 0.7000  
March 31, 2006
  $ 43.24     $ 37.73     $ 0.7000  
 
We had 667 common stockholders of record registered with our transfer agent as of February 15, 2008.
 
We have estimated that, for federal income tax purposes, approximately 21.61% of the total $127.6 million in common stock distributions declared in 2007 were classified as ordinary dividend income to our shareholders, 69.02% qualified as capital gain income, and 9.37% represented a return of capital (nondividend distribution).
 
Additionally, for tax purposes, an estimated 23.84% of our 2007 preferred stock dividends were ordinary income, with 76.16% qualifying as capital gain income.
 
In order to comply with the REIT requirements of the Code, we are generally required to make common share distributions and preferred share dividends (other than capital gain distributions) to our shareholders in amounts that together at least equal i) the sum of a) 90% of our “REIT taxable income” computed without regard to the dividends paid deduction and net capital gains and b) 90% of net income (after tax), if any, from foreclosure property, minus ii) certain excess non-cash income. Our common share distribution policy is determined by our board of directors and is dependent on multiple factors, including cash flow and capital expenditure requirements, as well as ensuring that we meet the minimum distribution requirements set forth in the Code.
 
During 2007, the Operating Partnership did not issue any Units.
 
Subject to lock-up periods and certain adjustments, Units of the Operating Partnership are convertible into common stock of the Company on a one-for-one basis or cash at the option of the Company.


21


 

Equity Compensation Plans
 
The following table sets forth information regarding our equity compensation plans.
 
                         
    Number of Securities
          Number of Securities
 
    to be Issued
    Weighted-Average
    Remaining Available
 
    Upon Exercise of
    Exercise Price of
    for Further Issuance
 
    Outstanding Options,
    Outstanding Options,
    Under Equity
 
Plan Category
  Warrants and Rights     Warrants and Rights     Compensation Plans  
 
Equity Compensation Plans Approved by Security Holders
                1,743,543  
Equity Compensation Plans Not Approved by Security Holders(1)
    355,901     $ 31.68       84,274  
                         
Total
    355,901     $ 31.68       1,827,817  
                         
 
 
(1) See Notes 3 and 13 of the Notes to Consolidated Financial Statements contained herein for a description of the plan.


22


 

Performance Graph*
 
The following graph provides a comparison of the cumulative total stockholder return among the Company, the NAREIT Equity REIT Total Return Index (the “NAREIT Index”) and the Standard & Poor’s 500 Index (“S&P 500”). The comparison is for the period from December 31, 2002 to December 31, 2007 and assumes the reinvestment of any dividends. The closing price for our Common Stock quoted on the NYSE at the close of business on December 31, 2002 was $28.00 per share. The NAREIT Index includes REITs with 75% or more of their gross invested book value of assets invested directly or indirectly in the equity ownership of real estate. Upon written request, we will provide stockholders with a list of the REITs included in the NAREIT Index. The historical information set forth below is not necessarily indicative of future performance. The following graph was prepared at our request by Research Data Group, Inc., San Francisco, California.
 
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
 
(GRAPH)
 
                                                 
    12/02   12/03   12/04   12/05   12/06   12/07
FIRST INDUSTRIAL REALTY TRUST, INC.
  $ 100.00     $ 131.43     $ 170.19     $ 172.67     $ 224.61     $ 178.05  
S&P 500
    100.00       128.68       142.69       149.70       173.34       182.87  
NAREIT Equity
    100.00       137.13       180.44       202.38       273.34       230.45  
 
 
* The information provided in this performance graph shall not be deemed to be “soliciting material,” to be “filed” or to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act of 1934 unless specifically treated as such.


23


 

The following table contains information for shares of the our common stock repurchased during the year ended December 31, 2007:
 
                                 
                Total Number
    Approximate
 
                of Shares
    Dollar Value of
 
                Purchased as
    Shares that May
 
    Total
          Part of Publicly
    Yet be
 
    Number of
    Average
    Announced
    Purchased
 
    Shares
    Price Paid
    Plans or
    Under the Plans
 
Period
  Purchased     per Share     Programs     or Programs(1)  
 
January 1, 2007 — July 31, 2007
                    $ 29,513,176  
August 1, 2007 — August 31, 2007
    645,083     $ 39.46       645,083     $ 4,060,637  
September 1, 2007 — September 30, 2007
    98,431     $ 39.90       98,431     $ 100,132,878  
October 1, 2007 — October 31, 2007
                    $ 100,132,878  
November 1, 2007 — November 30, 2007
    1,054,200     $ 37.93       1,054,200     $ 60,144,757  
December 1, 2007 — December 31, 2007
                    $ 60,144,757  
                                 
Total
    1,797,714     $ 38.59       1,797,714          
                                 
 
 
(1) In March 2000 and in September 2007, our Board of Directors authorized a stock repurchase plan pursuant to which we are permitted to purchase up to $100.0 million and $100.0 million, respectively, of our outstanding common stock. During the year ended December 31, 2007, we repurchased 1,797,714 shares at an average price per share of $38.59 ($38.62 per share, including brokerage commissions). During November 2007 we completed the March 2000 Program.


24


 

 
Item 6.   Selected Financial Data
 
The following sets forth selected financial and operating data for the Company on a historical consolidated basis. The following data should be read in conjunction with the Consolidated Financial Statements and Notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this Form 10-K. The historical statements of operations for the years ended December 31, 2007, 2006, 2005, 2004, and 2003 include the results of operations of the Company as derived from our audited financial statements, adjusted for discontinued operations. The results of operations of properties sold are presented in discontinued operations if they met both of the following criteria: (a) the operations and cash flows of the property have been (or will be) eliminated from the ongoing operations of the Company as a result of the disposition and (b) we will not have any significant involvement in the operations of the property after the disposal transaction. The historical balance sheet data and other data as of December 31, 2007, 2006, 2005, 2004, and 2003 include the balances of the Company as derived from our audited financial statements.
 
                                         
    Year Ended
    Year Ended
    Year Ended
    Year Ended
    Year Ended
 
    12/31/07     12/31/06     12/31/05     12/31/04     12/31/03  
    (In thousands, except per unit and property data)  
 
Statement of Operations Data:
                                       
Total Revenues
  $ 434,927     $ 350,924     $ 287,663     $ 232,786     $ 217,925  
Interest Income
    1,926       1,614       1,486       3,632       2,416  
Mark-to-Market/(Loss) Gain on Settlement of Interest Rate Protection Agreements
          (3,112 )     811       1,583        
Property Expenses
    (129,403 )     (115,230 )     (95,172 )     (78,632 )     (73,428 )
General and Administrative Expense
    (92,101 )     (77,497 )     (55,812 )     (39,569 )     (26,953 )
Interest Expense
    (119,314 )     (121,141 )     (108,339 )     (98,636 )     (94,895 )
Amortization of Deferred Financing Costs
    (3,210 )     (2,666 )     (2,125 )     (1,931 )     (1,764 )
Depreciation and Other Amortization
    (153,682 )     (130,582 )     (94,490 )     (69,326 )     (56,788 )
Contractor Expenses
    (34,553 )     (10,263 )     (15,574 )            
(Loss) Gain from Early Retirement from Debt
    (393 )           82       (515 )     (1,466 )
Equity in Income of Joint Ventures
    30,045       30,673       3,699       37,301       539  
Income Tax Benefit
    10,571       9,882       14,337       8,195       5,878  
Minority Interest Allocable to Continuing Operations
    9,944       11,593       9,695       3,774       7,033  
                                         
Loss from Continuing Operations
    (45,243 )     (55,805 )     (53,739 )     (1,338 )     (21,503 )
Income from Discontinued Operations (Including Gain on Sale of Real Estate of $244,962, $213,442, $132,139, $88,245 and $79,485 for the Years Ended December 31, 2007, 2006, 2005, 2004, and 2003, respectively)
    260,975       240,145       167,406       129,625       149,330  
Provision for Income Taxes Allocable to Discontinued Operations (Including $36,032, $47,511, $20,529, $8,659 and $2,154 allocable to Gain on Sale of Real Estate for the Years ended December 31, 2007, 2006, 2005, 2004, and 2003, respectively)
    (38,044 )     (51,102 )     (23,898 )     (11,275 )     (3,866 )
Minority Interest Allocable to Discontinued Operations
    (28,178 )     (24,594 )     (18,886 )     (16,238 )     (21,427 )
Gain on Sale of Real Estate
    9,425       6,071       29,550       16,755       15,794  
Provision for Income Taxes Allocable to Gain on Sale of Real Estate
    (3,082 )     (2,119 )     (10,871 )     (5,359 )     (2,614 )
Minority Interest Allocable to Gain on Sale of Real Estate
    (802 )     (514 )     (2,458 )     (1,564 )     (1,941 )
                                         
Net Income
    155,051       112,082       87,104       110,606       113,773  
Redemption of Preferred Stock
    (2,017 )     (672 )           (7,959 )      
Preferred Dividends
    (21,320 )     (21,424 )     (10,688 )     (14,488 )     (20,176 )
                                         
Net Income Available to Common Stockholders
  $ 131,174     $ 89,986     $ 76,416     $ 88,159     $ 93,597  
                                         
Basic and Diluted Earnings Per Weighted Average Common Share Outstanding:
                                       
Loss from Continuing Operations Available to Common Stockholders
  $ (1.43 )   $ (1.69 )   $ (1.14 )   $ (0.34 )   $ (0.79 )
                                         
Net Income Available to Common Stockholders
  $ 2.99     $ 2.04     $ 1.80     $ 2.17     $ 2.43  
                                         
Distributions Per Share
  $ 2.8500     $ 2.8100     $ 2.7850     $ 2.7500     $ 2.7400  
                                         
Basic and Diluted Weighted Average Number of Common Shares Outstanding
    44,086       44,012       42,431       40,557       38,542  
                                         
Net Income
  $ 155,051     $ 112,082     $ 87,104     $ 110,606     $ 113,773  
Other Comprehensive Income (Loss):
                                       
Settlement of Interest Rate Protection Agreements
    (4,261 )     (1,729 )           6,816        
Reclassification of Settlement of Interest Rate Protection Agreements to Net Income
                (159 )            
Mark-to-Market of Interest Rate Protection Agreements and Interest Rate Swap Agreements, Net of Tax Provision
    3,819       (2,800 )     (1,414 )     106       251  
Amortization of Interest Rate Protection Agreements
    (916 )     (912 )     (1,085 )     (512 )     198  
Foreign Currency Translation Adjustment, Net of Tax Provision
    2,134                          
Other Comprehensive (Income) Loss Allocable to Minority Interest
    (142 )     698       837              
                                         
Other Comprehensive Income
  $ 155,685     $ 107,339     $ 85,283     $ 117,016     $ 114,222  
                                         


25


 

                                         
    Year Ended
    Year Ended
    Year Ended
    Year Ended
    Year Ended
 
    12/31/07     12/31/06     12/31/05     12/31/04     12/31/03  
    (In thousands, except per unit and property data)  
 
Balance Sheet Data (End of Period):
                                       
Real Estate, Before Accumulated Depreciation
  $ 3,326,268     $ 3,219,728     $ 3,260,761     $ 2,856,474     $ 2,738,034  
Real Estate, After Accumulated Depreciation
    2,816,287       2,754,310       2,850,195       2,478,091       2,388,782  
Real Estate Held for Sale, Net
    37,875       115,961       16,840       52,790        
Total Assets
    3,258,033       3,224,399       3,226,243       2,721,890       2,648,023  
Mortgage Loans Payable, Net, Unsecured Lines of Credit and Senior Unsecured Debt, Net
    1,946,670       1,834,658       1,813,702       1,574,929       1,453,798  
Total Liabilities
    2,183,755       2,048,873       2,020,361       1,719,463       1,591,732  
Stockholders’ Equity
    923,919       1,022,979       1,043,562       845,494       889,173  
Other Data:
                                       
Cash Flow From Operating Activities
  $ 92,736     $ 59,551     $ 49,350     $ 77,657     $ 103,156  
Cash Flow From Investing Activities
    126,909       129,147       (371,654 )     9,992       29,037  
Cash Flow From Financing Activities
    (230,023 )     (180,800 )     325,617       (83,546 )     (131,372 )
Total In-Service Properties
    804       858       884       827       834  
Total In-Service GLA, in Square Feet
    64,028,533       68,610,505       70,193,161       61,670,735       57,925,466  
In-Service Occupancy Percentage
    95 %     94 %     92 %     90 %     88 %
 
Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
The following discussion should be read in conjunction with “Selected Financial Data” and the Consolidated Financial Statements and Notes thereto appearing elsewhere in this Form 10-K.
 
In addition, the following discussion 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. 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” or similar expressions. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on the operations and future prospects of the Company on a consolidated basis include, but are not limited to, changes in: international, national, regional and local economic conditions generally and the real estate market specifically, legislative/regulatory changes (including changes to laws governing the taxation of real estate investment trusts), availability of financing, interest rate, competition, supply and demand for industrial properties in our current and proposed market areas, potential environmental liabilities, slippage in development or lease-up schedules, tenant credit risks, higher-than-expected costs and changes in general accounting principles, policies and guidelines applicable to real estate investment trusts and risks related to doing business internationally (including foreign currency exchange risks). These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Further information concerning the Company and its business, including additional factors that could materially affect our financial results, is included in Item 1A. “Risk Factors,” and in our other filings with the Securities and Exchange Commission (the “SEC”).
 
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 interests in our properties and land parcels are held through partnerships, corporations, and limited liability companies controlled, directly or indirectly, by us, including First Industrial, L.P. (the “Operating Partnership”), of which we are the sole general partner, as well as, among others, our taxable REIT subsidiary, First Industrial Investment, Inc. (the “TRS”), of which the Operating Partnership is the sole stockholder, all of whose operating data is consolidated with that of the Company as presented herein.
 
We also own minority equity interests in, and provide services to, five joint ventures which 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” and the “2006 Land/Development Joint Venture”). We also owned a minority interest in and provided property management services to a sixth joint venture (the “1998 Core Joint Venture”). On January 31, 2007, we purchased the 90%

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equity interest from the institutional investor in the 1998 Core Joint Venture. Effective January 31, 2007, the assets and liabilities and results of operations of the 1998 Core Joint Venture are consolidated with the Company since we effectively own 100% of the equity interest. Prior to January 31, 2007, the 1998 Core Joint Venture was accounted for under the equity method of accounting. Additionally, on December 28, 2007 we entered into two new joint ventures with institutional investors (the “2007 Canada Joint Venture” and the “2007 Europe Joint Venture” together with 2003 Net Lease Joint Venture, 2005 Development/Repositioning Joint Venture, 2005 Core Joint Venture, the 2006 Net Lease Co-Investment Program, the 2006 Land/Development Joint Venture and the 1998 Core Joint Venture, the “Joint Ventures”). The operating data of our Joint Ventures is not consolidated with that of the Company as presented herein. However, the operating data of the 2005 Development/Repositioning Joint Venture, referred to as FirstCal Industrial, LLC, is separately presented on a consolidated basis, separate from that of the Company.
 
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 growth would be limited. 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 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


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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 stabilized properties or land or properties offering lower potential returns relative to their market value. The gain/loss on, and fees from, the sale of such properties are included in our income and are a significant source of funds, in addition to revenues generated from rental income and tenant recoveries, for our distributions. 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.
 
Currently, 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 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 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.
 
CRITICAL ACCOUNTING POLICIES
 
Our significant accounting policies are described in more detail in Note 3 to the consolidated financial statements. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.
 
  •  We maintain an allowance for doubtful accounts which is based on estimates of potential losses which could result from the inability of our tenants to satisfy outstanding billings with us. The allowance for doubtful accounts is an estimate based on our assessment of the creditworthiness of our tenants.
 
  •  Properties are classified as held for sale when our management has approved the sales of such properties. When properties are classified as held for sale, we cease depreciating the properties and estimate the values of such properties and measure them at the lower of depreciated cost or fair value, less costs to dispose. If circumstances arise that were previously considered unlikely, and, as a result, we decide not to sell a property previously classified as held for sale, we will reclassify such property as held and used. We estimate the value of such property and measure it at the lower of its carrying


28


 

  amount (adjusted for any depreciation and amortization expense that would have been recognized had the property been continuously classified as held and used) or fair value at the date of the subsequent decision not to sell. Fair value is determined by deducting from the estimated sales price of the property the estimated costs to close the sale.
 
  •  We review our properties on a quarterly basis for possible impairment and provide a provision if impairments are determined. We utilize the guidelines established under Financial Accounting Standards Board’s (“FASB”) Statement of Financial Accounting Standards (“FAS”) No. 144, “Accounting for the Impairment or Disposal of Long Lived Assets” (“FAS 144”) to determine if impairment conditions exist. We review the expected undiscounted cash flows of each property to determine if there are any indications of impairment. If the expected undiscounted cash flows of a particular property are less than the net book basis of the property, we will recognize an impairment charge equal to the amount of carrying value of the property that exceeds the fair value of the property. Fair value is determined by discounting the future expected cash flows of the property. The calculation of the fair value involves subjective assumptions such as estimated occupancy, rental rates, ultimate residual value and the discount rate used to present value the cash flows.
 
  •  We are engaged in the acquisition of individual properties as well as multi-property portfolios. In accordance with FAS No. 141, “Business Combinations” (“FAS 141”), we are required to allocate purchase price between land, building, tenant improvements, leasing commissions, in please leases, tenant relationship and above and below market leases. Above-market and below-market lease values for acquired properties are recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) our estimate of fair market lease rents for each corresponding in-place lease. Acquired above and below market leases are amortized over the remaining non-cancelable terms of the respective leases as an adjustment to rental income. In-place lease and tenant relationship values for acquired properties are recorded based on our evaluation of the specific characteristics of each tenant’s lease and our overall relationship with the respective tenant. The value allocated to in-place lease intangible assets is amortized to depreciation and amortization expense over the remaining lease term of the respective lease. The value allocated to tenant relationship is amortized to depreciation and amortization expense over the expected term of the relationship, which includes an estimate of the probability of lease renewal and its estimated term. We also must allocate purchase price on multi-property portfolios to individual properties. The allocation of purchase price is based our assessment of various characteristics of the markets where the property is located and the expected cash flows of the property.
 
  •  We capitalize (direct and certain indirect) costs incurred in developing, renovating, acquiring and rehabilitating real estate assets as part of the investment basis. Costs incurred in making certain other improvements are also capitalized. During the land development and construction periods, we capitalize interest costs, real estate taxes and certain general and administrative costs of the personnel performing development, renovations or rehabilitation up to the time the property is substantially complete. The determination and calculation of certain costs requires estimates by us. Amounts included in capitalized costs are included in the investment basis of real estate assets.
 
  •  We analyze our investments in joint ventures to determine whether the joint venture should be accounted for under the equity method of accounting or consolidated into our financial statements based on standards set forth under FAS Interpretation No. 46(R), Consolidation of Variable Interest Entities, EITF 96-16, Investor’s Accounting for an Investee When the Investor Has a Majority of the Voting Interest but the Minority Shareholder or Shareholders Have Certain Approval or Veto Rights and Statement of Position 78-9, Accounting for Investments in Real Estate Ventures. Based on the guidance set forth in these pronouncements, we do not consolidate any of our joint venture investments because either the joint venture has been determined not to be a variable interest entity or it has been determined we are not the primary beneficiary. Our assessment of whether we are the primary beneficiary of a variable interest involves the consideration of various factors including the form of our


29


 

  ownership interest, our representation on the entity’s governing body, the size of our investment and future cash flows of the entity.
 
  •  In the preparation of our consolidated financial statements, significant management judgment is required to estimate our current and deferred income tax liabilities, and our compliance with REIT qualification requirements. Our estimates are based on our interpretation of tax laws. These estimates may have an impact on the income tax expense recognized. Adjustments may be required by a change in assessment of our deferred income tax assets and liabilities, changes due to audit adjustments by federal and state tax authorities, our inability to qualify as a REIT, and changes in tax laws. Adjustments required in any given period are included within the income tax provision.
 
RESULTS OF OPERATIONS
 
Comparison of Year Ended December 31, 2007 to Year Ended December 31, 2006
 
Our net income available to common stockholders was $131.7 million and $90.0 million for the year ended December 31, 2007 and 2006, respectively. Basic and diluted net income available to common stockholders were $2.99 per share for the year ended December 31, 2007 and $2.04 per share for the year ended December 31, 2006.
 
The tables below summarize our revenues, property expenses and depreciation and other amortization by various categories for the year ended December 31, 2007 and December 31, 2006. Same store properties are properties owned prior to January 1, 2006 and held as an operating property through December 31, 2007 and developments and redevelopments that were stabilized (generally defined as 90% occupied) prior to January 1, 2006 or were substantially completed for 12 months prior to January 1, 2006. Acquired properties are properties that were acquired subsequent to December 31, 2005 and held as an operating property through December 31, 2007. Sold properties are properties that were sold subsequent to December 31, 2005. (Re)Developments and land are land parcels and developments and redevelopments that were not: a) substantially complete 12 months prior to January 1, 2006 or b) stabilized prior to January 1, 2006. Other revenues are derived from the operations of our maintenance company, fees earned from our joint ventures, and other miscellaneous revenues. Contractor revenues and expenses represent revenues earned and expenses incurred in connection with the TRS acting as general contractor to construct industrial properties, including industrial properties for the 2005 Development/Repositioning Joint Venture and also includes revenues and expenses related to the development of properties 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.
 
At December 31, 2007 and 2006, the occupancy rates of our same store properties were 94.1% and 92.3%, respectively.
 


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    2007     2006     $ Change     % Change  
    ($ in 000’s)  
 
REVENUES
                               
Same Store Properties
  $ 301,404     $ 289,761     $ 11,643       4.0 %
Acquired Properties
    55,724       16,844       38,880       230.8 %
Sold Properties
    41,037       80,409       (39,372 )     (49.0 )%
(Re)Developments and Land, Not Included Above
    8,213       5,973       2,240       37.5 %
Other
    36,890       29,958       6,932       23.1 %
                                 
    $ 443,268     $ 422,945     $ 20,323       4.8 %
Discontinued Operations
    (43,969 )     (82,561 )     38,592       (46.7 )%
                                 
Subtotal Revenues
  $ 399,299     $ 340,384     $ 58,915       17.3 %
                                 
Contractor Revenues
    35,628       10,540       25,088       238.0 %
                                 
Total Revenues
  $ 434,927     $ 350,924     $ 84,003       23.9 %
                                 
 
Revenues from same store properties increased by $11.6 million due primarily to an increase in same store property occupancy rates and an increase in same store rental rates. Revenues from acquired properties increased $38.9 million due to the 196 industrial properties acquired subsequent to December 31, 2005 totaling approximately 19.1 million square feet of gross leasable area (“GLA”). Revenues from sold properties decreased $39.4 million due to the 289 industrial properties sold subsequent to December 31, 2005 totaling approximately 30.8 million square feet of GLA. Revenues from (re)developments and land increased $2.2 million due to an increase in occupancy. Other revenues increased by approximately $6.9 million due primarily to an increase in joint venture fees and fees earned related to us assigning our interest in certain purchase contracts to third parties for consideration. Contractor revenues increased $25.1 million for the year ended December 31, 2007 due primarily to increased third party development activity and an increased number of construction projects for which the TRS acted as general contractor.
 
                                 
    2007     2006     $ Change     % Change  
    ($ in 000’s)  
 
PROPERTY AND CONTRACTOR EXPENSES
                               
Same Store Properties
  $ 96,368     $ 94,400     $ 1,968       2.1 %
Acquired Properties
    13,680       4,037       9,643       238.9 %
Sold Properties
    12,346       23,532       (11,186 )     (47.5 )%
(Re) Developments and Land, Not Included Above
    4,512       3,979       533       13.4 %
Other
    16,603       15,427       1,176       7.6 %
                                 
    $ 143,509     $ 141,375     $ 2,134       1.5 %
Discontinued Operations
    (14,106 )     (26,145 )     12,039       (46.0 )%
                                 
Property Expenses
  $ 129,403     $ 115,230     $ 14,173       12.3 %
                                 
Contractor Expenses
    34,553       10,263       24,290       236.7 %
                                 
Total Property and Contractor Expenses
  $ 163,956     $ 125,493     $ 38,463       30.6 %
                                 
 
Property expenses include real estate taxes, repairs and maintenance, property management, utilities, insurance, other property related expenses, and contractor expenses. Property expenses from same store properties increased $2.0 million due primarily to an increase in real estate taxes due to a reassessment of values of certain properties of ours, as well as an increase in repairs and maintenance. Property expenses from acquired properties increased by $9.6 million due to properties acquired subsequent to December 31, 2005. Property expenses from sold properties decreased by $11.2 million due to properties sold subsequent to

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December 31, 2005. Property expenses from (re)developments and land increased $0.5 million due to an increase in occupancy. The $1.2 million increase in other expense is primarily attributable to increases in employee compensation. Contractor expenses increased $24.3 million for the year ended December 31, 2007 due primarily to increased third party development activity and an increased number of construction projects for which the TRS acted as general contractor.
 
General and administrative expense increased by approximately $14.6 million, or 18.8%, due primarily to increases in employee compensation related to compensation for additional employees as well as an increase in incentive compensation.
 
                                 
    2007     2006     $ Change     % Change  
    ($ in 000’s)  
 
DEPRECIATION AND OTHER AMORTIZATION
                               
Same Store Properties
  $ 109,896     $ 107,451     $ 2,445       2.3 %
Acquired Properties
    38,988       13,727       25,261       184.0 %
Sold Properties
    12,568       28,383       (15,815 )     (55.7 )%
(Re) Developments and Land, Not Included Above
    4,243       8,821       (4,578 )     (51.9 )%
Corporate Furniture, Fixtures and Equipment
    1,837       1,913       (76 )     (4.0 )%
                                 
    $ 167,532     $ 160,295     $ 7,237       4.5 %
Discontinued Operations
    (13,850 )     (29,713 )     15,863       (53.4 )%
                                 
Total Depreciation and Other Amortization
  $ 153,682     $ 130,582     $ 23,100       17.7 %
                                 
 
Depreciation and other amortization for same store properties remained relatively unchanged. Depreciation and other amortization from acquired properties increased by $25.3 million due to properties acquired subsequent to December 31, 2005. Depreciation and other amortization from sold properties decreased by $15.8 million due to properties sold subsequent to December 31, 2005. Depreciation and other amortization for (re)developments and land decreased by $4.6 million due primarily to accelerated depreciation recognized for the year ended December 31, 2006 on one property in Columbus, OH which was razed during 2006.
 
Interest income increased $0.3 million due primarily to an increase in the average mortgage loans receivable outstanding during the year ended December 31, 2007, as compared to the year ended December 31, 2006, partially offset by a decrease in interest income earned on funds held with intermediaries in connection with completing property transactions in accordance with Section 1031 of the Code.
 
Interest expense decreased by approximately $1.8 million primarily due to a decrease in the weighted average interest rate for the year ended December 31, 2007 (6.45%), as compared to the year ended December 31, 2006 (6.72%) and due to an increase in capitalized interest for the year ended December 31, 2007 due to an increase in development activities, partially offset by an increase in the weighted average debt balance outstanding for the year ended December 31, 2007 ($1,981.4 million), as compared to the year ended December 31, 2006 ($1,878.5 million).
 
Amortization of deferred financing costs increased by $0.5 million, or 20.4%, due primarily to financing fees incurred associated with the issuance of $200.0 million of senior unsecured debt in September 2006.
 
In October 2005, we entered into an interest rate protection agreement which hedged the change in value of a build to suit development project we were constructing. This interest rate protection agreement had a notional value of $50.0 million, was based on the three month LIBOR rate, had a strike rate of 4.8675%, had an effective date of December 30, 2005 and a termination date of December 30, 2010. Per FAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” fair value and cash flow hedge accounting for hedges of non-financial assets and liabilities is limited to hedges of the risk of changes in the market price of the entire hedged item because changes in the price of an ingredient or component of a non-financial item generally do not have a predictable, separately measurable effect on the price of the item. Since the interest rate protection agreement is hedging a component of the change in value of the build to suit development, the


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interest rate protection agreement does not qualify for hedge accounting and the change in value of the interest rate protection agreement is recognized immediately in net income as opposed to other comprehensive income. On January 5, 2006, we settled the interest rate protection agreement for a payment of $0.2 million. Included in Mark-to-Market/Loss on Settlement of Interest Rate Protection Agreement for the year ended December 31, 2006 is the settlement and mark-to-market of the interest rate protection agreement.
 
In April 2006, we entered into interest rate protection agreements which we designated as cash flow hedges. Each of the interest rate protection agreements had a notional value of $74.8 million, were effective from May 10, 2007 through May 10, 2012, and fixed the LIBOR rate at 5.42%. In September 2006, the interest rate protection agreements failed to qualify for hedge accounting since the actual debt issuance date was not within the range of dates we disclosed in our hedge designation. We settled the interest rate protection agreements and paid the counterparties $2.9 million.
 
We recognized a $0.4 million loss from early retirement of debt for the year ended December 31, 2007. This includes $0.1 million write-off of financing fees associated with our previous line of credit agreement which was amended and restated on September 28, 2007. The loss from early retirement of debt also includes $0.3 million due to early payoffs on mortgage loans.
 
Equity in income of joint ventures decreased by $0.6 million primarily due to a decrease in our economic share of the gains and earn outs on property sales from the 2005 Development/Repositioning Joint Venture during the year ended December 31, 2007, partially offset by an increase in our economic share of the gains on property sales from the 2005 Core Joint Venture for the year ended December 31, 2007.
 
The year to date income tax provision (included in continuing operations, discontinued operations and gain of sale) decreased $12.8 million, in the aggregate, due primarily to a decrease in rental income and gain on sale of real estate and an increase in general and administrative expenses, partially offset by an increase in joint venture fees and management/leasing fees, and a decrease in interest expense within the TRS.
 
The $9.4 million gain on sale of real estate for the year ended December 31, 2007, resulted from the sale of three industrial properties and several land parcels that do not meet the criteria established by FAS 144 for inclusion in discontinued operations. The $6.1 million gain on sale of real estate for the year ended December 31, 2006, resulted from the sale of several land parcels that do not meet the criteria established by FAS 144 for inclusion in discontinued operations.
 
The following table summarizes certain information regarding the industrial properties included in our discontinued operations for the year ended December 31, 2007 and December 31, 2006.
 
                 
    2007     2006  
    ($ in 000’s)  
 
Total Revenues
  $ 43,969     $ 82,561  
Property Expenses
    (14,106 )     (26,145 )
Depreciation and Amortization
    (13,850 )     (29,713 )
Gain on Sale of Real Estate
    244,962       213,442  
Provision for Income Taxes
    (38,044 )     (51,102 )
Minority Interest
    (28,178 )     (24,594 )
                 
Income from Discontinued Operations
  $ 194,753     $ 164,449  
                 
 
Income from discontinued operations (net of income taxes and minority interest) for the year ended December 31, 2007 reflects the results of operations and gain on sale of real estate relating to 161 industrial properties that were sold during the year ended December 31, 2007 and the results of operations of six properties that were identified as held for sale at December 31, 2007.
 
Income from discontinued operations (net of income taxes and minority interest) for the year ended December 31, 2006 reflects the results of operations of the 161 industrial properties that were sold during the year ended December 31, 2007, the results of operations of 125 industrial properties that were sold during the year ended December 31, 2006, the results of operations of the six industrial properties identified as held for


33


 

sale at December 31, 2007 and gain on sale of real estate relating to 125 industrial properties that were sold during the year ended December 31, 2006.
 
Comparison of Year Ended December 31, 2006 to Year Ended December 31, 2005
 
Our net income available to common stockholders was $90.0 million and $76.4 million for the years ended December 31, 2006 and 2005, respectively. Basic and diluted net income available to common stockholders were $2.04 per share for the year ended December 31, 2006, and $1.80 per share for the year ended December 31, 2005.
 
The tables below summarize our revenues, property expenses and depreciation and other amortization by various categories for the years ended December 31, 2006 and December 31, 2005. Same store properties are properties owned prior to January 1, 2005 and held as an operating property through December 31, 2006 and developments and redevelopments that were stabilized (generally defined as 90% occupied) prior to January 1, 2005 or were substantially completed for 12 months prior to January 1, 2005. Acquired properties are properties that were acquired subsequent to December 31, 2004 and held as an operating property through December 31, 2006. Sold properties are properties that were sold subsequent to December 31, 2004. (Re)Developments and land are land parcels and developments and redevelopments that were not: a) substantially complete 12 months prior to January 1, 2005 or b) stabilized prior to January 1, 2005. Other revenues are derived from the operations of our maintenance company, fees earned from our joint ventures, and other miscellaneous revenues. Contractor revenues and expenses represent revenues earned and expenses incurred in connection with the TRS acting as general contractor to construct industrial properties, including industrial properties for the 2005 Development/Repositioning Joint Ventures and also includes revenues and expenses related to the development of properties for third parties. Other expenses are derived from the operations of our maintenance company and other miscellaneous regional expenses.
 
At December 31, 2006 and 2005, the occupancy rates of our same store properties were 92.6% and 91.7%, respectively.
 
                                 
    2006     2005     $ Change     % Change  
    ($ in 000’s)  
 
REVENUES
                               
Same Store Properties
  $ 257,525     $ 255,963     $ 1,562       0.6 %
Acquired Properties
    86,150       18,565       67,585       364.0 %
Sold Properties
    27,072       63,585       (36,513 )     (57.4 )%
(Re)Developments and Land, Not Included Above
    22,217       18,789       3,428       18.2 %
Other
    29,981       19,118       10,863       56.8 %
                                 
    $ 422,945     $ 376,020     $ 49,925       12.5 %
Discontinued Operations
    (82,561 )     (104,598 )     22,037       (21.1 )%
                                 
Subtotal Revenues
  $ 340,384     $ 271,422     $ 68,962       25.4 %
                                 
Contractor Revenues
    10,540       16,241       (5,701 )     (35.1 )%
                                 
Total Revenues
  $ 350,924     $ 287,663     $ 63,261       22.0 %
                                 
 
Revenues from same store properties remained relatively unchanged. Revenues from acquired properties increased $67.6 million due to the 252 industrial properties totaling approximately 30.6 million square feet of GLA acquired subsequent to December 31, 2004. Revenues from sold properties decreased $36.5 million due to the 221 industrial properties totaling approximately 29.9 million square feet of GLA sold subsequent to December 31, 2004. Revenues from (re)developments and land increased by approximately $3.4 million due primarily to an increase in properties placed in service during 2006 and 2005. Other revenues increased by approximately $10.9 million due primarily to an increase in joint venture fees, partially offset by a decrease in assignment fees. Contractor revenues decreased $5.7 million due to decreased third party development activity.
 


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    2006     2005     $ Change     % Change  
    ($ in 000’s)  
 
PROPERTY AND CONTRACTOR EXPENSES
                               
Same Store Properties
  $ 87,047     $ 85,220     $ 1,827       2.1 %
Acquired Properties
    21,784       5,688       16,096       283.0 %
Sold Properties
    7,603       19,385       (11,782 )     (60.8 )%
(Re)Developments and Land, Not Included Above
    9,512       9,005       507       5.6 %
Other
    15,429       11,321       4,108       36.3 %
                                 
    $ 141,375     $ 130,619     $ 10,756       8.2 %
Discontinued Operations
    (26,145 )     (35,447 )     9,302       (26.2 )%
                                 
Property Expenses
  $ 115,230     $ 95,172     $ 20,058       21.1 %
                                 
Contractor Expenses
    10,263       15,574       (5,311 )     (34.1 )%
                                 
Total Property and Contractor Expenses
  $ 125,493     $ 110,746     $ 14,747       13.3 %
                                 
 
Property expenses include real estate taxes, repairs and maintenance, property management, utilities, insurance, other property related expenses and contractor expenses. Property expenses from same store properties increased $1.8 million or 2.1% primarily due to an increase of $1.1 million in utility expense attributable to increases in gas and electric costs and an increase of $0.8 million in real estate tax expense. Property expenses from acquired properties increased by $16.1 million primarily due to properties acquired subsequent to December 31, 2004. Property expenses from sold properties decreased $11.8 million due to properties sold subsequent to December 31, 2004. Property expenses from (re)developments and land increased by approximately $0.5 million due primarily to an increase in properties placed in service during 2006 and 2005. Other expenses increased $4.1 million due primarily to increases in employee compensation. Contractor expenses decreased $5.3 million due to decreased third party development activity.
 
General and administrative expense increased by approximately $21.7 million, or 38.9%, due primarily to increases in employee compensation related to compensation for new employees as well as an increase in incentive compensation.
 
                                 
    2006     2005     $ Change     % Change  
    ($ in 000’s)  
 
DEPRECIATION AND OTHER AMORTIZATION
                               
Same Store Properties
  $ 82,896     $ 84,009     $ (1,113 )     (1.3 )%
Acquired Properties
    51,652       11,808       39,844       337.4 %
Sold Properties
    9,584       20,644       (11,060 )     (53.6 )%
(Re)Developments and Land, Not Included Above
    14,250       10,169       4,081       40.1 %
Corporate Furniture, Fixtures and Equipment
    1,913       1,371       542       39.5 %
                                 
      160,295       128,001       32,294       25.2 %
Discontinued Operations
    (29,713 )     (33,511 )     3,798       (11.3 )%
                                 
Total Depreciation and Other Amortization
  $ 130,582     $ 94,490     $ 36,092       38.2 %
                                 
 
Depreciation and other amortization for same store properties remained relatively unchanged. Depreciation and other amortization from acquired properties increased by $39.8 million due to properties acquired subsequent to December 31, 2004. Depreciation and other amortization from sold properties decreased by $11.1 million due to properties sold subsequent to December 31, 2004. Depreciation and other amortization for (re)developments and land increased $4.1 million due primarily to accelerated depreciation on one property in Columbus, OH which was razed during the year ended December 31, 2006. Amortization of corporate

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furniture, fixtures and equipment increased $0.5 million primarily due to expansion and improvement to corporate offices.
 
Interest income remained relatively unchanged.
 
In April 2006, we entered into interest rate protection agreements which we designated as cash flow hedges. Each of the interest rate protection agreements had a notional value of $74.8 million, were effective from May 10, 2007 through May 10, 2012, and fixed the LIBOR rate at 5.42%. In September 2006, the interest rate protection agreements failed to qualify for hedge accounting since the actual debt issuance date was not within the range of dates we disclosed in our hedge designation. We settled the interest rate protection agreements and paid the counterparties $2.9 million. In October 2005, we entered into an interest rate protection agreement which hedged the change in value of a build-to-suit development project we were constructing. This interest rate protection agreement did not qualify for hedge accounting. We recognized a loss of $0.2 million related to this interest rate protection agreement for the year ended December 31, 2006. Both transactions are recognized in the mark-to-market/(loss) gain on settlement of interest rate protection agreements caption on the consolidated statement of operations.
 
We recognized a $0.6 million gain related to the settlement/mark-to-market of two interest rate protection agreements we entered into during 2005 in order to hedge the change in value of a build-to-suit development project as well as $0.2 million in deferred gain that was reclassified out of other comprehensive income relating to a settled interest rate protection agreement that no longer qualified for hedge accounting.
 
Interest expense increased by approximately $12.8 million due primarily to an increase in the weighted average debt balance outstanding for the year ended December 31, 2006 ($1,878.5 million) as compared to the year ended December 31, 2005 ($1,690.2 million), an increase in the weighted average interest rate for the year ended December 31, 2006 (6.72%) as compared to the year ended December 31, 2005 (6.63%), partially offset by an increase in capitalized interest for the year ended December 31, 2006 due to an increase in development activities.
 
Amortization of deferred financing costs increased by approximately $0.5 million, or 25.5%, due primarily to financing fees incurred associated with the amendment and restatement of our Unsecured Line of Credit in August 2005, the issuance of the 2016 Notes in January 2006 and the issuance of the 2011 Exchangeable Notes in September 2006.
 
We recognized approximately $0.08 million of gain on the early retirement of debt for the year ended December 31, 2005, comprised of $0.05 million write-off of financing fees associated with our previous line of credit agreement which was amended and restated on August 23, 2005. The gain on early retirement of debt also includes a payment of $0.3 million of fees and a write-off of loan premium of $0.4 million on a $13.7 million mortgage loan which was assumed by the buyers of the related properties on July 13, 2005.
 
Equity in income of joint ventures increased by approximately $27.0 million due primarily to our economic share of gains and earn outs on property sales from the 2005 Development/Repositioning Joint Venture and the 2005 Core Joint Venture during the year ended December 31, 2006.
 
The income tax provision (included in continuing operations, discontinued operations and gain on sale) increased by $22.9 million, in the aggregate, due primarily to an increase in the gain on sale of real estate, joint venture fees, equity in net income of joint ventures, partially offset by an increase in interest expense and an increase in general and administrative expense within the TRS.
 
The $6.1 million gain on sale of real estate for the year ended December 31, 2006 resulted from the sale of several land parcels that do not meet the criteria established by FAS 144 for inclusion in discontinued operations. The $29.6 million gain on sale of real estate for the year ended December 31, 2005 resulted from the sale of ten industrial properties and several land parcels that do not meet the criteria established by FAS 144 for inclusion in discontinued operations.


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The following table summarizes certain information regarding the industrial properties included in our discontinued operations for the years ended December 31, 2006 and December 31, 2005.
 
                 
    Year Ended
 
    December 31,  
    2006     2005  
    ($ in 000’s)  
 
Total Revenues
  $ 82,561     $ 104,598  
Property Expenses
    (26,145 )     (35,447 )
Interest Expense
          (373 )
Depreciation and Amortization
    (29,713 )     (33,511 )
Gain on Sale of Real Estate
    213,442       132,139  
Provision for Income Taxes
    (51,102 )     (23,898 )
Minority Interest
    (24,594 )     (18,886 )
                 
Income from Discontinued Operations
    164,449       124,622  
                 
 
Income from discontinued operations, net of income taxes and minority interest, for the year ended December 31, 2006 reflects the results of operations of industrial properties that were sold during the year ended December 31, 2007, the results of operations and gain on sale of real estate of $213.4 million relating to 125 industrial properties that were sold during the year ended December 31, 2006 and the results of operations of six properties that were identified as held for sale at December 31, 2007.
 
Income from discontinued operations, net of income taxes and minority interest, for the year ended December 31, 2005 reflects the results of operations of industrial properties that were sold during the years ended December 31, 2007 and 2006, six properties that were identified as held for sale at December 31, 2007, the results of operations and gain on sale of real estate of $132.1 million from the 86 industrial properties which were sold during the year ended December 31, 2005.
 
LIQUIDITY AND CAPITAL RESOURCES
 
At December 31, 2007, our cash and restricted cash was approximately $5.8 and $24.9 million, respectively. Restricted cash is primarily comprised of cash held in escrow in connection with mortgage debt requirements and gross proceeds from the sales of certain industrial properties. These sales proceeds will be disbursed as we exchange industrial properties under Section 1031 of the Code.
 
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, debt service requirements and the minimum distribution required to maintain our REIT qualification under the Code. We anticipate that these needs will be met with cash flows provided by operating and investment activities.
 
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 indebtedness and the issuance of additional equity securities. On April 30, 2007 we filed a registration statement with the SEC covering an indefinite number or amount of securities to be issued in the following three years.
 
We also may finance the development or acquisition of additional properties through borrowings under our Unsecured Line of Credit. At December 31, 2007, borrowings under our Unsecured Line of Credit bore interest at a weighted average interest rate of 5.787%. Our Unsecured Line of Credit bears interest at a floating rate of LIBOR plus 0.475% or the Prime Rate, at our election. As of February 15, 2008, we had approximately $47.9 million available for additional borrowings under our 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. Also, our


37


 

borrowing rate on our Unsecured Line of Credit may increase in the event of a downgrade on our unsecured notes by the rating agencies.
 
We currently have credit ratings from Standard & Poor’s, Moody’s and Fitch Ratings of BBB/Baa2/BBB, respectively. Our goal is to maintain our existing credit ratings. 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.
 
Year Ended December 31, 2007
 
Net cash provided by operating activities of approximately $92.7 million for the year ended December 31, 2007 was comprised primarily of net income before minority interest of approximately $174.1 million and net distributions from joint ventures of $1.3 million, offset by adjustments for non-cash items of approximately $82.2 million and the net change in operating assets and liabilities of approximately $0.5 million. The adjustments for the non-cash items of approximately $82.2 million are primarily comprised of the gain on sale of real estate of approximately $254.4 million and the effect of the straight-lining of rental income of approximately $9.7 million, offset by depreciation and amortization of approximately $179.3 million, the provision for bad debt of approximately $2.2 million, and loss on early retirement of debt of approximately $0.4 million.
 
Net cash provided by investing activities of approximately $126.9 million for the year ended December 31, 2007 was comprised primarily of the net proceeds from the sale of real estate, the repayment of notes receivable, and distributions from our industrial real estate joint ventures, partially offset by the acquisition of real estate, development of real estate, capital expenditures related to the expansion and improvement of existing real estate, contributions to, and investments in, our industrial real estate joint ventures, the increase in restricted cash that is held by an intermediary for Section 1031 exchange purposes, and the funding of notes receivable.
 
During the year ended December 31, 2007, we acquired 105 industrial properties comprising approximately 8.6 million square feet of GLA and several land parcels. The purchase price of these acquisitions totaled approximately $470.8 million, excluding costs incurred in conjunction with the acquisition of the industrial properties and land parcels. We also substantially completed the development of 15 industrial properties comprising approximately 3.7 million square feet of GLA at a cost of approximately $114.8 million for the year ended December 31, 2007.
 
We invested approximately $27.7 million in, and received total distributions of approximately $54.2 million from, our industrial real estate joint ventures. As of December 31, 2007, our industrial real estate joint ventures owned 113 industrial properties comprising approximately 19.9 million square feet of GLA and several land parcels.
 
During the year ended December 31, 2007, we sold 164 industrial properties comprising approximately 13.7 million square feet of GLA and several land parcels. Net proceeds from the sales of the 164 industrial properties and several land parcels were approximately $800.1 million.
 
Net cash used in financing activities of approximately $230.0 million for the year ended December 31, 2007 was derived primarily from repayments of senior unsecured debt, common and preferred stock dividends and unit distributions, redemption of preferred stock, repayments on mortgage loans payable, purchase of treasury shares, other costs of senior unsecured debt, the repurchase of restricted stock from our employees to pay for withholding taxes on the vesting of restricted stock and costs incurred in connection with the early retirement of debt, partially offset by the net proceeds from the issuance of senior unsecured debt, net borrowings under our Unsecured Line of Credit, net proceeds from the exercise of stock options and a cash book overdraft.
 
During the year ended December 31, 2007, we repurchased 1,797,714 shares of our common stock, totaling approximately $69.4 million.


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On June 7, 2007, we redeemed the Series C Preferred Stock for $25.00 per Depositary Share, or $50.0 million in the aggregate, and paid a prorated second quarter dividend of $0.40729 per Depositary Share, totaling approximately $0.8 million.
 
For the year ended December 31, 2007, certain directors and employees of the Company exercised 19,600 non-qualified employee stock options. Net proceeds to us were approximately $0.6 million.
 
On May 7, 2007, we issued the 2017 II Notes. Net of issuance discount, we received net proceeds of $149.6 million from the issuance of the 2017 II Notes. In April 2006, we entered into interest rate protection agreements to fix the interest rate on the 2017 II Notes prior to issuance. We settled the effective portion of the interest rate protection agreements on May 1, 2007 for a payment of $4.3 million which is included in other comprehensive income.
 
On May 15, 2007, we paid off and retired the 2007 Unsecured Notes in the amount of $150.0 million.
 
Contractual Obligations and Commitments
 
The following table lists our contractual obligations and commitments as of December 31, 2007 (In thousands):
 
                                         
          Payments Due by Period  
          Less Than
                   
    Total     1 Year     1-3 Years     3-5 Years     Over 5 Years  
 
Operating and Ground Leases*
  $ 52,764     $ 3,339     $ 5,821     $ 4,692     $ 38,912  
Real Estate Development*
    64,641       63,335       1,306              
Long-term Debt
    1,958,553       3,111       148,412       933,757       873,273  
Interest Expense on Long-Term Debt*
    894,138       104,003       196,559       141,551       452,025  
                                         
Total
  $ 2,970,096     $ 173,788     $ 352,098     $ 1,080,000     $ 1,364,210  
                                         
 
 
* Not on balance sheet.
 
Off-Balance Sheet Arrangements
 
Letters of credit are issued in most cases as pledges to governmental entities for development purposes. At December 31, 2007, we have $9.6 million in outstanding letters of credit, none of which are reflected as liabilities on our balance sheet. We have no other off-balance sheet arrangements other than those disclosed on the Contractual Obligations and Commitments table above.
 
Environmental
 
We incurred environmental costs of approximately $0.6 million and $0.6 million in 2007 and 2006, respectively. We estimate 2008 costs of approximately $0.5 million. We estimate that the aggregate cost which needs to be expended in 2008 and beyond with regard to currently identified environmental issues will not exceed approximately $2.6 million.
 
Inflation
 
For the last several years, inflation has not had a significant impact on the Company because of the relatively low inflation rates in our markets of operation. Most of our leases require the tenants to pay their share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation. In addition, many of the outstanding leases expire within six years which may enable us to replace existing leases with new leases at higher base rentals if rents of existing leases are below the then-existing market rate.


39


 

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 lessor extent, foreign currency fluctuations.
 
Interest Rate Risk
 
This 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 December 31, 2007 that are sensitive to changes in the 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 December 31, 2007, $1,624.5 million (approximately 83.5% of total debt at December 31, 2007) of our debt was fixed rate debt and $322.1 million (approximately 16.5% of total debt at December 31, 2007) was variable rate debt. 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 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.
 
Based upon the amount of variable rate debt outstanding at December 31, 2007, 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 $1.9 million per year. A 10% increase in interest rates would decrease the fair value of the fixed rate debt at December 31, 2007 by approximately $55.3 million to $1,624.6 million. A 10% decrease in interest rates would increase the fair value of the fixed rate debt at December 31, 2007 by approximately $59.3 million to $1,739.2 million.
 
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 December 31, 2007, we had no outstanding derivative instruments.
 
Foreign Currency Exchange Rate Risk
 
Owning, operating and developing industrial property outside of the United States exposes the Company 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 December 31, 2007, the Company had only one property and one land parcel for which the U.S. dollar was not the functional currency. This property and land parcel are located in Ontario, Canada and use the Canadian dollar as their functional currency.
 
Subsequent Events
 
On January 22, 2008, we paid a fourth quarter 2007 distribution of $0.7200 per share, totaling approximately $36.1 million.
 
From January 1, 2008 to February 15, 2008, we awarded 2,168 shares of restricted common stock to certain Directors. These shares of restricted common stock had a fair value of approximately $0.1 million on


40


 

the date of grant. The restricted common stock vest over a period of five years. Compensation expense will be charged to earnings over the respective vesting period.
 
From January 1, 2008 to February 15, 2008, we acquired 11 industrial properties and several land parcels for a total estimated investment of approximately $79.1 million. We also sold three industrial properties and one land parcel for approximately $3.6 million of gross proceeds during this period.
 
In January 2008, we entered into two interest rate protection agreements which fixed the interest rate on forecasted offerings of unsecured debt which we designated as cash flow hedges (the “January 2008 Agreements”). The January 2008 Agreements each have a notional value of $59.8 million and are effective from May 15, 2009 through May 15, 2014. The January 2008 Agreements fix the LIBOR rate at 4.0725% and 4.0770%, respectively.
 
Related Party Transactions
 
We periodically engage in transactions for which CB Richard Ellis, Inc. acts as a broker. A relative of Michael W. Brennan, the President and Chief Executive Officer and a director of the Company, is an employee of CB Richard Ellis, Inc. For the years ended December 31, 2007, 2006 and 2005 this relative received approximately $0.2, $0.3, and $0.3 million in brokerage commissions.
 
Other
 
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” which establishes a common definition of fair value, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements. For financial assets and liabilities and nonfinancial assets and liabilities that are remeasured at least annually, this statement is effective for fiscal years beginning after November 15, 2007. We do not expect that the implementation of this statement will have a material effect on our consolidated financial position or results of operations.
 
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” which permits entities to choose to measure many financial instruments and certain other items at fair value. This statement is effective for fiscal years beginning after November 15, 2007. We do not expect that the implementation of this statement will have a material effect on our consolidated financial position or results of operations.
 
In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”). SFAS 141R establishes principles and requirements for how an acquirer recognizes and measures in it’s financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS 141R also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. SFAS 141R is effective for financial statements issued for fiscal years beginning after December 15, 2008. We are currently evaluating the potential impact of adoption of SFAS 141R on our consolidated financial statements.
 
In December 2007, the FASB issued SFAS No. 160. “Noncontrolling Interests in Consolidated Financial Statements-and Amendment of ARB No. 51 (“SFAS 160”) SFAS 160 establishes accounting and reporting standards pertaining to ownership interests in subsidiaries held by parties other than the parent, the amount of net income attributable to the parent and to the noncontrolling interest, changes in a parent’s ownership interest, and the valuation of any retained noncontrolling equity investment when a subsidiary is deconsolidated. This statement also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS 160 is effective for fiscal years beginning on or after December 15, 2008. We are currently evaluating the potential impact of adoption of SFAS 160 on our consolidated financial statements.
 
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk
 
Response to this item is included in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” above.


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Item 8.   Financial Statements and Supplementary Data
 
See Index to Financial Statements and Financial Statement Schedule included in Item 15.
 
Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
 
None.
 
Item 9A.  Controls and Procedures
 
Evaluation of Disclosure Controls and Procedures
 
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic reports pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required financial disclosure.
 
We carried out an evaluation, under the supervision and with the participation of our management, including the principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based upon this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.
 
Management’s Report on Internal Control Over Financial Reporting
 
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
 
Our management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2007. In making its assessment of internal control over financial reporting, management used the criteria described in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
 
Our management has concluded that, as of December 31, 2007, our internal control over financial reporting was effective.
 
The effectiveness of our internal control over financial reporting as of December 31, 2007 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein within Item 15. See Report of Independent Registered Public Accounting Firm.
 
Changes in Internal Control Over Financial Reporting
 
There has been no change in our internal control over financial reporting that occurred during the fourth quarter of 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
Item 9B.   Other Information
 
None.


42


 

 
PART III
 
Item 10, 11, 12, 13 and 14.   Directors, Executive Officers and Corporate Governance, Executive Compensation, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, Certain Relationships and Related Transactions and Director Independence and Principal Accountant Fees and Services
 
The information required by Item 10, Item 11, Item 12, Item 13 and Item 14 is hereby incorporated or furnished, solely to the extent required by such item, from the Company’s definitive proxy statement, which is expected to be filed with the SEC no later than 120 days after the end of the Company’s fiscal year. Information from the Company’s definitive proxy statement shall not be deemed to be “filed” or “soliciting material,” or subject to liability for purposes of Section 18 of the Securities Exchange Act of 1934 to the maximum extent permitted under the Exchange Act.
 
PART IV
 
Item 15.   Exhibits and Financial Statement Schedules
 
(a) Financial Statements, Financial Statement Schedule and Exhibits
 
(1 & 2) See Index to Financial Statements and Financial Statement Schedule.
 
(3) Exhibits:
 
         
Exhibits
 
Description
 
  3 .1   Amended and Restated Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 1996, File No. 1-13102)
  3 .2   Amended and Restated Bylaws of the Company, dated September 4, 1997 (incorporated by reference to Exhibit 1 of the Company’s Form 8-K, dated September 4, 1997, as filed on September 29, 1997, File No. 1-13102)
  3 .3   Articles of Amendment to the Company’s Articles of Incorporation, dated June 20, 1994 (incorporated by reference to Exhibit 3.2 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 1996, File No. 1-13102)
  3 .4   Articles of Amendment to the Company’s Articles of Incorporation, dated May 31, 1996 (incorporated by reference to Exhibit 3.3 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 1996, File No. 1-13102)
  3 .5   Articles Supplementary relating to the Company’s 6.236% Series F Flexible Cumulative Redeemable Preferred Stock, $0.01 par value (incorporated by reference to Exhibit 3.1 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  3 .6   Articles Supplementary relating to the Company’s 7.236% Series G Flexible Cumulative Redeemable Preferred Stock, $0.01 par value (incorporated by reference to Exhibit 3.2 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  3 .7   Articles Supplementary relating to the Company’s Junior Participating Preferred Stock, $0.01 par value (incorporated by reference to Exhibit 4.10 of Form S-3 of the Company and First Industrial, L.P. dated September 24, 1997, Registration No. 333-29879)
  3 .8   Articles Supplementary relating to the Company’s 7.25% Series J Cumulative Redeemable Preferred Stock, $0.01 par value (incorporated by reference to Exhibit 4.1 of the Form 8-K of the Company filed January 17, 2006, File No. 1-13102)
  3 .9   Articles Supplementary relating to the Company’s 7.25% Series K Cumulative Redeemable Preferred Stock, $0.01 par value (incorporated by reference to Exhibit 1.6 of the Form 8-A of the Company, as filed on August 18, 2006, File No. 1-13102)


43


 

         
Exhibits
 
Description
 
  4 .1   Deposit Agreement, dated May 27, 2004, by and among the Company, EquiServe Inc. and EquiServe Trust Company, N.A. and holders from time to time of Series F Depositary Receipts (incorporated by reference to Exhibit 4.1 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  4 .2   Deposit Agreement, dated May 27, 2004, by and among the Company, EquiServe Inc. and EquiServe Trust Company, N.A. and holders from time to time of Series G Depositary Receipts (incorporated by reference to Exhibit 4.2 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  4 .3   Remarketing Agreement, dated May 27, 2004, relating to 50,000 depositary shares, each representing 1/100 of a share of the Series F Flexible Cumulative Redeemable Preferred Stock, by and among Lehman Brothers Inc., the Company and First Industrial, L.P. (incorporated by reference to Exhibit 1.2 of the Form 8-K of the Company, dated May 27, 2004, File No. 1-13102)
  4 .4   Remarketing Agreement, dated May 27, 2004, relating to 25,000 depositary shares, each representing 1/100 of a share of the Series G Flexible Cumulative Redeemable Preferred Stock, by and among Lehman Brothers Inc., the Company and First Industrial, L.P. (incorporated by reference to Exhibit 1.3 of the Form 8-K of the Company, dated May 27, 2004, File No. 1-13102)
  4 .5   Deposit Agreement, dated January 13, 2006, by and among the Company, Computershare Shareholder Services, Inc. and Computershare Trust Company, N.A., as depositary, and holders from time to time of Series J Depositary Receipts (incorporated by reference to Exhibit 10.1 of the Form 8-K of the Company, filed January 17, 2006, File No. 1-13102)
  4 .6   Deposit Agreement, dated August 21, 2006, by and among the Company, Computershare Shareholder Services, Inc. and Computershare Trust Company, N.A., as depositary, and holders from time to time of Series K Depositary Receipts (incorporated by reference to Exhibit 1.7 of the Form 8-A of the Company, as filed on August 18, 2006, File No. 1-13102)
  4 .7   Indenture, dated as of May 13, 1997, between First Industrial, L.P. and First Trust National Association, as Trustee (incorporated by reference to Exhibit 4.1 of the Form 10-Q of the Company for the fiscal quarter ended March 31, 1997, as amended by Form 10-Q/A No. 1 of the Company filed May 30, 1997, File No. 1-13102)
  4 .8   Supplemental Indenture No. 1, dated as of May 13, 1997, between First Industrial, L.P. and First Trust National Association as Trustee relating to $150 million of 7.60% Notes due 2007 and $100 million of 7.15% Notes due 2027 (incorporated by reference to Exhibit 4.2 of the Form 10-Q of the Company for the fiscal quarter ended March 31, 1997, as amended by Form 10-Q/A No. 1 of the Company filed May 30, 1997, File No. 1-13102)
  4 .9   Supplemental Indenture No. 2, dated as of May 22, 1997, between First Industrial, L.P. and First Trust National Association as Trustee relating to $100 million of 73/8% Notes due 2011(incorporated by reference to Exhibit 4.4 of the Form 10-Q of First Industrial, L.P. for the fiscal quarter ended March 31, 1997, File No. 333-21873)
  4 .10   Supplemental Indenture No. 3 dated October 28, 1997 between First Industrial, L.P. and First Trust National Association providing for the issuance of Medium-Term Notes due Nine Months or more from Date of Issue (incorporated by reference to Exhibit 4.1 of Form 8-K of First Industrial, L.P., dated November 3, 1997, as filed November 3, 1997, File No. 333-21873)
  4 .11   7.50% Medium-Term Note due 2017 in principal amount of $100 million issued by First Industrial, L.P. (incorporated by reference to Exhibit 4.19 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1997, File No. 1-13102)
  4 .12   Trust Agreement, dated as of May 16, 1997, between First Industrial, L.P. and First Bank National Association, as Trustee (incorporated by reference to Exhibit 4.5 of the Form 10-Q of First Industrial, L.P. for the fiscal quarter ended March 31, 1997, File No. 333-21873)
  4 .13   7.60% Notes due 2028 in principal amount of $200 million issued by First Industrial, L.P. (incorporated by reference to Exhibit 4.2 of the Form 8-K of First Industrial, L.P. dated July 15, 1998, File No. 333-21873)

44


 

         
Exhibits
 
Description
 
  4 .14   Supplemental Indenture No. 5, dated as of July 14, 1998, between First Industrial, L.P. and U.S. Bank Trust National Association, relating to First Industrial, L.P.’s 7.60% Notes due July 15, 2028 (incorporated by reference to Exhibit 4.1 of the Form 8-K of First Industrial, L.P. dated July 15, 1998, File No. 333-21873)
  4 .15   7.375% Note due 2011 in principal amount of $200 million issued by First Industrial, L.P. (incorporated by reference to Exhibit 4.15 of First Industrial, L.P.’s Annual Report on Form 10-K for the year ended December 31, 2000, File No. 333-21873)
  4 .16   Supplemental Indenture No. 6, dated as of March 19, 2001, between First Industrial, L.P. and U.S. Bank Trust National Association, relating to First Industrial, L.P.’s 7.375% Notes due March 15, 2011 (incorporated by reference to Exhibit 4.16 of First Industrial, L.P.’s Annual Report on Form 10-K for the year ended December 31, 2000, File No. 333-21873)
  4 .17   Registration Rights Agreement, dated as of March 19, 2001, among First Industrial, L.P. and Credit Suisse First Boston Corporation, Chase Securities, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney, Inc., Banc of America Securities LLC, Banc One Capital Markets, Inc. and UBS Warburg LLC (incorporated by reference to Exhibit 4.17 of First Industrial, L.P.’s Annual Report on Form 10-K for the year ended December 31, 2000, File No. 333-21873)
  4 .18   Supplemental Indenture No. 7 dated as of April 15, 2002, between First Industrial, L.P. and U.S. Bank National Association, relating to First Industrial, L.P.’s 6.875% Notes due 2012 and 7.75% Notes due 2032 (incorporated by reference to Exhibit 4.1 of the Form 8-K of First Industrial, L.P. dated April 4, 2002, File No. 333-21873)
  4 .19   Form of 6.875% Notes due in 2012 in the principal amount of $200 million issued by First Industrial, L.P. (incorporated by reference to Exhibit 4.2 of the Form 8-K of First Industrial, L.P., dated April 4, 2002, File No. 333-21873)
  4 .20   Form of 7.75% Notes due 2032 in the principal amount of $50.0 million issued by First Industrial, L.P. (incorporated by reference to Exhibit 4.3 of the Form 8-K of First Industrial, L.P., dated April 4, 2002, File No. 333-21873)
  4 .21   Supplemental Indenture No. 8, dated as of May 17, 2004, relating to 6.42% Senior Notes due
        June 1, 2014, by and between First Industrial, L.P. and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of the Form 8-K of First Industrial, L.P., dated May 27, 2004, File No. 333-21873)
  4 .22   Supplemental Indenture No. 9, dated as of June 14, 2004, relating to 5.25% Senior Notes due 2009, by and between the Operating Partnership and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of the Form 8-K of First Industrial, L.P., dated June 17, 2004, File No. 333-21873)
  4 .23   Supplemental Indenture No. 10, dated as of January 10, 2006, relating to 5.75% Senior Notes due 2016, by and between the Operating Partnership and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of the Form 8-K of the Company, filed January 11, 2006, File No. 1-13102)
  4 .24   Indenture dated as of September 25, 2006 among First Industrial, L.P., as issuer, the Company, as guarantor, and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 of the current report on Form 8-K of First Industrial, L.P. dated September 25, 2006, File No. 333-21873)
  4 .25   Form of 4.625% Exchangeable Senior Note due 2011 (incorporated by reference to Exhibit 4.2 of the current report on Form 8-K of First Industrial, L.P. dated September 25, 2006, File No. 333-21873)
  4 .26   Registration Rights Agreement dated September 25, 2006 among the Company, First Industrial, L.P. and the Initial Purchasers named therein (incorporated by reference to Exhibit 10.1 of the current report on Form 8-K of First Industrial, L.P. dated September 25, 2006, File No. 333-21873)
  4 .27   Supplemental Indenture No. 11, dated as of May 7, 2007, relating to 5.95% Senior Notes due 2017, by and between the Operating Partnership and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of the Form 8-K of the Company, filed May 5, 2007, File No. 1-13102)

45


 

         
Exhibits
 
Description
 
  10 .1   Eleventh Amended and Restated Partnership Agreement of First Industrial, L.P. dated August 21, 2006 (the “LP Agreement”) (incorporated by reference to Exhibit 10.2 of the Form 8-K of the Company, filed August 22, 2006, File No. 1-13102)
  10 .2   Sales Agreement by and among the Company, First Industrial, L.P. and Cantor Fitzgerald & Co. dated September 16, 2004 (incorporated by reference to Exhibit 1.1 of the Form 8-K of the Company, dated September 16, 2004, File No. 1-13102)
  10 .3   Registration Rights Agreement, dated April 29, 1998, relating to the Company’s Common Stock, par value $0.01 per share, between the Company, the Operating Partnership and Merrill Lynch, Pierce, Fenner & Smith Incorporated (incorporated by reference to Exhibit 4.1 of the Form 8-K of the Company dated May 1, 1998, File No. 1-13102)
  10 .4   Non-Competition Agreement between Jay H. Shidler and First Industrial Realty Trust, Inc. (incorporated by reference to Exhibit 10.16 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1994, File No. 1-13102)
  10 .5   Form of Non-Competition Agreement between each of Michael T. Tomasz, Paul T. Lambert, Michael J. Havala, Michael W. Brennan, Michael G. Damone, Duane H. Lund, and Johannson L. Yap and First Industrial Realty Trust, Inc. (incorporated by reference to Exhibit 10.14 to the Company’s Registration Statement on Form S-11, File No. 33-77804)
  10 .6†   1994 Stock Incentive Plan (incorporated by reference to Exhibit 10.37 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1994, File No. 1-13102)
  10 .7†   First Industrial Realty Trust, Inc. Deferred Income Plan (incorporated by reference to Exhibit 10 of the Form 10-Q of the Company for the fiscal quarter ended March 31, 1996, File No. 1-13102)
  10 .8   Contribution Agreement, dated March 19, 1996, among FR Acquisitions, Inc. and the parties listed on the signature pages thereto (incorporated by reference to Exhibit 10.1 of the Form 8-K of the Company, dated April 3, 1996, File No. 1-13102)
  10 .9   Contribution Agreement, dated January 31, 1997, among FR Acquisitions, Inc. and the parties listed on the signature pages thereto (incorporated by reference to Exhibit 10.58 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1996, File No. 1-13102)
  10 .10†   Employment Agreement, dated June 21, 2005, between the Company and Michael W. Brennan (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed June 24, 2005 File No. 1-13102)
  10 .11†   1997 Stock Incentive Plan (incorporated by reference to Exhibit 10.62 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1996, File No. 1-13102)
  10 .12†   2001 Stock Incentive Plan (incorporated by reference to Exhibit 10.34 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2001, File No. 1-13102)
  10 .13†   Employment Agreement, dated March 31, 2002, between First Industrial Realty Trust, Inc. and Michael J. Havala (incorporated by reference to Exhibit 10.1 of the Form 10-Q of First Industrial Realty Trust, Inc. for the fiscal quarter ended March 31, 2002, File No. 1-13102)
  10 .14†   Employment Agreement, dated March 31, 2002, between First Industrial Realty Trust, Inc. and Johannson L. Yap (incorporated by reference to Exhibit 10.2 of the Form 10-Q of First Industrial Realty Trust, Inc. for the fiscal quarter ended March 31, 2002, File No. 1-13102)
  10 .15†   Employment Agreement, dated March 25, 2002, between First Industrial Realty Trust, Inc. and David P. Draft (incorporated by reference to Exhibit 10.3 of the Form 10-Q of First Industrial Realty Trust, Inc. for the fiscal quarter ended March 31, 2002, File No. 1-13102)
  10 .16†   Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.3 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  10 .17†   Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.4 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  10 .18†   Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.5 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  10 .19†   Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.6 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)

46


 

         
Exhibits
 
Description
 
  10 .20   Fifth Amended and Restated Unsecured Revolving Credit Agreement, dated as of September 28, 2007, among First Industrial, L.P., First Industrial Realty Trust, Inc., JP Morgan Chase Bank, NA and certain other banks (incorporated by reference to Exhibit 10.1 of the Form 8-K of the Company filed October 1, 2007, File No. 1-13102)
  10 .21†   Form of Restricted Stock Agreement (Director’s Annual Retainer) (incorporated by reference to Exhibit 10.1 of the Form 8-K of the Company filed May 19, 2006, File No. 1-13102)
  10 .22†   Amendment No. 1 to the Company’s 2001 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2006, File No. 1-13102)
  10 .23†   Amendment No. 2 to the Company’s 2001 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2007, File No. 1-13102)
  10 .24†*   Amendment No. 1 to the Company’s 1994 Stock Incentive Plan
  10 .25†*   Amendment No. 1 to the Company’s 1997 Stock Incentive Plan
  10 .26†*   Form of Director Restricted Stock Award Agreement
  10 .27†*   Form of Director Restricted Stock Award Agreement
  10 .28†*   Form of Employee Restricted Stock Award Agreement
  10 .29†*   Form of Employee Restricted Stock Award Agreement
  10 .30†*   Employment Agreement dated January 30, 2006 between First Industrial Development Services, Inc. and Gerald A. Pientka
  10 .31†   Employment Agreement dated September 10, 2007 between First Industrial Realty Trust, Inc. and Robert Cutlip (incorporated by reference to Exhibit 10.1 of the Form 8-K of the Company filed September 12, 2007, File No. 1-13102)
  21 *   Subsidiaries of the Registrant
  23 *   Consent of PricewaterhouseCoopers LLP
  31 .1*   Certification of Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended
  31 .2*   Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended
  32 **   Certification of the Principal Executive Officer and 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.
 
Indicates a compensatory plan or arrangement contemplated by Item 15 a (3) of Form 10-K.

47


 

EXHIBIT INDEX
 
         
Exhibits
 
Description
 
  3 .1   Amended and Restated Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 1996, File No. 1-13102)
  3 .2   Amended and Restated Bylaws of the Company, dated September 4, 1997 (incorporated by reference to Exhibit 1 of the Company’s Form 8-K, dated September 4, 1997, as filed on September 29, 1997, File No. 1-13102)
  3 .3   Articles of Amendment to the Company’s Articles of Incorporation, dated June 20, 1994 (incorporated by reference to Exhibit 3.2 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 1996, File No. 1-13102)
  3 .4   Articles of Amendment to the Company’s Articles of Incorporation, dated May 31, 1996 (incorporated by reference to Exhibit 3.3 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 1996, File No. 1-13102)
  3 .5   Articles Supplementary relating to the Company’s 6.236% Series F Flexible Cumulative Redeemable Preferred Stock, $0.01 par value (incorporated by reference to Exhibit 3.1 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  3 .6   Articles Supplementary relating to the Company’s 7.236% Series G Flexible Cumulative Redeemable Preferred Stock, $0.01 par value (incorporated by reference to Exhibit 3.2 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  3 .7   Articles Supplementary relating to the Company’s Junior Participating Preferred Stock, $0.01 par value (incorporated by reference to Exhibit 4.10 of Form S-3 of the Company and First Industrial, L.P. dated September 24, 1997, Registration No. 333-29879)
  3 .8   Articles Supplementary relating to the Company’s 7.25% Series J Cumulative Redeemable Preferred Stock, $0.01 par value (incorporated by reference to Exhibit 4.1 of the Form 8-K of the Company filed January 17, 2006, File No. 1-13102)
  3 .9   Articles Supplementary relating to the Company’s 7.25% Series K Cumulative Redeemable Preferred Stock, $0.01 par value (incorporated by reference to Exhibit 1.6 of the Form 8-A of the Company, as filed on August 18, 2006, File No. 1-13102)
  4 .1   Deposit Agreement, dated May 27, 2004, by and among the Company, EquiServe Inc. and EquiServe Trust Company, N.A. and holders from time to time of Series F Depositary Receipts (incorporated by reference to Exhibit 4.1 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  4 .2   Deposit Agreement, dated May 27, 2004, by and among the Company, EquiServe Inc. and EquiServe Trust Company, N.A. and holders from time to time of Series G Depositary Receipts (incorporated by reference to Exhibit 4.2 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  4 .3   Remarketing Agreement, dated May 27, 2004, relating to 50,000 depositary shares, each representing 1/100 of a share of the Series F Flexible Cumulative Redeemable Preferred Stock, by and among Lehman Brothers Inc., the Company and First Industrial, L.P. (incorporated by reference to Exhibit 1.2 of the Form 8-K of the Company, dated May 27, 2004, File No. 1-13102)
  4 .4   Remarketing Agreement, dated May 27, 2004, relating to 25,000 depositary shares, each representing 1/100 of a share of the Series G Flexible Cumulative Redeemable Preferred Stock, by and among Lehman Brothers Inc., the Company and First Industrial, L.P. (incorporated by reference to Exhibit 1.3 of the Form 8-K of the Company, dated May 27, 2004, File No. 1-13102)
  4 .5   Deposit Agreement, dated January 13, 2006, by and among the Company, Computershare Shareholder Services, Inc. and Computershare Trust Company, N.A., as depositary, and holders from time to time of Series J Depositary Receipts (incorporated by reference to Exhibit 10.1 of the Form 8-K of the Company, filed January 17, 2006, File No. 1-13102)
  4 .6   Deposit Agreement, dated August 21, 2006, by and among the Company, Computershare Shareholder Services, Inc. and Computershare Trust Company, N.A., as depositary, and holders from time to time of Series K Depositary Receipts (incorporated by reference to Exhibit 1.7 of the Form 8-A of the Company, as filed on August 18, 2006, File No. 1-13102)


48


 

         
Exhibits
 
Description
 
  4 .7   Indenture, dated as of May 13, 1997, between First Industrial, L.P. and First Trust National Association, as Trustee (incorporated by reference to Exhibit 4.1 of the Form 10-Q of the Company for the fiscal quarter ended March 31, 1997, as amended by Form 10-Q/A No. 1 of the Company filed May 30, 1997, File No. 1-13102)
  4 .8   Supplemental Indenture No. 1, dated as of May 13, 1997, between First Industrial, L.P. and First Trust National Association as Trustee relating to $150 million of 7.60% Notes due 2007 and $100 million of 7.15% Notes due 2027 (incorporated by reference to Exhibit 4.2 of the Form 10-Q of the Company for the fiscal quarter ended March 31, 1997, as amended by Form 10-Q/A No. 1 of the Company filed May 30, 1997, File No. 1-13102)
  4 .9   Supplemental Indenture No. 2, dated as of May 22, 1997, between First Industrial, L.P. and First Trust National Association as Trustee relating to $100 million of 73/8% Notes due 2011(incorporated by reference to Exhibit 4.4 of the Form 10-Q of First Industrial, L.P. for the fiscal quarter ended March 31, 1997, File No. 333-21873)
  4 .10   Supplemental Indenture No. 3 dated October 28, 1997 between First Industrial, L.P. and First Trust National Association providing for the issuance of Medium-Term Notes due Nine Months or more from Date of Issue (incorporated by reference to Exhibit 4.1 of Form 8-K of First Industrial, L.P., dated November 3, 1997, as filed November 3, 1997, File No. 333-21873)
  4 .11   7.50% Medium-Term Note due 2017 in principal amount of $100 million issued by First Industrial, L.P. (incorporated by reference to Exhibit 4.19 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1997, File No. 1-13102)
  4 .12   Trust Agreement, dated as of May 16, 1997, between First Industrial, L.P. and First Bank National Association, as Trustee (incorporated by reference to Exhibit 4.5 of the Form 10-Q of First Industrial, L.P. for the fiscal quarter ended March 31, 1997, File No. 333-21873)
  4 .13   7.60% Notes due 2028 in principal amount of $200 million issued by First Industrial, L.P. (incorporated by reference to Exhibit 4.2 of the Form 8-K of First Industrial, L.P. dated July 15, 1998, File No. 333-21873)
  4 .14   Supplemental Indenture No. 5, dated as of July 14, 1998, between First Industrial, L.P. and U.S. Bank Trust National Association, relating to First Industrial, L.P.’s 7.60% Notes due July 15, 2028 (incorporated by reference to Exhibit 4.1 of the Form 8-K of First Industrial, L.P. dated July 15, 1998, File No. 333-21873)
  4 .15   7.375% Note due 2011 in principal amount of $200 million issued by First Industrial, L.P. (incorporated by reference to Exhibit 4.15 of First Industrial, L.P.’s Annual Report on Form 10-K for the year ended December 31, 2000, File No. 333-21873)
  4 .16   Supplemental Indenture No. 6, dated as of March 19, 2001, between First Industrial, L.P. and U.S. Bank Trust National Association, relating to First Industrial, L.P.’s 7.375% Notes due March 15, 2011 (incorporated by reference to Exhibit 4.16 of First Industrial, L.P.’s Annual Report on Form 10-K for the year ended December 31, 2000, File No. 333-21873)
  4 .17   Registration Rights Agreement, dated as of March 19, 2001, among First Industrial, L.P. and Credit Suisse First Boston Corporation, Chase Securities, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney, Inc., Banc of America Securities LLC, Banc One Capital Markets, Inc. and UBS Warburg LLC (incorporated by reference to Exhibit 4.17 of First Industrial, L.P.’s Annual Report on Form 10-K for the year ended December 31, 2000, File No. 333-21873)
  4 .18   Supplemental Indenture No. 7 dated as of April 15, 2002, between First Industrial, L.P. and U.S. Bank National Association, relating to First Industrial, L.P.’s 6.875% Notes due 2012 and 7.75% Notes due 2032 (incorporated by reference to Exhibit 4.1 of the Form 8-K of First
        Industrial, L.P. dated April 4, 2002, File No. 333-21873)
  4 .19   Form of 6.875% Notes due in 2012 in the principal amount of $200 million issued by First Industrial, L.P. (incorporated by reference to Exhibit 4.2 of the Form 8-K of First Industrial, L.P., dated April 4, 2002, File No. 333-21873)
  4 .20   Form of 7.75% Notes due 2032 in the principal amount of $50.0 million issued by First Industrial, L.P. (incorporated by reference to Exhibit 4.3 of the Form 8-K of First Industrial, L.P., dated April 4, 2002, File No. 333-21873)


49


 

         
Exhibits
 
Description
 
  4 .21   Supplemental Indenture No. 8, dated as of May 17, 2004, relating to 6.42% Senior Notes due June 1, 2014, by and between First Industrial, L.P. and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of the Form 8-K of First Industrial, L.P., dated May 27, 2004, File No. 333-21873)
  4 .22   Supplemental Indenture No. 9, dated as of June 14, 2004, relating to 5.25% Senior Notes due 2009, by and between the Operating Partnership and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of the Form 8-K of First Industrial, L.P., dated June 17, 2004, File No. 333-21873)
  4 .23   Supplemental Indenture No. 10, dated as of January 10, 2006, relating to 5.75% Senior Notes due 2016, by and between the Operating Partnership and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of the Form 8-K of the Company, filed January 11, 2006, File No. 1-13102)
  4 .24   Indenture dated as of September 25, 2006 among First Industrial, L.P., as issuer, the Company, as guarantor, and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 of the current report on Form 8-K of First Industrial, L.P. dated September 25, 2006, File No. 333-21873)
  4 .25   Form of 4.625% Exchangeable Senior Note due 2011 (incorporated by reference to Exhibit 4.2 of the current report on Form 8-K of First Industrial, L.P. dated September 25, 2006, File No. 333-21873)
  4 .26   Registration Rights Agreement dated September 25, 2006 among the Company, First Industrial, L.P. and the Initial Purchasers named therein (incorporated by reference to Exhibit 10.1 of the current report on Form 8-K of First Industrial, L.P. dated September 25, 2006, File No. 333-21873)
  4 .27   Supplemental Indenture No. 11, dated as of May 7, 2007, relating to 5.95% Senior Notes due 2017, by and between the Operating Partnership and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of the Form 8-K of the Company, filed May 5, 2007, File No. 1-13102)
  10 .1   Eleventh Amended and Restated Partnership Agreement of First Industrial, L.P. dated August 21, 2006 (the “LP Agreement”) (incorporated by reference to Exhibit 10.2 of the Form 8-K of the Company, filed August 22, 2006, File No. 1-13102)
  10 .2   Sales Agreement by and among the Company, First Industrial, L.P. and Cantor Fitzgerald & Co. dated September 16, 2004 (incorporated by reference to Exhibit 1.1 of the Form 8-K of the Company, dated September 16, 2004, File No. 1-13102)
  10 .3   Registration Rights Agreement, dated April 29, 1998, relating to the Company’s Common Stock, par value $0.01 per share, between the Company, the Operating Partnership and Merrill Lynch, Pierce, Fenner & Smith Incorporated (incorporated by reference to Exhibit 4.1 of the Form 8-K of the Company dated May 1, 1998, File No. 1-13102)
  10 .4   Non-Competition Agreement between Jay H. Shidler and First Industrial Realty Trust, Inc. (incorporated by reference to Exhibit 10.16 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1994, File No. 1-13102)
  10 .5   Form of Non-Competition Agreement between each of Michael T. Tomasz, Paul T. Lambert, Michael J. Havala, Michael W. Brennan, Michael G. Damone, Duane H. Lund, and Johannson L. Yap and First Industrial Realty Trust, Inc. (incorporated by reference to Exhibit 10.14 to the Company’s Registration Statement on Form S-11, File No. 33-77804)
  10 .6†   1994 Stock Incentive Plan (incorporated by reference to Exhibit 10.37 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1994, File No. 1-13102)
  10 .7†   First Industrial Realty Trust, Inc. Deferred Income Plan (incorporated by reference to Exhibit 10 of the Form 10-Q of the Company for the fiscal quarter ended March 31, 1996, File No. 1-13102)
  10 .8   Contribution Agreement, dated March 19, 1996, among FR Acquisitions, Inc. and the parties listed on the signature pages thereto (incorporated by reference to Exhibit 10.1 of the Form 8-K of the Company, dated April 3, 1996, File No. 1-13102)
  10 .9   Contribution Agreement, dated January 31, 1997, among FR Acquisitions, Inc. and the parties listed on the signature pages thereto (incorporated by reference to Exhibit 10.58 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1996, File No. 1-13102)


50


 

         
Exhibits
 
Description
 
  10 .10†   Employment Agreement, dated June 21, 2005, between the Company and Michael W. Brennan (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed June 24, 2005 File No. 1-13102)
  10 .11†   1997 Stock Incentive Plan (incorporated by reference to Exhibit 10.62 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1996, File No. 1-13102)
  10 .12†   2001 Stock Incentive Plan (incorporated by reference to Exhibit 10.34 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2001, File No. 1-13102)
  10 .13†   Employment Agreement, dated March 31, 2002, between First Industrial Realty Trust, Inc. and Michael J. Havala (incorporated by reference to Exhibit 10.1 of the Form 10-Q of First Industrial Realty Trust, Inc. for the fiscal quarter ended March 31, 2002, File No. 1-13102)
  10 .14†   Employment Agreement, dated March 31, 2002, between First Industrial Realty Trust, Inc. and Johannson L. Yap (incorporated by reference to Exhibit 10.2 of the Form 10-Q of First Industrial Realty Trust, Inc. for the fiscal quarter ended March 31, 2002, File No. 1-13102)
  10 .15†   Employment Agreement, dated March 25, 2002, between First Industrial Realty Trust, Inc. and David P. Draft (incorporated by reference to Exhibit 10.3 of the Form 10-Q of First Industrial Realty Trust, Inc. for the fiscal quarter ended March 31, 2002, File No. 1-13102)
  10 .16†   Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.3 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  10 .17†   Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.4 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  10 .18†   Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.5 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  10 .19†   Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.6 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  10 .20   Fifth Amended and Restated Unsecured Revolving Credit Agreement, dated as of September 28, 2007, among First Industrial, L.P., First Industrial Realty Trust, Inc., JP Morgan Chase Bank, NA and certain other banks (incorporated by reference to Exhibit 10.1 of the Form 8-K of the Company filed October 1, 2007, File No. 1-13102)
  10 .21†   Form of Restricted Stock Agreement (Director’s Annual Retainer) (incorporated by reference to Exhibit 10.1 of the Form 8-K of the Company filed May 19, 2006, File No. 1-13102)
  10 .22†   Amendment No. 1 to the Company’s 2001 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2006, File No. 1-13102)
  10 .23†   Amendment No. 2 to the Company’s 2001 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2007, File No. 1-13102)
  10 .24†*   Amendment No. 1 to the Company’s 1994 Stock Incentive Plan
  10 .25†*   Amendment No. 1 to the Company’s 1997 Stock Incentive Plan
  10 .26†*   Form of Director Restricted Stock Award Agreement
  10 .27†*   Form of Director Restricted Stock Award Agreement
  10 .28†*   Form of Employee Restricted Stock Award Agreement
  10 .29†*   Form of Employee Restricted Stock Award Agreement
  10 .30†*   Employment Agreement dated January 30, 2006 between First Industrial Development Services, Inc. and Gerald A. Pientka
  10 .31†   Employment Agreement dated September 10, 2007 between First Industrial Realty Trust, Inc. and Robert Cutlip (incorporated by reference to Exhibit 10.1 of the Form 8-K of the Company filed September 12, 2007, File No. 1-13102)
  21 *   Subsidiaries of the Registrant
  23 *   Consent of PricewaterhouseCoopers LLP


51


 

         
Exhibits
 
Description
 
  31 .1*   Certification of Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended
  31 .2*   Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended
  32 **   Certification of the Principal Executive Officer and 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.
 
Indicates a compensatory plan or arrangement contemplated by Item 15 a (3) of Form 10-K.


52


 

FIRST INDUSTRIAL REALTY TRUST, INC.
 
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
 
         
    Page
 
FINANCIAL STATEMENTS
       
Report of Independent Registered Public Accounting Firm
    54  
Consolidated Balance Sheets of First Industrial Realty Trust, Inc. (the “Company”) as of December 31, 2007 and 2006
    55  
Consolidated Statements of Operations of the Company for the Years Ended December 31, 2007, 2006 and 2005
    56  
Consolidated Statements of Comprehensive Income of the Company for the Years Ended December 31, 2007, 2006 and 2005
    57  
Consolidated Statements of Changes in Stockholders’ Equity of the Company for the Years Ended December 31, 2007, 2006 and 2005
    58  
Consolidated Statements of Cash Flows of the Company for the Years Ended December 31, 2007, 2006 and 2005
    59  
Notes to the Consolidated Financial Statements
    60  
FINANCIAL STATEMENT SCHEDULE
       
Schedule III: Real Estate and Accumulated Depreciation
    S-1  
 
FIRSTCAL INDUSTRIAL, L.L.C.
 
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
 
         
    Page
 
FINANCIAL STATEMENTS
       
Report of Independent Registered Public Accounting Firm
    92  
Consolidated Statements of Financial Position of FirstCal Industrial, L.L.C. as of December 31, 2007 and 2006 (not covered by the report included herein)
    93  
Consolidated Statements of Operations of FirstCal Industrial, L.L.C. for the Years Ended December 31, 2007 and 2006 (not covered by the report included herein) and for the period from March 18, 2005 (inception) to December 31, 2005
    94  
Consolidated Statements of Changes in Members’ Capital of FirstCal Industrial, L.L.C. for the Years Ended December 31, 2007 and 2006 (not covered by the report included herein) and for the period from March 18, 2005 (inception) to December 31, 2005
    95  
Consolidated Statements of Cash Flows of FirstCal Industrial, L.L.C. for the Years Ended December 31, 2007 and 2006 (not covered by the report included herein) and for the period from March 18, 2005 (inception) to December 31, 2005
    96  
Notes to the Consolidated Financial Statements
    97  


53


 

 
Report of Independent Registered Public Accounting Firm
 
To the Board of Directors and Stockholders of
First Industrial Realty Trust, Inc.:
 
In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of First Industrial Realty Trust, Inc. and its subsidiaries (“the Company”) at December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements and financial statement schedule and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
 
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
/s/  PricewaterhouseCoopers LLP
Chicago, Illinois
 
February 25, 2008


54


 

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
CONSOLIDATED BALANCE SHEETS
 
                 
    December 31,
    December 31,
 
    2007     2006  
    (Dollars in thousands, except share and per share data)  
 
ASSETS
Assets:
               
Investment in Real Estate:
               
Land
  $ 655,523     $ 558,425  
Buildings and Improvements
    2,599,784       2,626,284  
Construction in Progress
    70,961       35,019  
Less: Accumulated Depreciation
    (509,981 )     (465,418 )
                 
Net Investment in Real Estate
    2,816,287       2,754,310  
                 
Real Estate Held for Sale, Net of Accumulated Depreciation and Amortization of $3,038 and $9,688 at December 31, 2007 and December 31, 2006, respectively
    37,875       115,961  
Cash and Cash Equivalents
    5,757       16,135  
Restricted Cash
    24,903       15,970  
Tenant Accounts Receivable, Net
    9,665       8,014  
Investments in Joint Ventures
    57,543       55,527  
Deferred Rent Receivable, Net
    32,665       28,839  
Deferred Financing Costs, Net
    15,373       15,210  
Deferred Leasing Intangibles, Net
    87,019       86,265  
Prepaid Expenses and Other Assets, Net
    170,946       128,168  
                 
Total Assets
  $ 3,258,033     $ 3,224,399  
                 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
               
Mortgage Loans Payable, Net
  $ 73,550     $ 77,926  
Senior Unsecured Debt, Net
    1,550,991       1,549,732  
Unsecured Line of Credit
    322,129       207,000  
Accounts Payable and Accrued Expenses
    146,308       119,027  
Deferred Leasing Intangibles, Net
    22,041       19,486  
Rents Received in Advance and Security Deposits
    31,425       30,844  
Leasing Intangibles Held for Sale, Net of Accumulated Amortization of $0 and $183 at December 31, 2007 and December 31, 2006, respectively
          2,310  
Dividends Payable
    37,311       42,548  
                 
Total Liabilities
    2,183,755       2,048,873  
                 
Commitments and Contingencies
           
Minority Interest
    150,359       152,547  
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 December 31, 2007, 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. At December 31, 2006, 10,000,000 shares authorized, 20,000, 500, 250, 600 and 200 shares of Series C, F, G, J and K Cumulative Preferred Stock, respectively, issued and outstanding, having a liquidation preference of $2,500 per share ($50,000), $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, 47,996,263 and 47,537,030 shares issued and 43,672,149 and 45,010,630 shares outstanding at December 31, 2007 and December 31, 2006, respectively)
    480       475  
Additional Paid-in-Capital
    1,354,674       1,388,311  
Distributions in Excess of Accumulated Earnings
    (281,587 )     (284,955 )
Accumulated Other Comprehensive Loss
    (9,630 )     (10,264 )
Treasury Shares at Cost (4,324,114 and 2,526,400 shares at December 31, 2007 and December 31, 2006, respectively)
    (140,018 )     (70,588 )
                 
Total Stockholders’ Equity
    923,919       1,022,979  
                 
Total Liabilities and Stockholders’ Equity
  $ 3,258,033     $ 3,224,399  
                 
 
The accompanying notes are an integral part of the financial statements.


55


 

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
CONSOLIDATED STATEMENTS OF OPERATIONS
 
                         
    Year Ended
    Year Ended
    Year Ended
 
    December 31,
    December 31,
    December 31,
 
    2007     2006     2005  
    (In thousands except per share data)  
 
Revenues:
                       
Rental Income
  $ 281,747     $ 239,448     $ 194,500  
Tenant Recoveries and Other Income
    117,552       100,936       76,922  
Contractor Revenues
    35,628       10,540       16,241  
                         
Total Revenues
    434,927       350,924       287,663  
                         
Expenses:
                       
Property Expenses
    129,403       115,230       95,172  
General and Administrative
    92,101       77,497       55,812  
Depreciation and Other Amortization
    153,682       130,582       94,490  
Contractor Expenses
    34,553       10,263       15,574  
                         
Total Expenses
    409,739       333,572       261,048  
                         
Other Income/Expense:
                       
Interest Income
    1,926       1,614       1,486  
Interest Expense
    (119,314 )     (121,141 )     (108,339 )
Amortization of Deferred Financing Costs
    (3,210 )     (2,666 )     (2,125 )
Mark-to-Market/(Loss) Gain on Settlement of Interest Rate Protection Agreements
          (3,112 )     811  
(Loss) Gain From Early Retirement of Debt
    (393 )           82  
                         
Total Other Income/Expense
    (120,991 )     (125,305 )     (108,085 )
Loss from Continuing Operations Before Equity in Income of Joint Ventures, Income Tax Benefit and Income Allocated To Minority Interest
    (95,803 )     (107,953 )     (81,470 )
Equity in Income of Joint Ventures
    30,045       30,673       3,699  
Income Tax Benefit
    10,571       9,882       14,337  
Minority Interest Allocable to Continuing Operations
    9,944       11,593       9,695  
                         
Loss from Continuing Operations
    (45,243 )     (55,805 )     (53,739 )
Income from Discontinued Operations (Including Gain on Sale of Real Estate of $244,962, $213,442, and $132,139 for the Years Ended December 31, 2007, 2006 and 2005, respectively)
    260,975       240,145       167,406  
Provision for Income Taxes Allocable to Discontinued Operations (including $36,032, $47,511, and $20,529 allocable to Gain on Sale of Real Estate for the Years Ended December 31, 2007, 2006 and 2005, respectively)
    (38,044 )     (51,102 )     (23,898 )
Minority Interest Allocable to Discontinued Operations
    (28,178 )     (24,594 )     (18,886 )
                         
Income Before Gain on Sale of Real Estate
    149,510       108,644       70,883  
Gain on Sale of Real Estate
    9,425       6,071       29,550  
Provision for Income Taxes Allocable to Gain on Sale of Real Estate
    (3,082 )     (2,119 )     (10,871 )
Minority Interest Allocable to Gain on Sale of Real Estate
    (802 )     (514 )     (2,458 )
                         
Net Income
    155,051       112,082       87,104  
Less: Preferred Dividends
    (21,320 )     (21,424 )     (10,688 )
Less: Redemption of Preferred Stock
    (2,017 )     (672 )      
                         
Net Income Available to Common Stockholders
  $ 131,714     $ 89,986     $ 76,416  
                         
Basic and Diluted Earnings Per Share:
                       
Loss from Continuing Operations Available to Common Stockholders
  $ (1.43 )   $ (1.69 )   $ (1.14 )
                         
Income from Discontinued Operations
  $ 4.42     $ 3.74     $ 2.94  
                         
Net Income Available to Common Stockholders
  $ 2.99     $ 2.04     $ 1.80  
                         
Weighted Average Shares Outstanding
    44,086       44,012       42,431  
                         
Dividends/Distributions declared per Common Share/Unit Outstanding
  $ 2.8500     $ 2.8100     $ 2.7850  
                         
 
The accompanying notes are an integral part of the financial statements.


56


 

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
                         
    Year Ended
    Year Ended
    Year Ended
 
    December 31,
    December 31,
    December 31,
 
    2007     2006     2005  
    (Dollars in thousands)  
 
Net Income
  $ 155,051     $ 112,082     $ 87,104  
Other Comprehensive Income (Loss):
                       
Settlement of Interest Rate Protection Agreements
    (4,261 )     (1,729 )      
Reclassification of Settlement of Interest Rate Protection Agreements to Net Income
                (159 )
Mark-to-Market of Interest Rate Protection Agreements, Net of Tax Provision
    3,819       (2,800 )     (1,414 )
Amortization of Interest Rate Protection Agreements
    (916 )     (912 )     (1,085 )
Foreign Currency Translation Adjustment, Net of Tax Provision
    2,134              
Other Comprehensive (Income) Loss Allocable to Minority Interest
    (142 )     698       837  
                         
Other Comprehensive Income
  $ 155,685     $ 107,339     $ 85,283  
                         
 
The accompanying notes are an integral part of the financial statements.


57


 

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
 
                         
    Year Ended
    Year Ended
    Year Ended
 
    December 31,
    December 31,
    December 31,
 
    2007     2006     2005  
    (Dollars in thousands)  
 
Preferred Stock — Beginning of Year
  $     $     $  
Issuance of Preferred Stock
                 
Redemption of Preferred Stock
                 
                         
Preferred Stock — End of Year
  $     $     $  
                         
Common Stock — Beginning of Year
  $ 475     $ 470     $ 454  
Net Proceeds from the Issuance of Common Stock
          1       15  
Issuance of Restricted Stock
    5       3       2  
Repurchase and Retirement of Common Stock
          (1 )     (1 )
Restricted Stock Forfeitures
                (1 )
Conversion of Units to Common Stock
          2       1  
                         
Common Stock — End of Year
  $ 480     $ 475     $ 470  
                         
Additional Paid-In-Capital — Beginning of Year
  $ 1,388,311     $ 1,384,712     $ 1,142,356  
Net Proceeds from the Issuance of Common Stock
    567       3,819       56,109  
Issuance of Restricted Stock
    (5 )     (3 )     8,379  
Repurchase and Retirement of Restricted Stock/Common Stock
    (3,210 )     (2,463 )     (2,741 )
Restricted Stock Forfeitures
                (2,825 )
Call Spread
          (6,835 )      
Net Proceeds from the Issuance of Preferred Stock
          192,624       181,484  
Redemption of Preferred Stock
    (47,997 )     (181,484 )      
Conversion of Units to Common Stock
    2,858       5,142       1,950  
Reclassification to initially adopt SFAS No. 123R
          (16,825 )      
Amortization of Restricted Stock Grants
    14,150       9,624        
                         
Additional Paid-In-Capital — End of Year
  $ 1,354,674     $ 1,388,311     $ 1,384,712  
                         
Dist. In Excess of Accum. Earnings — Beginning of Year
  $ (284,955 )   $ (248,686 )   $ (203,417 )
Preferred Stock Dividends
    (21,320 )     (21,424 )     (10,688 )
Distributions ($2.8500, $2.8100 and $2.7850 per Share/Unit at December 31, 2007, 2006 and 2005, respectively)
    (146,126 )     (144,720 )     (139,168 )
Redemption of Preferred Stock
    (2,017 )     (672 )      
Repurchase and Retirement of Restricted Stock/Common Stock
    (728 )     (269 )     (543 )
Restricted Stock Forfeitures
                (147 )
Net Income Before Minority Interest
    174,087       125,597       98,753  
Minority Interest:
                       
Allocation of Income
    (19,036 )     (13,515 )     (11,649 )
Distributions ($2.8500, $2.8100 and $2.7850 per Unit at December 31, 2007, 2006 and 2005, respectively)
    18,508       18,734       18,173  
                         
Dist. In Excess of Accum. Earnings — End of Year
  $ (281,587 )   $ (284,955 )   $ (248,686 )
                         
Unearned Value of Rest. Stock Grants — Beginning of Year
  $     $ (16,825 )   $ (19,611 )
Issuance of Restricted Stock
                (8,381 )
Amortization of Restricted Stock Grants
                8,845  
Restricted Stock Forfeitures
                2,322  
Reclassification to initially adopt SFAS No. 123R
          16,825        
                         
Unearned Value of Rest. Stock Grants — End of Year
  $     $     $ (16,825 )
                         
Treasury Shares, at cost — Beginning of Year
  $ (70,588 )   $ (70,588 )   $ (70,588 )
Purchase of Treasury Shares
    (69,430 )            
                         
Treasury Shares, at cost — End of Year
  $ (140,018 )   $ (70,588 )   $ (70,588 )
                         
Accum. Other Comprehensive Loss — Beginning of Year
  $ (10,264 )   $ (5,521 )   $ (3,700 )
Settlement of Interest Rate Protection Agreements
    (4,261 )     (1,729 )      
Reclassification of Settlement of Interest Rate Protection Agreements to Net Income
                (159 )
Mark-to-Market of Interest Rate Protection Agreements, Net of Tax Provision
    3,819       (2,800 )     (1,414 )
Amortization of Interest Rate Protection Agreements
    (916 )     (912 )     (1,085 )
Foreign Currency Translation Adjustment, Net of Tax Provision
    2,134              
Other Comprehensive (Income) Loss Allocable to Minority Interest
    (142 )     698       837  
                         
Accum. Other Comprehensive Loss — End of Year
  $ (9,630 )   $ (10,264 )   $ (5,521 )
                         
Total Stockholders’ Equity at End of Year
  $ 923,919     $ 1,022,979     $ 1,043,562  
                         
 
The accompanying notes are an integral part of the financial statements.


58


 

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                         
    Year Ended
    Year Ended
    Year Ended
 
    December 31,
    December 31,
    December 31,
 
    2007     2006     2005  
 
CASH FLOWS FROM OPERATING ACTIVITIES:
                       
Net Income
  $ 155,051     $ 112,082     $ 87,104  
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
                       
Allocation of Income to Minority Interest
    19,036       13,515       11,649  
Depreciation
    121,584       121,347       99,338  
Amortization of Deferred Financing Costs
    3,210       2,666       2,125  
Other Amortization
    54,556       40,965       33,728  
Provision for Bad Debt
    2,212       2,289       1,817  
Mark-to-Market/Loss on Settlement of Interest Rate Protection Agreements
          (16 )     (143 )
Loss (Gain) From Early Retirement of Debt
    393             (82 )
Equity in Income of Joint Ventures
    (30,045 )     (30,673 )     (3,699 )
Distributions from Joint Ventures
    31,365       31,664       3,866  
Decrease (Increase) in Developments for Sale Costs
    1,209       5,883       (16,241 )
Gain on Sale of Real Estate
    (254,387 )     (219,513 )     (161,689 )
Increase in Tenant Accounts Receivable and Prepaid Expenses and Other Assets, Net
    (20,140 )     (16,524 )     (23,371 )
Increase in Deferred Rent Receivable
    (9,710 )     (10,154 )     (9,459 )
Increase in Accounts Payable and Accrued Expenses and Rents Received in Advance and Security Deposits
    18,408       6,020       24,407  
Increase in Restricted Cash
    (6 )            
                         
Net Cash Provided by Operating Activities
    92,736       59,551       49,350  
                         
CASH FLOWS FROM INVESTING ACTIVITIES:
                       
Purchases of and Additions to Investment in Real Estate
    (677,461 )     (813,840 )     (920,707 )
Net Proceeds from Sales of Investments in Real Estate
    800,147       907,428       537,252  
Contributions to and Investments in Joint Ventures
    (27,696 )     (32,773 )     (45,175 )
Distributions from Joint Ventures
    22,863       19,734       2,971  
Funding of Notes Receivable
    (8,385 )            
Repayment and Sale of Mortgage Loans Receivable
    26,350       34,987       83,561  
(Increase) Decrease in Restricted Cash
    (8,909 )     13,611       (29,556 )
                         
Net Cash Provided by (Used in) Investing Activities
    126,909       129,147       (371,654 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES:
                       
Net Proceeds from the Issuance of Common Stock
    567       3,462       55,754  
Proceeds from the Issuance of Preferred Stock
          200,000       187,500  
Preferred Stock Offering Costs
          (7,103 )     (5,906 )
Redemption of Preferred Stock
    (50,014 )     (182,156 )      
Repurchase of Restricted Stock
    (3,938 )     (2,660 )     (3,285 )
Proceeds from Senior Unsecured Debt
    149,595       399,306        
Other Costs from Senior Unsecured Debt
    (4,261 )     (1,729 )      
Repayment of Senior Unsecured Debt
    (150,000 )     (150,000 )     (50,000 )
Dividends/Distributions
    (146,660 )     (143,858 )     (137,672 )
Preferred Stock Dividends
    (26,023 )     (19,248 )     (8,162 )
Purchase of Treasury Shares
    (69,430 )            
Proceeds from Mortgage Loans Payable
                1,167  
Repayments of Mortgage Loans Payable
    (41,475 )     (12,618 )     (1,987 )
Proceeds from Unsecured Lines of Credit
    879,129       779,300       647,500  
Repayments on Unsecured Lines of Credit
    (764,000 )     (1,029,800 )     (357,500 )
Call Spread
          (6,835 )      
Debt Issuance Costs and Costs Incurred in Connection with the Early Retirement of Debt
    (3,766 )     (6,861 )     (1,792 )
Cash Book Overdraft. 
    253              
                         
Net Cash (Used in) Provided by Financing Activities
    (230,023 )     (180,800 )     325,617  
                         
Net (Decrease) Increase in Cash and Cash Equivalents
    (10,378 )     7,898       3,313  
Cash and Cash Equivalents, Beginning of Period
    16,135       8,237       4,924  
                         
Cash and Cash Equivalents, End of Period
  $ 5,757     $ 16,135     $ 8,237  
                         
 
The accompanying notes are an integral part of the financial statements.


59


 

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
 
1.   Organization and Formation of Company
 
First Industrial Realty Trust, Inc. was organized in the state of Maryland on August 10, 1993. First Industrial Realty Trust, Inc. 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,” and our taxable REIT subsidiary, First Industrial Investment, Inc., as the “TRS.”
 
We began operations on July 1, 1994. Our operations are conducted primarily through the Operating Partnership, of which we are the sole general partner, and the TRS, of which the Operating Partnership is the sole stockholder. We also conduct operations through other partnerships, corporations, and limited liability companies, the operating data of which, together with that of the Operating Partnership and the TRS, is consolidated with that of the Company as presented herein.
 
We also own minority equity interests in, and provide various services to, five joint ventures which 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” and the “2006 Land/Development Joint Venture”). We also owned economic interests in and provided various services to a sixth joint venture (the “1998 Core Joint Venture”). On January 31, 2007, we purchased the 90% equity interest from the institutional investor in the 1998 Core Joint Venture. Effective January 31, 2007, the assets and liabilities and results of operations of the 1998 Core Joint Venture are consolidated with the Company since we own 100% of the equity interest. Prior to January 31, 2007, the 1998 Core Joint Venture was accounted for under the equity method of accounting. Additionally, in December 2007, we entered into two new joint ventures, (the “2007 Canada Joint Venture” and the “2007 Europe Joint Venture” together with 2003 Net Lease Joint Venture, 2005 Development/Repositioning Joint Venture, 2005 Core Joint Venture, the 2006 Net Lease Co-Investment Program, the 2006 Land/Development Joint Venture and the 1998 Core Joint Venture, the “Joint Ventures”). At December 31, the 2007 Canada Joint Venture and the 2007 Europe Joint Venture did not own any properties. The operating data of our Joint Ventures is not consolidated with that of the Company as presented herein. However, the operating data of the 2005 Development/Repositioning Joint Venture, referred to as FirstCal Industrial, LLC, is separately presented on a consolidated basis, separate from that of the Company.
 
As of December 31, 2007, we owned 885 industrial properties (inclusive of developments in progress) located in 28 states in the United States and one province in Canada, containing an aggregate of approximately 75.9 million square feet of gross leasable area (“GLA”).
 
Any references to the number of buildings and square footage in the financial statement footnotes are unaudited.
 
2.   Basis of Presentation
 
First Industrial Realty Trust, Inc. is the sole general partner of the Operating Partnership, with an approximate 87.1% and 87.3% ownership interest at December 31, 2007 and 2006, respectively. Minority interest at December 31, 2007 and 2006, represents the approximate 12.9% and 12.7%, respectively, aggregate partnership interest in the Operating Partnership held by the limited partners thereof.
 
Our consolidated financial statements at December 31, 2007 and 2006 and for each of the years ended December 31, 2007, 2006 and 2005 include the accounts and operating results of the Company and our subsidiaries. Such financial statements present our minority equity interests in our joint ventures under the equity method of accounting. All intercompany transactions have been eliminated in consolidation.


60


 

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
3.   Summary of Significant Accounting Policies
 
In order to conform with generally accepted accounting principles, we are required in preparation of our financial statements to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of December 31, 2007 and 2006, and the reported amounts of revenues and expenses for each of the years ended December 31, 2007, 2006 and 2005. Actual results could differ from those estimates.
 
Cash and Cash Equivalents
 
Cash and cash equivalents include all cash and liquid investments with an initial maturity of three months or less. The carrying amount approximates fair value due to the short term maturity of these investments.
 
Restricted Cash
 
At December 31, 2007 and 2006, restricted cash includes cash held in escrow in connection with mortgage debt requirements and gross proceeds from the sales of certain industrial properties. These sales proceeds will be disbursed as we exchange into properties under Section 1031 of the Internal Revenue Code. The carrying amount approximates fair value due to the short term maturity of these investments.
 
Investment in Real Estate and Depreciation
 
Investment in Real Estate is carried at cost. We review our properties on a quarterly basis for impairment and provide a provision if impairments are found. To determine if an impairment may exist, we review our properties and identify those that have had either an event of change or event of circumstances warranting further assessment of recoverability (such as a decrease in occupancy). If further assessment of recoverability is needed, we estimate the future net cash flows expected to result from the use of the property and its eventual disposition, on an individual property basis. If the sum of the expected future net cash flows (undiscounted and without interest charges) is less than the carrying amount of the property on an individual property basis, we will recognize an impairment loss based upon the estimated fair value of such property. For properties we consider held for sale, we cease depreciating the properties and value the properties at the lower of depreciated cost or fair value, less costs to dispose. If circumstances arise that were previously considered unlikely, and, as a result, we decide not to sell a property previously classified as held for sale, we will reclassify such property as held and used. Such property is measured at the lower of its carrying amount (adjusted for any depreciation and amortization expense that would have been recognized had the property been continuously classified as held and used) or fair value at the date of the subsequent decision not to sell. To calculate the fair value of properties held for sale, we deduct from the estimated sales price of the property the estimated costs to close the sale. We classify properties as held for sale when our management has approved the properties for sale.
 
Interest costs, real estate taxes, compensation costs of development personnel and other directly related costs incurred during construction periods are capitalized and depreciated commencing with the date the property is substantially completed. Upon substantial completion, we reclassify construction in progress to building, tenant improvements and leasing commissions. Such costs begin to be capitalized to the development projects from the point we are undergoing necessary activities to get the development ready for its intended use and ceases when the development projects are substantially completed and held available for occupancy. Depreciation expense is computed using the straight-line method based on the following useful lives:
 
         
    Years  
 
Buildings and Improvements
    8 to 50  
Land Improvements
    1 to 15  
Furniture, Fixtures and Equipment
    5 to 10  


61


 

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Construction expenditures for tenant improvements, leasehold improvements and leasing commissions (inclusive of compensation costs of personnel attributable to leasing) are capitalized and amortized over the terms of each specific lease. Capitalized compensation costs of personnel attributable to leasing relate to time directly attributable to originating leases with independent third parties that result directly from and are essential to originating those leases and would not have been incurred had these leasing transactions not occurred. Repairs and maintenance are charged to expense when incurred. Expenditures for improvements are capitalized.
 
We account for all acquisitions entered into subsequent to June 30, 2001 in accordance with Financial Accounting Standards Board’s (“FASB”) Statement of Financial Accounting Standard No. 141, “Business Combinations” (“FAS 141”). Upon acquisition of a property, we allocate the purchase price of the property based upon the fair value of the assets acquired, which generally consist of land, buildings, tenant improvements, leasing commissions and intangible assets including in-place leases, above market and below market leases and tenant relationships. We allocate the purchase price to the fair value of the tangible assets of an acquired property by valuing the property as if it were vacant. Acquired above and below market leases are valued based on the present value of the difference between prevailing market rates and the in-place rates over the remaining lease term. Acquired above and below market leases are amortized over the remaining non-cancelable terms of the respective leases as an adjustment to rental revenue on our consolidated statements of operations.
 
The purchase price is further allocated to in-place lease values and tenant relationships based on our evaluation of the specific characteristics of each tenant’s lease and our overall relationship with the respective tenant. The value of in-place lease intangibles and tenant relationships, which are included as components of Deferred Leasing Intangibles, Net (see below) are amortized over the remaining lease term (and expected renewal periods of the respective lease for tenant relationships) as adjustments to depreciation and other amortization expense. If a tenant terminates its lease early, the unamortized portion of the tenant improvements, leasing commissions, above and below market leases, the in-place lease value and tenant relationships is immediately written off.
 
Deferred Leasing Intangibles, exclusive of deferred leasing intangibles held for sale, included in our total assets consist of the following:
 
                 
    December 31,
    December 31,
 
    2007     2006  
 
In-Place Leases
  $ 86,398     $ 81,422  
Less: Accumulated Amortization
    (24,860 )     (15,361 )
                 
    $ 61,538     $ 66,061  
                 
Above Market Leases
  $ 6,440     $ 6,933  
Less: Accumulated Amortization
    (2,519 )     (2,177 )
                 
    $ 3,921     $ 4,756  
                 
Tenant Relationships
  $ 24,970     $ 16,657  
Less: Accumulated Amortization
    (3,410 )     (1,209 )
                 
    $ 21,560     $ 15,448  
                 
Total Deferred Leasing Intangibles, Net
    87,019       86,265  
                 


62


 

 
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:
 
                 
    December 31,
    December 31,
 
    2007     2006  
 
Below Market Leases
  $ 31,668     $ 25,735  
Less: Accumulated Amortization
    (9,627 )     (6,249 )
                 
Total Deferred Leasing Intangibles, Net
  $ 22,041     $ 19,486  
                 
 
Amortization expense related to in-place leases and tenant relationships of deferred leasing intangibles was $23,913, $17,403, and $9,160 for the years ended December 31, 2007, 2006, and 2005, respectively. Rental revenues increased by $4,265, $3,656, and $2,427 related to amortization of above/(below) market leases for the years ended December 31, 2007, 2006, and 2005, respectively. We will recognize net amortization expense related to deferred leasing intangibles over the next five years, for properties owned as of December 31, 2007, as follows:
 
                 
          Estimated Net Increase to
 
    Estimated Net Amortization
    Rental Revenues Related to
 
    of In-Place Leases and
    Above and Below Market
 
    Tenant Relationships     Leases  
 
2008
  $ 15,110     $ 3,948  
2009
    12,829       3,160  
2010
    11,046       2,373  
2011
    9,592       1,480  
2012
    7,942       1,077  
 
Contractor Revenues and Expenses
 
During 2007 and 2006, the TRS entered into contracts with third parties to construct industrial properties and also acted as general contractor to construct industrial properties, including properties for the 2005 Development/Repositioning Joint Venture during 2007. We use the percentage-of-completion contract method to recognize revenue. Using this method, revenues are recorded based on estimates of the percentage of completion of individual contracts. The percentage of completion estimates are based on a comparison of the contract expenditures incurred to the estimated final costs. Changes in job performance, job conditions and estimated profitability may result in revisions to costs and income and are recognized in the period in which the revisions are determined.
 
Foreign Currency Transactions and Translation
 
During 2007, we owned one industrial property and one land parcel located in Toronto, Canada for which the functional currency was determined to be the Canadian dollar. The assets and liabilities of this industrial property and land parcel are translated to U.S. dollars from the Canadian dollar based on the current exchange rate prevailing at each balance sheet date and any resulting translation adjustments are included in accumulated other comprehensive income (loss). The revenues and expenses of this property and land parcel are translated into U.S. dollars using the average exchange rates prevailing during the periods presented.
 
Deferred Financing Costs
 
Deferred financing costs include fees and costs incurred to obtain long-term financing. These fees and costs are being amortized over the terms of the respective loans. Accumulated amortization of deferred financing costs was $15,089 and $13,863 at December 31, 2007 and 2006, respectively. Unamortized deferred financing costs are written-off when debt is retired before the maturity date.


63


 

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Investments in Joint Ventures
 
Investments in Joint Ventures represent our minority equity interests in our joint ventures. We account for our Investments in Joint Ventures under the equity method of accounting, as we do not have operational control or a majority voting interest. Under the equity method of accounting, our share of earnings or losses of our Joint Ventures is reflected in income as earned and contributions or distributions increase or decrease, respectively, our Investments in Joint Ventures as paid or received, respectively. Differences between our carrying value of our Investments in Joint Ventures and our underlying equity of such Joint Ventures are amortized over the respective lives of the underlying assets.
 
Stock Based Compensation
 
Effective January 1, 2006 we adopted Statement of Financial Accounting Standards No. 123R, “Share Based Payment” (“FAS 123R”), using the modified prospective application method, which requires measurement of compensation cost for all stock-based awards at fair value on the date of grant and recognition of compensation over the service period for awards expected to vest. For the year ended December 31, 2005, we accounted for our stock incentive plans under the recognition and measurement principles of Statement of Financial Accounting Standards No. 123, “Accounting for Stock Based Compensation” for all new issuances of stock based compensation. At January 1, 2006, we did not have any unvested option awards and we had accounted for our previously issued restricted stock awards at fair value. Accordingly, the adoption of FAS 123R did not require us to recognize a cumulative effect of a change in accounting principle. We reclassified $16,825 from the Unearned Value of Restricted Stock Grants caption within Stockholder’s Equity to Additional Paid in Capital during the year ended December 31, 2006 in accordance with the provisions of FAS 123R.
 
Prior to January 1, 2003, we accounted for our stock incentive plans under the recognition measurement principles of Accounting Principles Board opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). Under APB 25, compensation expense is not recognized for options issued in which the strike price is equal to the fair value of our stock on the date of grant. The following table illustrates the pro forma effect on net income and earnings per share as if the fair value recognition provisions of FAS 123R had been applied to all outstanding and unvested option awards for the year ended December 31, 2005:
 
         
    2005  
 
Net Income Available to Common Stockholders — as reported
  $ 76,416  
Add: Stock-Based Employee Compensation Expense Included in Net Income Available to Common Stockholders, Net of Minority Interest — as reported
     
Less: Total Stock-Based Employee Compensation Expense, Net of Minority Interest — Determined Under the Fair Value Method
    (87 )
         
Net Income Available to Common Stockholders — pro forma
  $ 76,329  
         
Net Income Available to Common Stockholders per Share — as reported — Basic
  $ 1.80  
Net Income Available to Common Stockholders per Share — pro forma — Basic
  $ 1.80  
Net Income Available to Common Stockholders per Share — as reported — Diluted
  $ 1.80  
Net Income Available to Common Stockholders per Share — pro forma — Diluted
  $ 1.80  
 
We have not issued any stock options subsequent to January 2005.
 
Revenue Recognition
 
Rental income is recognized on a straight-line method under which contractual rent increases are recognized evenly over the lease term. Tenant recovery income includes payments from tenants for real estate


64


 

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
taxes, insurance and other property operating expenses and is recognized as revenue in the same period the related expenses are incurred by us.
 
Revenue is recognized on payments received from tenants for early lease terminations after we determine that all the necessary criteria have been met in accordance with FASB Statement of Financial Accounting Standards No. 13, “Accounting for Leases” (“FAS 13”).
 
Interest income on mortgage loans receivable is recognized based on the accrual method unless a significant uncertainty of collection exists. If a significant uncertainty exists, interest income is recognized as collected.
 
We provide an allowance for doubtful accounts against the portion of tenant accounts receivable which is estimated to be uncollectible. Accounts receivable in the consolidated balance sheets are shown net of an allowance for doubtful accounts of $837 and $783 as of December 31, 2007 and 2006, respectively. For accounts receivable we deem uncollectible, we use the direct write-off method.
 
Gain on Sale of Real Estate
 
Gain on sale of real estate is recognized using the full accrual method, when appropriate. Gains relating to transactions which do not meet the full accrual method of accounting are deferred and recognized when the full accrual method of accounting criteria are met or by using the installment or deposit methods of profit recognition, as appropriate in the circumstances. As the assets are sold, their costs and related accumulated depreciation are written off with resulting gains or losses reflected in net income or loss. Estimated future costs to be incurred by us after completion of each sale are included in the determination of the gain on sales.
 
Income Taxes
 
We have elected to be taxed as a REIT under Sections 856 through 860 of the Code. As a result, we generally are not subject to federal income taxation to the extent of the income which we distribute if we satisfy the requirements set forth in Section 856 of the Code (pertaining to its organization and types of income and assets) necessary to maintain our status as a REIT. We are required to distribute annually at least 90% of our REIT taxable income, as defined in the Code, to our stockholders and we satisfy certain other requirements.
 
A provision has been made for federal income taxes in the accompanying consolidated financial statements for activities conducted in the TRS, which has been accounted for under FAS No. 109, “Accounting for Income Taxes” (“FAS 109”). In accordance with FAS 109, the total benefit/expense has been separately allocated to income from continuing operations, income from discontinued operations and gain on sale of real estate.
 
We and certain of our subsidiaries are subject to certain state and local income, excise and franchise taxes. The provision for excise and franchise taxes has been reflected in general and administrative expense in the consolidated statements of operations and has not been separately stated due to its insignificance. State and local income taxes are included in the provision/benefit for income taxes which is allocated to income from continuing operations, income from discontinued operations and gain on sale of real estate.
 
We file income tax returns in the U.S., and various states and foreign jurisdictions. The TRS is currently under examination by the Internal Revenue Service for tax years 2004 and 2005. In general, the statutes of limitations for income tax returns remain open for the years 2004 through 2007.
 
Earnings Per Common Share
 
Net income per weighted average share — basic is based on the weighted average common shares outstanding (excluding restricted stock that has not yet vested). Net income per weighted average share —


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FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
diluted is based on the weighted average common shares outstanding (excluding restricted stock that has not yet vested) plus the dilutive effect of in-the-money employee stock options, restricted stock and 2011 Exchangeable Notes (hereinafter defined). See Note 10 for further disclosure about earnings per share.
 
Fair Value of Financial Instruments
 
Our financial instruments include short-term investments, tenant accounts receivable, net, mortgage notes receivable, accounts payable, other accrued expenses, mortgage loans payable, unsecured line of credit and senior unsecured debt.
 
The fair values of the short-term investments, tenant accounts receivable, net, mortgage notes receivable, accounts payable and other accrued expenses approximates their carrying or contract values. See Note 5 for the fair values of the mortgage loans payable, unsecured line of credit and senior unsecured debt.
 
Derivative Financial Instruments
 
Historically, we have used interest rate protection agreements (the “Agreements”) to fix the interest rate on anticipated offerings of senior unsecured debt or convert floating rate debt to fixed rate debt. Receipts or payments that result from the settlement of Agreements used to fix the interest rate on anticipated offerings of senior unsecured debt are amortized over the life of the senior unsecured debt and included in interest expense. Receipts or payments resulting from Agreements used to convert floating rate debt to fixed rate debt are recognized as a component of interest expense. Agreements which qualify for hedge accounting are marked-to-market and any gain or loss that is effective is recognized in other comprehensive income (shareholders’ equity). Any agreements which no longer qualify for hedge accounting are marked-to-market and any gain or loss is recognized in net income immediately. The credit risks associated with the Agreements are controlled through the evaluation and monitoring of the creditworthiness of the counterparty. In the event that the counterparty fails to meet the terms of the Agreements, our exposure is limited to the current value of the interest rate differential, not the notional amount, and our carrying value of the Agreements on the balance sheet. See Note 5 for more information on the Agreements.
 
Discontinued Operations
 
On January 1, 2002, we adopted the FASB Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long Lived Assets” (“FAS 144”). FAS 144 addresses financial accounting and reporting for the disposal of long lived assets. FAS 144 requires that the results of operations and gains or losses on the sale of property or property held for sale be presented in discontinued operations if both of the following criteria are met: (a) the operations and cash flows of the property have been (or will be) eliminated from the ongoing operations of the Company as a result of the disposal transaction and (b) we will not have any significant continuing involvement in the operations of the property after the disposal transaction. FAS 144 also requires prior period results of operations for these properties to be reclassified and presented in discontinued operations in prior consolidated statements of operations.
 
Segment Reporting
 
Management views the Company as a single segment based on its method of internal reporting.
 
Recent Accounting Pronouncements
 
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” which establishes a common definition of fair value, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements. For financial assets and liabilities and nonfinancial assets and liabilities that are remeasured at least annually, this statement is effective for fiscal years beginning after November 15,


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FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
2007. We do not expect that the implementation of this statement will have a material effect on our consolidated financial position or results of operations.
 
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” which permits entities to choose to measure many financial instruments and certain other items at fair value. This statement is effective for fiscal years beginning after November 15, 2007. We do not expect that the implementation of this statement will have a material effect on our consolidated financial position or results of operations.
 
In December 2007, the FASB issued No. 141 (revised 2007), “Business Combinations” (SFAS 141R). SFAS 141R establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS 141R also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. SFAS 141R is effective for financial statements issued for fiscal years beginning after December 15, 2008. We are currently evaluating the potential impact of adoption of SFAS 141R on our consolidated financial statements.
 
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements-and Amendment of ARB No. 51.” (“SFAS 160”) SFAS 160 establishes accounting and reporting standards pertaining to ownership interests in subsidiaries held by parties other than the parent, the amount of net income attributable to the parent and to the noncontrolling interest, changes in a parent’s ownership interest, and the valuation of any retained noncontrolling equity investment when a subsidiary is deconsolidated. This statement also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS 160 is effective for fiscal years beginning on or after December 15, 2008. We are currently evaluating the potential impact of adoption of SFAS 160 on our consolidated financial statements.
 
4.   Investments in Joint Ventures and Property Management Services
 
On September 28, 1998, we entered into the 1998 Core Joint Venture with an institutional investor to invest in industrial properties. At December 31, 2006 we owned a 10% equity interest in the 1998 Core Joint Venture and provided property and asset management services to the 1998 Core Joint Venture. On January 31, 2007, we purchased the remaining 90% equity interest from the institutional investor in the 1998 Core Joint Venture. We paid $18,458 in cash and assumed $30,340 in mortgage loans payable. As of December 31, 2007, we have paid off and retired the mortgage loan payable. In connection with the early repayment of the mortgage loans payable, we incurred prepayment penalties and a write-off of unamortized deferred financing fees totaling $265.
 
On May 16, 2003, we entered into the 2003 Net Lease Joint Venture with an institutional investor to invest in industrial properties. We own a 15% equity interest in and provide property management services to the 2003 Net Lease Joint Venture.
 
On March 18, 2005, we entered into the 2005 Development/Repositioning Joint Venture with an institutional investor to invest in, own, develop, redevelop and operate certain industrial properties. We own a 10% equity interest in and provide property management, asset management, development management, disposition, incentive and leasing management services to the 2005 Development/Repositioning Joint Venture.
 
On September 7, 2005, we entered into the 2005 Core Joint Venture with an institutional investor to invest in, own and operate certain industrial properties. We own a 10% equity interest in and provide property management, asset management, development management, disposition, incentive and leasing management services to the 2005 Core Joint Venture.


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FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
On March 21, 2006, we entered into the 2006 Net Lease Co-Investment Program with an institutional investor to invest in industrial properties. We own a 15% equity interest in and provide property management, asset management and leasing management services to the 2006 Net Lease Co-Investment Program.
 
On July 21, 2006, we entered into the 2006 Land/Development Joint Venture with an institutional investor to invest in land and vertical development. We own a 10% equity interest in and provide property management, asset management, development management and leasing management services to the 2006 Land/Development Joint Venture.
 
On February 27, 2007, we redeemed the 85% equity interest in one property from the institutional investor in the 2003 Net Lease Joint Venture. In connection with the redemption, we assumed a $8,250 mortgage loan payable and $2,951 in other liabilities. The mortgage loan payable was subsequently paid off in February 2007.
 
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 are entitled to incentive payments if certain economic thresholds related to the industrial properties are achieved.
 
During December 2007, we entered into the 2007 Canada Joint Venture and the 2007 Europe Joint Venture with an institutional investor to invest in, own, develop, redevelop and operate industrial properties. We own a 10% interest in and will provide property management, asset management, development management and leasing management services to the 2007 Canada Joint Venture and the 2007 Europe Joint Venture.
 
As of December 31, 2007, the 2003 Net Lease Joint Venture owned 11 industrial properties comprising approximately 5.1 million square feet of GLA, the 2005 Development/Repositioning Joint Venture owned 24 industrial properties comprising approximately 5.0 million square feet of GLA and several land parcels, the 2005 Core Joint Venture owned 66 industrial properties comprising approximately 4.8 million square feet of GLA and several land parcels, the 2006 Net Lease Co-Investment Program owned 12 industrial properties comprising approximately 5.0 million square feet of GLA and the 2006 Land/Development Joint Venture owned several land parcels. As of December 31, 2007, the 2007 Canada Joint Venture and the 2007 Europe Joint Venture do not own any properties.
 
During the year ended December 31, 2006, we sold two land parcels to the 2005 Development/Repositioning Joint Venture. During the year ended December 31, 2005, we sold eight industrial properties comprising approximately 1.6 million square feet of GLA and several land parcels to the 2005 Development/Repositioning Joint Venture. We deferred 10% of the gain from the sales, which is equal to our economic interest in the 2005 Development/Repositioning Joint Venture. On May 18, 2007, we repurchased 66 acres of the land we had sold to the 2005 Development/Repositioning Joint Venture for a purchase price of $6,379. Since we had deferred 10% of the gain on sale from the original sale in 2005, we netted the unamortized deferred gain amount, along with our 10% economic interest in the gain on sale and distributions in excess of our 10% economic interest we received from the sale against the basis of the land.
 
On October 15, 2007, we purchased 10 acres of land from the 2005 Development/Repositioning Joint Venture for a purchase price of $3,714. We netted our 10% economic interest in the gain on sale and distributions in excess of our 10% economic interest we received from the sale against the basis of the land.
 
During the year ended December 31, 2007, we earned acquisition fees from the 2006 Land/Development Joint Venture and the July 2007 Fund. During the year ended December 31, 2006, we earned acquisition fees from the 2003 Net Lease Joint Venture, the 2005 Core Joint Venture, the 2006 Net Lease Co-Investment Program and the July 2007 Fund. We deferred 15% of the acquisition fees earned from the 2003 Net Lease Joint Venture and the 2006 Net Lease Co-Investment Program activity and 10% of the acquisition fees earned


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FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
from the 2005 Core Joint Venture and the 2006 Land/Development Joint Venture activity. The deferrals reduced our investment in the Joint Ventures and are amortized into income over the life of the underlying properties, generally 25 to 40 years.
 
At December 31, 2007 and 2006, we have a receivable from the Joint Ventures and the July 2007 Fund of $6,068 and $7,967, 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 and reimbursement for development expenditures made by the TRS who is acting in the capacity of the general contractor for development projects for the 2005 Development/Repositioning Joint Venture. These receivable accounts are included in prepaid expenses and other assets, net.
 
During the years ended December 31, 2007, 2006 and 2005, 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:
 
                         
    Year Ended
    Year Ended
    Year Ended
 
    December 31,
    December 31,
    December 31,
 
    2007     2006     2005  
 
Contributions
  $ 25,482     $ 29,194     $ 43,311  
Distributions
  $ 54,228     $ 51,398     $ 6,837  
Fees
  $ 25,116     $ 22,507     $ 8,301  
 
The combined summarized financial information of the investments in joint ventures is as follows:
 
                 
    December 31,
    December 31,
 
    2007     2006  
 
Condensed Combined Balance Sheets
               
Gross Real Estate Investment
  $ 1,777,964     $ 1,685,969  
Less: Accumulated Depreciation
    (69,811 )     (72,398 )
                 
Net Real Estate
    1,708,153       1,613,571  
Other Assets
    163,583       224,048  
                 
Total Assets
  $ 1,871,736     $ 1,837,619  
                 
Debt
  $ 1,264,769     $ 1,276,001  
Other Liabilities
    112,268       108,430  
Equity
    494,699       453,188  
                 
Total Liabilities and Equity
  $ 1,871,736     $ 1,837,619  
                 
Company’s share of Equity
  $ 56,494     $ 53,151  
Basis Differentials(1)
    1,049       2,376  
                 
Carrying Value of the Company’s investments in joint ventures
  $ 57,543     $ 55,527  
                 
 
 
(1) This amount represents the aggregate difference between our historical cost basis and the basis reflected at the joint venture level. Basis differentials are primarily comprised of gain deferrals related to properties we sold to the Joint Ventures, deferred fees and certain equity costs which are not reflected at the joint venture level.
 


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FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
                         
    Year Ended December 31,  
    2007     2006     2005  
 
Condensed Combined Statements of Operations
                       
Total Revenues
  $ 127,928     $ 163,443     $ 59,411  
Expenses:
                       
Operating and Other
    43,449       55,070       16,128  
Interest
    63,768       61,524       20,995  
Depreciation and Amortization
    64,690       90,842       32,150  
                         
Total Expenses
    171,907       207,436       69,273  
                         
Gain on Sale of Real Estate
    108,175       94,352       10,761  
                         
Net Income
    64,196       50,359       899  
                         
Company’s share of Net Income
  $ 30,045     $ 30,673     $ 3,699  
                         
 
5.   Mortgage Loans Payable, Net, Senior Unsecured Notes, Net and Unsecured Line of Credit
 
The following table discloses certain information regarding our mortgage loans, senior unsecured notes and unsecured line of credit:
 
                                         
                      Effective
       
    Outstanding
    Interest
    Interest
       
    Balance at     Rate at
    Rate at
       
    December 31,
    December 31,
    December 31,
    December 31,
    Maturity
 
    2007     2006     2007     2007     Date  
 
Mortgage Loans Payable, Net
  $ 73,550     $ 77,926     5.50% - 9.25%     4.58% - 9.25%       July 2009 - 
September 2024
 
Unamortized Premiums
    (2,196 )     (2,919 )                        
                                         
Mortgage Loans Payable, Gross
  $ 71,354     $ 75,007                          
                                         
Senior Unsecured Notes, Net
                                       
2007 Notes
          149,998     7.600%       7.61%         05/15/07  
2016 Notes
    199,442       199,372     5.750%       5.91%         01/15/16  
2017 Notes
    99,905       99,895     7.500%       7.52%         12/01/17  
2027 Notes
    15,056       15,055     7.150%       7.11%         05/15/27  
2028 Notes
    199,838       199,831     7.600%       8.13%         07/15/28  
2011 Notes
    199,807       199,746     7.375%       7.39%         03/15/11  
2012 Notes
    199,408       199,270     6.875%       6.85%         04/15/12  
2032 Notes
    49,457       49,435     7.750%       7.87%         04/15/32  
2009 Notes
    124,937       124,893     5.250%       4.10%         06/15/09  
2014 Notes
    113,521       112,237     6.420%       6.54%         06/01/14  
2011 Exchangeable Notes
    200,000       200,000     4.625%       4.63%         09/15/11  
2017 II Notes
    149,620           5.950%       6.37%         05/15/17  
                                         
Subtotal
  $ 1,550,991     $ 1,549,732                          
Unamortized Discounts
    14,079       15,338                          
                                         
Senior Unsecured Notes, Gross
  $ 1,565,070     $ 1,565,070                          
                                         
Unsecured Line of Credit
  $ 322,129     $ 207,000     5.787%       5.787%         09/28/12  
                                         
 
Mortgage Loans Payable, Net
 
During 2007, in conjunction with the acquisition of several industrial properties, we assumed mortgages in the aggregate of $38,590; these mortgages were paid off and retired during 2007. As of December 31, 2007,

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FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
mortgage loans payable of $73,550 are collateralized by industrial properties with a carrying value of $136,846.
 
Senior Unsecured Notes, Net
 
On May 7, 2007, we issued $150,000 of senior unsecured debt which matures on May 15, 2017 and bears interest at a rate of 5.95% (the “2017 II Notes”). The issue price of the 2017 II Notes was 99.730%. Interest is paid semi-annually in arrears on May 15 and November 15. In April 2006, we entered into interest rate protection agreements to fix the interest rate on the 2017 II Notes prior to issuance. We settled the effective portion of the interest rate protection agreements on May 1, 2007 for a payment of $4,261 which is included in other comprehensive income. The debt issue discount and the settlement amount of the interest rate protection agreements will be amortized over the life of the 2017 II Notes as an adjustment to interest expense. Including the impact of the offering discount and the settlement amount of the interest rate projection agreements, our effective interest rate on the 2017 II Notes is 6.37%. The 2017 II Notes contain certain covenants, including limitations on incurrence of debt and debt service coverage.
 
On May 15, 2007, we paid off and retired our 7.60% 2007 Unsecured Notes in the amount of $150,000.
 
On September 25, 2006, we issued $175,000 of senior unsecured debt which bears interest at a rate of 4.625% (the “2011 Exchangeable Notes”). 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”). Holders of the 2011 Exchangeable Notes may exchange their notes for our common stock prior to the close of business on the second business day immediately preceding the stated maturity date at any time beginning on July 15, 2011 and also under the following circumstances: 1) during any calendar quarter beginning after December 31, 2006 (and only during such calendar quarter), if, and only if, the closing sale price per share of our common stock for at least 20 trading days ending on the last trading day of the preceding calendar quarter is more than 130% of the exchange price per share of our common stock in effect on the applicable trading day; 2) during the five consecutive trading-day period following any five consecutive trading-day period in which the trading price of the notes was less than 98% of the product of the closing sale price per share of our common stock multiplied by the applicable exchange rate; 3) if those notes have been called for redemption, at any time prior to the close of business on the second business day prior to the redemption date; 4) upon the occurrence of distributions of certain rights to purchase our common stock or certain other assets; or 5) if our common stock ceases to be listed on a U.S. national or regional securities exchange and is not quoted on the over-the-counter market as reported by Pink Sheets LLC or any similar organization, in each case, for 30 consecutive trading days. 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 and 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. If a change of control transaction described in the indenture relating to the 2011 Exchangeable Notes occurs and a holder elects to exchange notes in connection with any such transaction, holders of the 2011 Exchangeable Notes will be entitled to a make-whole amount in the form of an increase in the exchange rate. The exchange rate may also be adjusted under certain other circumstances, including the payment of cash dividends in excess of our current regular quarterly dividend on its common stock of $0.70 per share. The 2011 Exchangeable Notes will be exchangeable for cash up to their principal amount and shares of our common stock for the remainder of the exchange value in excess of the principal amount. The 2011 Exchangeable notes mature on September 15, 2011, unless previously redeemed or repurchased by us or exchanged in accordance with their terms prior to such date. Interest is paid semi-annually in arrears on March 15 and September 15 of each year, beginning March 15, 2007. The 2011 Exchangeable Notes are fully and unconditionally guaranteed by us. 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


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FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
principal amount of 2011 Exchangeable Notes issued and outstanding is $200,000. In connection with the Operating Partnership’s offering of the 2011 Exchangeable Notes, the Operating Partnership 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 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 transaction during the observation period relating to an exchange. The cost of the capped call is accounted for as a hedge and is included in shareholders’ equity because the derivative is indexed to our own stock and meets the scope exception in FAS 133. The capped call on the 2011 Exchangeable Notes requires a net share settlement.
 
All of our senior unsecured debt (except for the 2011 Exchangeable Notes) contains certain covenants, including limitations on incurrence of debt and debt service coverage.
 
Unsecured Line of Credit
 
We have maintained an unsecured revolving credit facility since 1997. On September 28, 2007, we amended and restated our unsecured revolving credit facility (the “Unsecured Line of Credit”). The Unsecured Line of Credit matures on September 28, 2012, has a borrowing capacity of $500,000 (with the right, subject to certain conditions, to increase the borrowing capacity up to $700,000) and bears interest at a floating rate of LIBOR plus 0.475%, or the prime rate, at our election. At December 31, 2007, borrowings under our unsecured revolving credit facility, bore interest at a weighted average interest rate of 5.787%. Up to $100,000 of the $500,000 capacity may be borrowed in foreign currencies, including the Canadian dollar, Euro, British Sterling and Japanese Yen. The net unamortized deferred financing fees related to the prior unsecured revolving credit facility and any additional deferred financing fees incurred in entering into the Unsecured Line of Credit on September 28, 2007 are being amortized over the life of the Unsecured Line of Credit, except for $128, which represents the write off of unamortized deferred financing costs associated with certain lenders who did not renew the line of credit and is included in loss from early retirement of debt. The Unsecured Line of Credit contains certain covenants including limitations on incurrence of debt and debt service coverage.
 
The following is a schedule of the stated maturities and scheduled principal payments of the mortgage loans, senior unsecured debt and unsecured line of credit, exclusive of premiums and discounts, for the next five years ending December 31, and thereafter:
 
         
    Amount  
 
2008
  $ 3,111  
2009
    132,959  
2010
    15,453  
2011
    407,269  
2012
    526,488  
Thereafter
    873,273  
         
Total
  $ 1,958,553  
         


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FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Fair Value
 
At December 31, 2007 and 2006, the fair value of our mortgage loans payable, senior unsecured debt and Unsecured Line of Credit were as follows:
 
                                 
    December 31, 2007     December 31, 2006  
    Carrying
    Fair
    Carrying
    Fair
 
    Amount     Value     Amount     Value  
 
Mortgage Loans Payable
  $ 73,550     $ 74,867     $ 77,926     $ 78,730  
Senior Unsecured Debt
    1,550,991       1,605,048       1,549,732       1,636,318  
Unsecured Line of Credit
    322,129       322,129       207,000       207,000  
                                 
Total
  $ 1,946,670     $ 2,002,044     $ 1,834,658     $ 1,922,048  
                                 
 
The fair value of the senior unsecured debt was determined by quoted market prices, if available. The fair values of our senior unsecured debt that were not valued by quoted market prices and 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 equal to its carrying value due to the variable interest rate nature of the loans.
 
Other Comprehensive Income
 
In conjunction with certain issuances of senior unsecured debt, we entered into interest rate protection agreements to fix the interest rate on anticipated offerings of senior unsecured debt. In the next 12 months, we will amortize approximately $741 into net income by decreasing interest expense.
 
In April 2006, we entered into two interest rate protection agreements which fixed the interest rate on forecasted offerings of unsecured debt which we designated as cash flow hedges (the “April 2006 Agreements”). The April 2006 Agreements each had a notional value of $72,900 and were effective from November 28, 2006 through November 28, 2016. The April 2006 Agreements fixed the LIBOR rate at 5.537%. On May 1, 2007 we settled the effective portion of the April 2006 Agreements for $4,261 which is included in other comprehensive income. The settlement amount of the April 2006 Agreements will be amortized over the life of the 2017 II Notes as an adjustment to interest expense.
 
In July 2007, the 2006 Land/Development Joint Venture entered into two interest rate protection agreements to effectively convert floating rate debt to fixed rate debt on a portion of its line of credit. The hedge relationship is considered highly effective and for the year ended December 31, 2007, $6,499 of unrealized loss due to a change in values of the swap contracts was recognized in other comprehensive income by the 2006 Land/Development Joint Venture. We recorded $ 650 in unrealized loss, representing our 10% share, net of $254 of income tax provision, which is shown as mark to market of interest rate protection agreements in other comprehensive income for the year ended December 31, 2007.
 
During 2007, we owned one industrial property and one land parcel located in Toronto, Canada for which the functional currency was determined to be the Canadian dollar. The assets and liabilities of this industrial property and land parcel are translated to U.S. dollars from the Canadian dollar based on the current exchange rate prevailing at each balance sheet date and any resulting translation adjustments are included in accumulated other comprehensive income. For year ended December 31, 2007, we recorded $3,283 in foreign currency translation gain, net of $1,149 of income tax provision.


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FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
6.   Stockholders’ Equity
 
Preferred Stock
 
On June 6, 1997, we issued 2,000,000 Depositary Shares, each representing 1/100th of a share of our 85/8%, $0.01 par value, Series C Cumulative Preferred Stock (the “Series C Preferred Stock”), at an initial offering price of $25.00 per Depositary Share. On June 6, 2007, the Series C Preferred Stock became redeemable for cash at our option, in whole or in part, at a redemption price equivalent to $25 per Depositary Share, or $50,000 in the aggregate, plus dividends accrued and unpaid to the redemption date. We redeemed the Series C Preferred Stock on June 7, 2007, at a redemption price of $25.00 per Depositary Share, and paid a prorated second quarter dividend of $0.40729 per Depositary Share, totaling approximately $815. Due to the redemption of the Series C Preferred Stock, the initial offering costs associated with the issuance of the Series C Preferred Stock of $2,017 were reflected as a deduction from net income to arrive at net income available to common stockholders in determining earnings per share for the year ended December 31, 2007.
 
On May 27, 2004, we issued 50,000 Depositary Shares, each representing 1/100th of a share of our 6.236%, $0.01 par value, Series F Flexible Cumulative Redeemable Preferred Stock (the “Series F Preferred Stock”), at an initial offering price of $1,000.00 per Depositary Share. Dividends on the Series F Preferred Stock are cumulative from the date of initial issuance and are payable semi-annually in arrears for the period from the date of original issuance through March 31, 2009 (the “Series F Initial Fixed Rate Period”), commencing on September 30, 2004, at a rate of 6.236% per annum of the liquidation preference (the “Series F Initial Distribution Rate”) (equivalent to $62.36 per Depositary Share). On or after March 31, 2009, the Series F Initial Distribution Rate is subject to reset, at our option, subject to certain conditions and parameters, at fixed or floating rates and periods. Fixed rates and periods will be determined through a remarketing procedure. Floating rates during floating rate periods will equal 2.375% (the initial credit spread), plus the greater of (i) the 3-month LIBOR Rate, (ii) the 10-year Treasury CMT Rate (as defined in the Articles Supplementary), and (iii) the 30-year Treasury CMT Rate (the adjustable rate)(as defined in the Articles Supplementary), reset quarterly. Dividends on the Series F Preferred Stock are payable semi-annually in arrears for fixed rate periods subsequent to the Series F Initial Fixed Rate Period and quarterly in arrears for floating rate periods. With respect to the payment of dividends and amounts upon liquidation, dissolution or winding up, the Series F Preferred Stock ranks senior to payments on our Common Stock and pari passu with our Series G Preferred Stock (hereinafter defined), Series J Preferred Stock (hereinafter defined) and Series K Preferred Stock (hereinafter defined). On or after March 31, 2009, subject to any conditions on redemption applicable in any fixed rate period subsequent to the Series F Initial Fixed Rate Period, the Series F Preferred Stock is redeemable for cash at our option, in whole or in part, at a redemption price equivalent to $1,000.00 per Depositary Share, or $50,000 in the aggregate, plus dividends accrued and unpaid to the redemption date. The Series F Preferred Stock has no stated maturity and is not convertible into any other securities of the Company.
 
On May 27, 2004, we issued 25,000 Depositary Shares, each representing 1/100th of a share our 7.236%, $0.01 par value, Series G Flexible Cumulative Redeemable Preferred Stock (the “Series G Preferred Stock”), at an initial offering price of $1,000.00 per Depositary Share. Dividends on the Series G Preferred Stock are cumulative from the date of initial issuance and are payable semi-annually in arrears for the period from the date of original issuance of the Series G Preferred Stock through March 31, 2014 (the “Series G Initial Fixed Rate Period”), commencing on September 30, 2004, at a rate of 7.236% per annum of the liquidation preference (the “Series G Initial Distribution Rate”) (equivalent to $72.36 per Depositary Share). On or after March 31, 2014, the Series G Initial Distribution Rate is subject to reset, at our option, subject to certain conditions and parameters, at fixed or floating rates and periods. Fixed rates and periods will be determined through a remarketing procedure. Floating rates during floating rate periods will equal 2.500% (the initial credit spread), plus the greater of (i) the 3-month LIBOR Rate, (ii) the 10-year Treasury CMT Rate (as defined in the Articles Supplementary), and (iii) the 30-year Treasury CMT Rate (the adjustable rate) (as defined in


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FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
the Articles Supplementary), reset quarterly. Dividends on the Series G Preferred Stock are payable semi-annually in arrears for fixed rate periods subsequent to the Series G Initial Fixed Rate Period and quarterly in arrears for floating rate periods. With respect to the payment of dividends and amounts upon liquidation, dissolution or winding up, the Series G Preferred Stock ranks senior to payments on our Common Stock and pari passu with our Series F Preferred Stock, Series J Preferred Stock (hereinafter defined) and Series K Preferred Stock (hereinafter defined). On or after March 31, 2014, subject to any conditions on redemption applicable in any fixed rate period subsequent to the Series G Initial Fixed Rate Period, the Series G Preferred Stock is redeemable for cash at our option, in whole or in part, at a redemption price equivalent to $1,000.00 per Depositary Share, or $25,000 in the aggregate, plus dividends accrued and unpaid to the redemption date. The Series G Preferred Stock has no stated maturity and is not convertible into any other securities of the Company.
 
On November 8, 2005 and November 18, 2005, we issued 600 and 150 Shares, respectively, of $.01 par value, Series I Flexible Cumulative Redeemable Preferred Stock, (the “Series I Preferred Stock”), in a private placement at an initial offering price of $250,000 per share for an aggregate initial offering price of $187,500. We redeemed the Series I Preferred Stock on January 13, 2006 for $242,875.00 per share, and paid a prorated first quarter dividend of $470.667 per share, totaling approximately $353. In accordance with EITF D-42, due to the redemption of the Series I Preferred Stock, the difference between the redemption cost and the carrying value of the Series I Preferred Stock of approximately $672 is reflected as a deduction from net income to arrive at net income available to common stockholders in determining earnings per share for the year ended December 31, 2006.
 
On January 13, 2006, we issued 6,000,000 Depositary Shares, each representing 1/10,000th of a share of our 7.25%, $.01 par value, Series J Cumulative Redeemable Preferred Stock (the “Series J Preferred Stock”), at an initial offering price of $25.00 per Depositary Share. Dividends on the Series J Preferred Stock, represented by the Depositary Shares, are cumulative from the date of initial issuance and are payable quarterly in arrears. However, during any period that both (i) the depositary shares are not listed on the NYSE or AMEX, or quoted on NASDAQ, and (ii) we are not subject to the reporting requirements of the Exchange Act, but the preferred shares are outstanding, we will increase the dividend on the preferred shares to a rate of 8.25% of the liquidation preference per year. However, if at any time both (i) the depositary shares cease to be listed on the NYSE or the AMEX, or quoted on NASDAQ, and (ii) we cease to be subject to the reporting requirements of the Exchange Act, but the preferred shares are outstanding, then the preferred shares will be redeemable, in whole but not in part at our option, within 90 days of the date upon which the depositary shares cease to be listed and we cease to be subject to such reporting requirements, at a redemption price equivalent to $25.00 per Depositary Share, plus all accrued and unpaid dividends to the date of redemption. With respect to the payment of dividends and amounts upon liquidation, dissolution or winding up, the Series J Preferred Stock ranks senior to payments on our Common Stock and pari passu with our Series F Preferred Stock, Series G Preferred Stock and Series K Preferred Stock (hereinafter defined). The Series J Preferred Stock is not redeemable prior to January 15, 2011. On or after January 15, 2011, the Series J Preferred Stock is redeemable for cash at our option, in whole or in part, at a redemption price equivalent to $25.00 per Depositary Share, or $150,000 in the aggregate, plus dividends accrued and unpaid to the redemption date. The Series J Preferred Stock has no stated maturity and is not convertible into any other securities of the Company.
 
On August 21, 2006, we issued 2,000,000 Depositary Shares, each representing 1/10,000th of a share of our 7.25%, $.01 par value, Series K Flexible Cumulative Redeemable Preferred Stock (the “Series K Preferred Stock”), at an initial offering price of $25.00 per Depositary Share. Dividends on the Series K Preferred Stock, represented by the Depositary Shares, are cumulative from the date of initial issuance and are payable quarterly in arrears. With respect to the payment of dividends and amounts upon liquidation, dissolution or winding up, the Series K Preferred Stock ranks senior to payments on our Common Stock and pari passu with our Series F Preferred Stock, Series G Preferred Stock and Series J Preferred Stock. The Series K Preferred


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FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Stock is not redeemable prior to August 15, 2011. On or after August 15, 2011, the Series K Preferred Stock is redeemable for cash at our option, in whole or in part, at a redemption price equivalent to $25.00 per Depositary Share, or $50,000 in the aggregate, plus dividends accrued and unpaid to the redemption date. The Series K Preferred Stock has no stated maturity and is not convertible into any other securities of the Company.
 
The following table summarizes certain information regarding our preferred stock:
 
                 
    Stated Value at  
    December 31,
    December 31,
 
    2007     2006  
 
Series C Preferred Stock
  $     $ 50,000  
Series F Preferred Stock
    50,000       50,000  
Series G Preferred Stock
    25,000       25,000  
Series J Preferred Stock
    150,000       150,000  
Series K Preferred Stock
    50,000       50,000  
                 
Total
  $ 275,000     $ 325,000  
                 
 
Shares of Common Stock
 
On December 9, 2005, we issued 1,250,000 shares of $0.01 par value common stock (the “December 2005 Equity Offering”). The price per share was $39.45 resulting in gross offering proceeds of $49,313. Proceeds to us, net of underwriters’ discount and total expenses, were approximately $48,775.
 
For the years ended December 31, 2007, 2006 and 2005, 119,747, 213,773, and 81,644, respectively, shares of common stock were converted from an equivalent number of limited partnership interests in the Operating Partnership (“Units”).
 
Treasury Stock
 
 
In March 2000 and in September 2007, our Board of Directors authorized a stock repurchase plan pursuant to which we are permitted to purchase up to $100,000 (the “March 2000 Program”) and $100,000, respectively, of our outstanding common stock. We may make purchases from time to time in the open market or in privately negotiated transactions, depending on market and business conditions. During the year ended December 31, 2007, we repurchased 1,797,714 shares at an average price per share of $38.62, including brokerage commissions. During November 2007 we completed the March 2000 Program.
 
Non-Qualified Employee Stock Options
 
For the year ended December 31, 2005, certain employees of the Company exercised 248,881 non-qualified employee stock options. Net proceeds to us were approximately $6,698.
 
For the year ended December 31, 2006, certain employees of the Company exercised 125,780 non-qualified employee stock options. Net proceeds to us were approximately $3,742.
 
For the year ended December 31, 2007, certain employees of the Company exercised 19,600 non-qualified employee stock options. Net proceeds to us were approximately $613.
 
Restricted Stock
 
During the years ended December 31, 2007, 2006, and 2005 we awarded 442,008, 303,142, and 189,878 restricted shares of common stock, respectively, to certain employees of the Company and 17,139, 16,232, and


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FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
10,164, respectively, to certain directors of the Company. See Note 13 for further disclosure on our stock based compensation.
 
The following table is a roll-forward of our shares of common stock outstanding, including unvested restricted shares of common stock for the three years ended December 31, 2007:
 
         
    Shares of
 
    Common Stock
 
    Outstanding  
Balance at December 31, 2004
    42,834,091  
Issuance of Common Stock and Stock Option Exercises
    1,480,942  
Issuance of Restricted Stock Shares
    200,042  
Repurchase and Retirement of Restricted Stock Shares
    (152,009 )
Conversion of Operating Partnership Units
    81,644  
         
Balance at December 31, 2005
    44,444,710  
         
Stock Option Exercises
    125,780  
Issuance of Restricted Stock Shares
    319,374  
Repurchase and Retirement of Restricted Stock Shares
    (93,007 )
Conversion of Operating Partnership Units
    213,773  
         
Balance at December 31, 2006
    45,010,630  
         
Issuance of Common Stock and Stock Option Exercises
    19,600  
Issuance of Restricted Stock Shares
    459,147  
Repurchase of Treasury Shares
    (1,797,714 )
Repurchase and Retirement of Restricted Stock Shares
    (139,261 )
Conversion of Operating Partnership Units
    119,747  
         
Balance at December 31, 2005
    43,672,149  
         
 
Dividends/Distributions
 
The following table summarizes dividends/distributions declared for the past three years:
 
                                                 
    Year Ended 2007     Year Ended 2006     Year Ended 2005  
    Dividend/
          Dividend/
          Dividend/
       
    Distribution
    Total
    Distribution
    Total
    Distribution
    Total
 
    per Share/
    Dividend/
    per Share/
    Dividend/
    per Share/
    Dividend/
 
    Unit     Distribution     Unit     Distribution     Unit     Distribution  
 
Common Stock/Operating Partnership Units
  $ 2.8500     $ 146,126     $ 2.8100     $ 144,720     $ 2.7850     $ 139,168  
Series C Preferred Stock
  $ 94.6353     $ 1,893     $ 215.6240     $ 4,313     $ 215.6240     $ 4,313  
Series F Preferred Stock
  $ 6,236.0000     $ 3,118     $ 6,236.0000     $ 3,118     $ 6,236.0000     $ 3,118  
Series G Preferred Stock
  $ 7,236.0000     $ 1,809     $ 7,236.0000     $ 1,809     $ 7,236.0000     $ 1,809  
Series I Preferred Stock
  $     $     $ 470.6667     $ 353     $ 1,930.2431     $ 1,448  
Series J Preferred Stock
  $ 18,125.2000     $ 10,875     $ 17,521.0000     $ 10,512     $     $  
Series K Preferred Stock
  $ 18,125.2000     $ 3,625     $ 6,595.6000     $ 1,319     $     $  


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FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
7.   Acquisition and Development of Real Estate
 
In 2005, we acquired 161 industrial properties comprising, in the aggregate, approximately 20.1 million square feet of GLA and several land parcels. The gross purchase price for 160 industrial properties and several land parcels totaled approximately $752,674, (approximately $14,698 of which was made through the issuance of 366,472 Units relating to five properties) excluding costs incurred in conjunction with the acquisition of the properties. Additionally, one industrial property was acquired through foreclosure due to a default on a mortgage loan receivable. We also substantially completed development of five properties comprising approximately 1.8 million square feet of GLA at a cost of approximately $97,466. We reclassed the costs of the substantially completed developments from construction in progress to building, tenant improvements and leasing commissions.
 
In 2006, we acquired 91 industrial properties comprising, in the aggregate, approximately 10.5 million square feet of GLA and several land parcels for a total purchase price of approximately $610,745 (approximately $1,288 of which was made through the issuance of 31,473 Units relating to two properties) excluding costs incurred in conjunction with the acquisition of the properties. We also substantially completed development of 15 properties comprising approximately 5.0 million square feet of GLA at a cost of approximately $188,592. We reclassed the costs of the substantially completed developments from construction in progress to building, tenant improvements and leasing commissions.
 
In 2007, we acquired 105 industrial properties comprising, in the aggregate, approximately 8.6 million square feet of GLA and several land parcels, including 41 industrial properties comprising approximately 1.3 million square feet of GLA in connection with the purchase of the 90% equity interest from the institutional investor of the 1998 Core Joint Venture and one industrial property comprising 0.3 million square feet of GLA in connection with the redemption of the 85% equity interest in one property from the institutional investor in the 2003 Net Lease Joint Venture (see Note 4). The purchase price of these acquisitions totaled approximately $470,784, excluding costs incurred in conjunction with the acquisition of the industrial properties and land parcels. We also substantially completed development of 15 properties comprising approximately 3.7 million square feet of GLA at a cost of approximately $144,790. We reclassed the costs of the substantially completed developments from construction in progress to building, tenant improvements and leasing commissions.
 
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 as a result of the above acquisitions was $36,270, $3,831, $20,336, and $(13,148), respectively, for the year ended December 31, 2006. The weighted average life in months of in-place leases, above market leases, tenant relationships and below market leases recorded as a result of 2006 acquisitions was 72, 71, 105, and 109 months, respectively.
 
The fair value of in-place leases, above market leases, tenant relationships, and below market leases recorded as a result of the above acquisitions was $23,038, $1,000, $10,007 and $(8,108), respectively for the year ended December 31, 2007. The weighted average life in months of in-place leases, above market leases, tenant relationships, and below market leases recorded as a result of 2007 acquisitions was 76, 99, 114, and 132 months, respectively.
 
8.   Sale of Real Estate, Real Estate Held for Sale and Discontinued Operations
 
In 2005, we sold 96 industrial properties comprising approximately 12.8 million square feet of GLA and several land parcels. Of the 96 industrial properties sold, eight industrial property sales were to the 2005 Development/Repositioning Joint Venture. Gross proceeds from the sales of the 96 industrial properties and several land parcels were approximately $656,094. The gain on sale of real estate was approximately


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FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
$161,689, of which $132,139 is shown in discontinued operations. Eighty-six of the 96 sold industrial properties meet the criteria established by FAS 144 to be included in discontinued operations. Therefore, in accordance with FAS 144, the results of operations and gain on sale of real estate, net of income taxes and minority interest, for the 86 sold industrial properties that meet the criteria established by FAS 144 are included in discontinued operations. The results of operations and gain on sale of real estate, net of income taxes and minority interest, for the ten industrial properties and several land parcels that do not meet the criteria established by FAS 144 are included in continuing operations.
 
In 2006, we sold 125 industrial properties comprising approximately 17.1 million square feet of GLA and several land parcels, totaling gross proceeds of $946,800. The gain on sale of real estate was approximately $219,513, of which $213,442 is shown in discontinued operations. The 125 sold industrial properties meet the criteria established by FAS 144 to be included in discontinued operations. Therefore, in accordance with FAS 144, the results of operations and gain on sale of real estate, net of income taxes and minority interest, for the 125 sold industrial properties are included in discontinued operations. The results of operations and gain on sale of real estate, net of income taxes and minority interest, for the several land parcels that do not meet the criteria established by FAS 144 are included in continuing operations.
 
In 2007, we sold 164 industrial properties comprising approximately 13.7 million square feet of GLA and several land parcels. Gross proceeds from the sales of the 164 industrial properties and several land parcels were approximately $881,278. The gain on sale of real estate was approximately $254,387, of which $244,962 is shown in discontinued operations. One hundred sixty-one of the 164 sold industrial properties meet the criteria established by FAS 144 to be included in discontinued operations. Therefore, in accordance with FAS 144, the results of operations and gain on sale of real estate, net of income taxes and minority interest for the 161 sold industrial properties that meet the criteria established by FAS 144 are included in discontinued operations. The results of operations and gain on sale of real estate, net of income taxes and minority interest for the three industrial properties and several land parcels that do not meet the criteria established by FAS 144 are included in continuing operations.
 
At December 31, 2007, we had six industrial properties comprising approximately 0.8 million square feet of GLA held for sale. In accordance with FAS 144, the results of operations of the six industrial properties held for sale at December 31, 2007 are included in discontinued operations. There can be no assurance that such industrial properties held for sale will be sold.
 
The following table discloses certain information regarding the industrial properties included in our discontinued operations for the years ended December 31, 2007, 2006 and 2005.
 
                         
    Year Ended December 31,  
    2007     2006     2005  
 
Total Revenues
  $ 43,969     $ 82,561     $ 104,598  
Property Expenses
    (14,106 )     (26,145 )     (35,447 )
Interest Expense
                (373 )
Depreciation and Amortization
    (13,850 )     (29,713 )     (33,511 )
Gain on Sale of Real Estate
    244,962       213,442       132,139  
Provision for Income Taxes
    (38,044 )     (51,102 )     (23,898 )
Minority Interest
    (28,178 )     (24,594 )     (18,886 )
                         
Income from Discontinued Operations
  $ 194,753     $ 164,449     $ 124,622  
                         
 
In conjunction with certain property sales, we provided seller financing. At December 31, 2007 and 2006, we had mortgage notes receivable and accrued interest outstanding of approximately $30,456 and $0, respectively, which is included as a component of prepaid expenses and other assets.


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FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
9.   Supplemental Information to Statements of Cash Flows
 
Supplemental disclosure of cash flow information:
 
                         
    Year Ended
    Year Ended
    Year Ended
 
    December 31,
    December 31,
    December 31,
 
    2007     2006     2005  
 
Interest paid, net of capitalized interest
  $ 118,909     $ 114,709     $ 107,573  
                         
Capitalized Interest
  $ 8,413     $ 5,159     $ 3,271  
                         
Income Taxes Paid
  $ 42,169     $ 36,374     $ 36,080  
                         
Supplemental schedule of noncash investing and financing activities:
                       
Distribution payable on common stock/Units
  $ 36,079     $ 36,613     $ 35,752  
                         
Distribution payable on preferred stock
  $ 1,232     $ 5,935     $ 3,757  
                         
Exchange of units for common stock:
                       
Minority interest
  $ (2,858 )   $ (5,144 )   $ (1,951 )
Common stock
          2       1  
Additional paid-in-capital
    2,858       5,142       1,950  
                         
    $     $     $  
                         
In conjunction with property and land acquisitions, the following assets and liabilities were assumed:
                       
Accounts payable and accrued expenses
  $ (6,095 )   $ (1,928 )   $ (4,735 )
                         
Issuance of Operating Partnership Units
  $     $ (1,288 )   $ (14,698 )
                         
Mortgage debt
  $ (38,590 )   $ (33,982 )   $ (11,545 )
                         
Foreclosed property acquisition and write-off of a Mortgage loan receivable
  $     $     $ 3,870  
                         
Write-off of fully depreciated assets
  $ 45,031     $ 30,596     $ 67,814  
                         
In conjunction with certain property sales, we provided seller financing or assigned a mortgage loan payable:
                       
Notes receivable
  $ 48,282     $ 11,200     $ 76,744  
                         
Mortgage Note Payable
  $ 769     $     $ 13,242  
                         


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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.
 
                         
    Year Ended
    Year Ended
    Year Ended
 
    December 31,
    December 31,
    December 31,
 
    2007     2006     2005  
 
Numerator:
                       
Loss from Continuing Operations
  $ (45,243 )   $ (55,805 )   $ (53,739 )
Gain on Sale of Real Estate, Net of Minority Interest and Income Tax
    5,541       3,438       16,221  
Less: Preferred Stock Dividends
    (21,320 )     (21,424 )     (10,688 )
Less: Redemption of Preferred Stock
    (2,017 )     (672 )      
                         
Loss from Continuing Operations Available to Common Stockholders, Net of Minority Interest and Income Tax — For Basic and Diluted EPS
    (63,039 )     (74,463 )     (48,206 )
Discontinued Operations, Net of Minority Interest and Income Tax
    194,753       164,449       124,622  
                         
Net Income Available to Common Stockholders — For Basic and Diluted EPS
  $ 131,714     $ 89,986     $ 76,416  
                         
Denominator:
                       
Weighted Average Shares — Basic and Diluted
    44,085,998       44,011,503       42,431,109  
Basic and Diluted EPS:
                       
Loss from Continuing Operations Available to Common Stockholders, Net of Minority Interest and Income Tax
  $ (1.43 )   $ (1.69 )   $ (1.14 )
                         
Discontinued Operations, Net of Minority Interest and Income Tax
  $ 4.42     $ 3.74     $ 2.94  
                         
Net Income Available to Common Stockholders
  $ 2.99     $ 2.04     $ 1.80  
                         
 
The number of weighted average shares — diluted is the same as the number of weighted average shares — basic for the years ended December 31, 2007, 2006 and 2005 as the dilutive effect of stock options and restricted stock was excluded because its inclusion would have been anti-dilutive to the loss from continuing operations available to common stockholders, net of minority interest and income tax. The dilutive stock options and restricted stock excluded from the computation are 90,386 and 73,837, respectively, for the year ended December 31, 2007, 116,155 and 93,643, respectively, for the year ended December 31, 2006, and 141,625 and 82,888, respectively, for the year ended December 31, 2005.
 
Unvested restricted stock of 909,966, 778,535, and 700,023 were outstanding as of December 31, 2007, 2006, and 2005, respectively. Unvested restricted stock aggregating 470,009, 109,517, and 182,651 were antidilutive at December 31, 2007, 2006 and 2005, respectively, and accordingly, were excluded from dilution computations.
 
Additionally, options to purchase common stock of 355,901, 381,976, and 546,723 were outstanding as of December 31, 2007, 2006 and 2005, respectively.


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FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The $200,000 of senior unsecured debt (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 (see Note 5).
 
11.   Income Taxes
 
For income tax purposes, distributions paid to common shareholders are classified as ordinary income, capital gain, return of capital or qualified dividends. For the years ended December 31, 2007, 2006 and 2005, the distributions per common share were classified as follows:
 
                                                 
          As a Percentage
          As a Percentage
          As a Percentage
 
    2007     of Distributions     2006     of Distributions     2005     of Distributions  
 
Ordinary income
  $ 0.6158       21.61 %   $ 0.2613       9.30 %   $ 0.3278       11.77 %
Long-term capital gains
    1.2950       45.44 %     0.3364       11.97 %     0.4289       15.40 %
Unrecaptured Section 1250 gain
    0.6721       23.58 %     0.2408       8.57 %     0.2158       7.75 %
Return of capital
    0.2671       9.37 %     1.3918       49.53 %     1.6276       58.44 %
Qualified Dividends
          0.00 %     0.5797       20.63 %     0.1849       6.64 %
                                                 
    $ 2.8500       100.00 %   $ 2.810       100.00 %   $ 2.785       100.00 %
                                                 
 
For income tax purposes, distributions paid to preferred shareholders are classified as ordinary income, capital gain, or qualified dividends. For the years ended December 31, 2007, 2006 and 2005, the preferred distributions per depositary share were classified as follows:
 
                                                 
          As a Percentage
          As a Percentage
          As a Percentage
 
Series C Preferred Stock
  2007     of Distributions     2006     of Distributions     2005     of Distributions  
 
Ordinary income
  $ 0.1285       23.84 %   $ 0.3972       18.42 %   $ 0.5992       27.79 %
Long-term capital gains
    0.2703       50.14 %     0.5115       23.72 %     0.8023       37.21 %
Unrecaptured Section 1250 gain
    0.1403       26.02 %     0.3661       16.98 %     0.4041       18.74 %
Qualified Dividends
          0.00 %     0.8814       40.88 %     0.3506       16.26 %
                                                 
    $ 0.5391       100.00 %   $ 2.1562       100.00 %   $ 2.1562       100.00 %
                                                 
 
                                 
          As a Percentage
          As a Percentage
 
Series J Preferred Stock
  2007     of Distributions     2006     of Distributions  
 
Ordinary income
  $ 0.4322       23.84 %   $ 0.3227       18.42 %
Long-term capital gains
    0.9087       50.14 %     0.4156       23.72 %
Unrecaptured Section 1250 gain
    0.4716       26.02 %     0.2975       16.98 %
Qualified Dividends
          0.00 %     0.7163       40.88 %
                                 
    $ 1.8125       100.00 %   $ 1.7521       100.00 %
                                 
 
                                 
          As a Percentage
          As a Percentage
 
Series K Preferred Stock
  2007     of Distributions     2006     of Distributions  
 
Ordinary income
  $ 0.4322       23.84 %   $ 0.1215       18.42 %
Long-term capital gains
    0.9087       50.14 %     0.1564       23.72 %
Unrecaptured Section 1250 gain
    0.4716       26.02 %     0.1120       16.98 %
Qualified Dividends
          0.00 %     0.2696       40.88 %
                                 
    $ 1.8125       100.00 %   $ 0.6595       100.00 %
                                 


82


 

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The components of income tax expense for the TRS for the years ended December 31, 2007, 2006 and 2005 are comprised of the following:
 
                         
    2007     2006     2005  
 
Current:
                       
Federal
  $ (28,209 )   $ (39,531 )   $ (19,265 )
State
    (4,934 )     (7,734 )     (4,519 )
Deferred:
                       
Federal
    3,977       3,548       4,299  
State
    571       695       1,009  
                         
    $ (28,595 )   $ (43,022 )   $ (18,476 )
                         
 
In addition to income tax expense recognized by the TRS, $1,960, $317 and $1,956 of state income taxes was recognized by the Company and is included in income tax expense on the consolidated statement of operations for the years ended December 31, 2007, 2006 and 2005, respectively.
 
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 TRS include the following as of December 31, 2007, 2006 and 2005:
 
                         
    2007     2006     2005  
 
Bad debt expense
  $ 32     $ 119     $ 118  
Investment in joint ventures
    2,677       2,519       648  
Fixed assets
    8,204       7,133       4,363  
Prepaid rent
    215       556       461  
Capitalized general and administrative expense under 263A
    2,671       2,408       2,696  
Deferred losses/gains
    905       968       878  
Mark-to-Market of interest rate protection agreements
                6  
Capitalized interest under 263A
    613       191       184  
Accrued contingency loss
    289       297        
Restricted stock
    2,744              
                         
Total deferred tax assets
  $ 18,350     $ 14,191     $ 9,354  
                         
Straight-line rent
    (967 )     (1,483 )     (923 )
Build to suit development
    (97 )     (100 )     (66 )
Fixed assets
    (130 )            
                         
Total deferred tax liabilities
  $ (1,194 )   $ (1,583 )   $ (989 )
                         
Total net deferred tax asset
  $ 17,156     $ 12,608     $ 8,365  
                         
 
The TRS does not have net operating loss carryforwards or tax credit carryforwards.


83


 

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The TRS’s components of income tax expense for the years ended December 31, 2007, 2006 and 2005 are as follows:
 
                         
    2007     2006     2005  
 
Tax expense associated with income from operations on sold properties which is included in discontinued operations
  $ (2,012 )   $ (3,591 )   $ (3,369 )
Tax expense associated with gains and losses on the sale of real estate which is included in discontinued operations
    (36,032 )     (47,511 )     (20,529 )
Tax expense associated with gains and losses on the sale of real estate
    (3,082 )     (2,119 )     (10,871 )
Income tax benefit
    12,531       10,199       16,293  
                         
Income tax expense
  $ (28,595 )   $ (43,022 )   $ (18,476 )
                         
 
The income tax benefit pertaining to income from continuing operations and gain on sale of real estate for the TRS differs from the amounts computed by applying the applicable federal statutory rate as follows:
 
                         
    2007     2006     2005  
 
Tax benefit at federal rate related to continuing operations
  $ 8,100     $ 6,725     $ 3,058  
State tax benefit, net of federal benefit
    998       801       442  
Meals and entertainment
    (121 )     (24 )     (19 )
Prior year provision to return adjustments
    436       484       1,886  
Other
    36       94       55  
                         
Net income tax benefit
  $ 9,449     $ 8,080     $ 5,422  
                         
 
We adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), on January 1, 2007. The adoption of FIN 48 had no affect on our financial statements as we had no unrecognized tax benefits. As of the adoption date, we had paid approximately $1,400 (representing taxes and interest) to the State of Michigan regarding business loss carryforwards for which we are currently litigating. That amount will favorably affect our effective income tax rate in future periods should we prevail.
 
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 (CAD). We filed an appeal to the Michigan Appeals Court in January 2008. However, as a result of the lower court’s decision, $705 was accrued for both tax and financial statement purposes; therefore, there is no unrecognized tax benefit related to this issue.
 
We have no unrecognized tax benefits as of December 31, 2007. To the extent we have unrecognized tax benefits in the future, it will be our policy to recognize interest and penalties related to unrecognized tax benefits in income tax expense.


84


 

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
12.   Future Rental Revenues
 
Our properties are leased to tenants under net and semi-net operating leases. Minimum lease payments receivable, excluding tenant reimbursements of expenses, under non-cancelable operating leases in effect as of December 31, 2007 are approximately as follows:
 
         
2008
  $ 266,885  
2009
    223,719  
2010
    174,816  
2011
    128,002  
2012
    93,790  
Thereafter
    303,081  
         
Total
  $ 1,190,293  
         
 
13.   Stock Based Compensation
 
We maintain three stock incentive plans (the “Stock Incentive Plans”) which are administered by the Compensation Committee of the Board of Directors. There are approximately 10.0 million shares reserved under the Stock Incentive Plans. Only officers, certain employees, our Independent Directors and our affiliates generally are eligible to participate in the Stock Incentive Plans.
 
The Stock Incentive Plans authorize (i) the grant of stock options that qualify as incentive stock options under Section 422 of the Code, (ii) the grant of stock options that do not so qualify, (iii) restricted stock awards, (iv) performance share awards and (v) dividend equivalent rights. The exercise price of the stock options is determined by the Compensation Committee. Special provisions apply to awards granted under the Stock Incentive Plans in the event of a change in control in the Company. As of December 31, 2007, stock options and restricted stock covering 1.3 million shares were outstanding and 1.8 million shares were available under the Stock Incentive Plans. At December 31, 2007 all outstanding stock options are vested. Stock option transactions are summarized as follows:
 
                                 
          Weighted
             
          Average
    Exercise
    Aggregate
 
          Exercise
    Price
    Intrinsic
 
    Shares     Price     per Share     Value  
 
Outstanding at December 31, 2005
    546,723     $ 31.27     $ 22.75-$33.15     $ 3,954  
Exercised
    (125,780 )   $ 30.24     $ 22.75-$33.15     $ 1,846  
Expired or Terminated
    (38,967 )   $ 30.88     $ 27.25-$33.13          
                                 
Outstanding at December 31, 2006
    381,976     $ 31.65     $ 25.13-$33.15     $ 5,823  
                                 
Exercised
    (19,600 )   $ 31.27     $ 30.38-$33.13     $ 230  
Expired or Terminated
    (6,475 )   $ 30.85     $ 27.25-$33.13          
                                 
Outstanding at December 31, 2007
    355,901     $ 31.68     $ 25.13-$33.15     $ 3,669  
                                 
 
The following table summarizes currently outstanding and exercisable options as of December 31, 2007:
 
                         
    Number
    Weighted
    Weighted
 
    Outstanding
    Average
    Average
 
    and
    Remaining
    Exercise
 
Range of Exercise Price
  Exercisable     Contractual Life     Price  
 
$25.13 - $30.53
    100,101       3.31       29.85  
$31.05 - $33.15
    255,800       2.43       32.40  


85


 

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
In September 1994, the Board of Directors approved and we adopted a 401(k)/Profit Sharing Plan. Under our 401(k)/Profit Sharing Plan, all eligible employees may participate by making voluntary contributions. We may make, but are not required to make, matching contributions. For the years ended December 31, 2007, 2006 and 2005, we made matching contributions of approximately $542, $451, and $358, respectively.
 
For the twelve months ended December 31, 2007, 2006 and 2005, we awarded 442,008, 303,142, and 189,878 restricted stock awards to our employees having a fair value at grant date of $20,882, $11,519, and $7,976, respectively. We also awarded 17,139, 16,232, and 10,164, restricted stock awards to our directors having a fair value at grant date of $688, $633, and $405, respectively. Restricted stock awards granted to employees generally vest over a period of three years and restricted stock awards granted to directors generally vest over a period of three to ten years. For the twelve months ended December 31, 2007, 2006 and 2005, we recognized $14,150, $9,624, and $8,845 in restricted stock amortization related to restricted stock awards, of which $1,707, $967, and $1,297 respectively, was capitalized in connection with development activities. At December 31, 2007, we have $23,787 in unearned compensation related to unvested restricted stock awards. The weighted average period that the unrecognized compensation is expected to be incurred is 1.38 years. We have not awarded options to our employees or our directors during the twelve months ended December 31, 2007, 2006 and 2005, and therefore no stock-based employee compensation expense related to options is included in net income available to common stockholders.
 
Restricted stock transactions for the years ended December 31, 2007 and 2006 are summarized as follows:
 
                 
          Weighted
 
          Average
 
          Grant Date
 
    Shares     Fair Value  
 
Outstanding at December 31, 2005
    700,023     $ 34.23  
Issued
    319,374     $ 38.05  
Vested
    (217,168 )   $ 36.57  
Forfeited
    (23,694 )   $ 34.55  
                 
Outstanding at December 31, 2006
    778,535     $ 35.49  
                 
Issued
    459,147     $ 46.98  
Vested
    (272,745 )   $ 37.74  
Forfeited
    (54,971 )   $ 39.59  
                 
Outstanding at December 31, 2007
    909,966     $ 41.88  
                 
 
14.   Related Party Transactions
 
We periodically engage in transactions for which CB Richard Ellis, Inc. acts as a broker. A relative of one of our officers/Directors is an employee of CB Richard Ellis, Inc. For the years ended December 31, 2007, 2006 and 2005 this relative received brokerage commissions in the amount of $240, $341, and $285, respectively.
 
15.   Commitments and Contingencies
 
In the normal course of business, we are involved in legal actions arising from the ownership of our 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 the consolidated financial position, our operations or our liquidity.


86


 

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Seven properties have leases granting the tenants options to purchase the property. Such options are exercisable at various times at appraised fair market value or at a fixed purchase price in excess of our depreciated cost of the asset. We have no notice of any exercise of any tenant purchase option.
 
We have committed to the construction of certain development projects totaling approximately 2.1 million square feet of GLA. The estimated total construction costs are approximately $114,005. Of this amount, approximately $64,641 remains to be funded. There can be no assurance that the actual completion cost will not exceed the estimated completion cost stated above.
 
At December 31, 2007, we had 23 letters of credit outstanding in the aggregate amount of $9,582. These letters of credit expire between February, 2008 and January, 2010.
 
Ground and Operating Lease Agreements
 
For the years ended December 31, 2007, 2006 and 2005, we recognized $3,102, $2,737 and $2,275 in operating and ground lease expense.
 
Future minimum rental payments under the terms of all non-cancelable ground and operating leases under which we are the lessee, as of December 31, 2007, are as follows:
 
         
2008
  $ 3,339  
2009
    3,077  
2010
    2,744  
2011
    2,534  
2012
    2,158  
Thereafter
    38,912  
         
Total
  $ 52,764  
         
 
16.   Subsequent Events
 
On January 22, 2008, we paid a fourth quarter 2007 distribution of $0.72 per common share/unit, totaling approximately $36,079.
 
From January 1, 2008 to February 15, 2008, we awarded 2,168 shares of restricted common stock to certain Directors. These shares of restricted common stock had a fair value of approximately $67 on the date of grant. The restricted common stock and units vest over a period of five years. Compensation expense will be charged to earnings over the respective vesting period.
 
From January 1, 2008 to February 15, 2008, we acquired 11 industrial properties and several land parcels for a total estimated investment of approximately $79,073. We also sold three industrial properties and one land parcel for approximately $3,592 of gross proceeds during this period.
 
In January 2008, we entered into two interest rate protection agreements which fixed the interest rate on forecasted offerings of unsecured debt which we designated as cash flow hedges (the “January 2008 Agreements”). The January 2008 Agreements each have a notional value of $59,750 and are effective from May 15, 2009 through May 15, 2014. The January 2008 Agreements fix the LIBOR rate at 4.0725% and 4.0770%, respectively.


87


 

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
17.   Quarterly Financial Information (unaudited)
 
The following table summarizes our quarterly financial information. The first, second and third fiscal quarters of 2007 and all fiscal quarters in 2006 have been revised in accordance with FAS 144.
 
Net income available to common stockholders and basic and diluted EPS from net income available to common stockholders has not been affected.
 
                                 
    Year Ended December 31, 2007  
    First
    Second
    Third
    Fourth
 
    Quarter     Quarter     Quarter     Quarter  
 
Total Revenues
  $ 107,174     $ 107,339     $ 105,675     $ 114,739  
Equity in Income of Joint Ventures
    5,631       11,626       6,376       6,412  
Minority Interest Allocable to Continuing Operations
    2,577       2,363       2,411       2,593  
Loss from Continuing Operations, Net of Income Tax and Minority Interest
    (11,648 )     (8,790 )     (11,961 )     (12,844 )
Income from Discontinued Operations, Net of Income Tax
    50,818       52,325       52,689       67,099  
Minority Interest Allocable to Discontinued Operations
    (6,434 )     (6,562 )     (6,623 )     (8,559 )
Gain on Sale of Real Estate, Net of Income Tax
    2,806       503       63       2,971  
Minority Interest Allocable to Gain on Sale of Real Estate
    (355 )     (63 )     (8 )     (376 )
Net Income
    35,187       37,413       34,160       48,291  
Preferred Stock Dividends
    (5,935 )     (5,671 )     (4,857 )     (4,857 )
Less: Redemption of Preferred Stock
          (2,017 )            
                                 
Net Income Available to Common Stockholders
  $ 29,252     $ 29,725     $ 29,303     $ 43,434  
                                 
Basic and Diluted Earnings Per Share:
                               
Loss From Continuing Operations
  $ (0.34 )   $ (0.36 )   $ (0.38 )   $ (0.35 )
                                 
Income from Discontinued Operations
  $ 1.00     $ 1.03     $ 1.04     $ 1.35  
                                 
Net Income Available to Common Stockholders
  $ 0.66     $ 0.67     $ 0.66     $ 1.00  
                                 
Weighted Average Shares Outstanding
    44,410       44,471       44,240       43,234  
                                 
 


88


 

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
                                 
    Year Ended December 31, 2006  
    First
    Second
    Third
    Fourth
 
    Quarter     Quarter     Quarter     Quarter  
 
Total Revenues
  $ 80,851     $ 84,041     $ 85,249     $ 100,783  
Equity in Income (Loss) of Joint Ventures
    (34 )     7,307       4,747       18,654  
Minority Interest Allocable to Continuing Operations
    3,312       2,641       3,397       2,243  
Loss from Continuing Operations, Net of Income Tax and Minority Interest
    (16,359 )     (13,376 )     (17,447 )     (8,623 )
Income from Discontinued Operations, Net of Income Tax
    44,285       51,025       52,079       41,654  
Minority Interest Allocable to Discontinued Operations
    (5,838 )     (6,638 )     (6,765 )     (5,353 )
Gain (Loss) on Sale of Real Estate, Net of Income Tax
    982       1,475       1,729       (234 )
Minority Interest Allocable to (Gain) Loss Sale of Real Estate
    (127 )     (192 )     (225 )     30  
Net Income
    22,943       32,294       29,371       27,474  
Preferred Stock Dividends
    (5,019 )     (5,029 )     (5,442 )     (5,934 )
Less: Redemption of Preferred Stock
    (672 )                  
                                 
Net Income Available to Common Stockholders
  $ 17,252     $ 27,265     $ 23,929     $ 21,540  
                                 
Basic and Diluted Earnings Per Share:
                               
Loss From Continuing Operations
  $ (0.48 )   $ (0.39 )   $ (0.49 )   $ (0.33 )
                                 
Income from Discontinued Operations
  $ 0.88     $ 1.01     $ 1.03     $ 0.82  
                                 
Net Income Available to Common Stockholders
  $ 0.39     $ 0.62     $ 0.54     $ 0.49  
                                 
Weighted Average Shares Outstanding
    43,887       44,006       44,032       44,118  
                                 
 
18.  Pro Forma Financial Information (unaudited)
 
The following Pro Forma Condensed Statements of Operations for the years ended December 31, 2007 and 2006 (the “Pro Forma Statements”) are presented as if the acquisition of 56 operating industrial properties between January 1, 2007 and December 31, 2007 had occurred at the beginning of each year. The Pro Forma Statements do not include acquisitions between January 1, 2007 and December 31, 2007 for industrial properties that were vacant upon purchase, were leased back to the sellers upon purchase or were subsequently sold before December 31, 2007. The Pro Forma Condensed Statements of Operations include all necessary adjustments to reflect the occurrence of purchases and sales of properties during 2007 as of January 1, 2007 and 2006.

89


 

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The Pro Forma Statements are not necessarily indicative of what our results of operations would have been for the years ended December 31, 2007 and 2006, nor do they purport to present our future results of operations.
 
Pro Forma Condensed Statements of Operations
 
                 
    Year Ended
    Year Ended
 
    December 31,
    December 31,
 
    2007     2006  
 
Pro Forma Revenues
  $ 441,933     $ 371,713  
Pro Forma Loss from Continuing Operations Available to Common Stockholders, Net of Minority Interest and Income Taxes
  $ (44,798 )   $ (49,248 )
Pro Forma Net Income Available to Common Stockholders
  $ 149,955     $ 115,200  
Per Share Data:
               
Pro Forma Basic and Diluted Earnings Per Share Data:
               
Loss from Continuing Operations Available to Common Stockholders
  $ (1.02 )   $ (1.12 )
                 
Net Income Available to Common Stockholders
  $ 3.40     $ 2.62  
                 
 
The following Pro Forma Condensed Statements of Operations for the years ended December 31, 2006 and 2005 (the “Pro Forma Statements”) are presented as if the acquisition of 56 operating industrial properties between January 1, 2006 and December 31, 2006 had occurred at the beginning of each year. The Pro Forma Statements do not include acquisitions between January 1, 2006 and December 31, 2006 for industrial properties that were vacant upon purchase, were leased back to the sellers upon purchase or were subsequently sold before December 31, 2006. The Pro Forma Condensed Statements of Operations include all necessary adjustments to reflect the occurrence of purchases and sales of properties during 2006 as of January 1, 2006 and 2005.
 
The Pro Forma Statements are not necessarily indicative of what our results of operations would have been for the years ended December 31, 2006 and 2005, nor do they purport to present our future results of operations.
 
Pro Forma Condensed Statements of Operations
 
                 
    Year Ended
    Year Ended
 
    December 31,
    December 31,
 
    2006     2005  
 
Pro Forma Revenues
  $ 409,229     $ 355,126  
Pro Forma Loss from Continuing Operations Available to Common Stockholders, Net of Minority Interest and Income Taxes
  $ (58,391 )   $ (36,017 )
Pro Forma Net Income Available to Common Stockholders
  $ 94,029     $ 77,290  
Per Share Data:
               
Pro Forma Basic and Diluted Earnings Per Share Data:
               
Loss from Continuing Operations Available to Common Stockholders
  $ (1.33 )   $ (0.85 )
                 
Net Income Available to Common Stockholders
  $ 2.14     $ 1.82  
                 


90


 

FIRSTCAL INDUSTRIAL, LLC
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
         
    Page
 
FINANCIAL STATEMENTS
       
Report of Independent Registered Public Accounting Firm
    92  
Consolidated Statements of Financial Position of FirstCal Industrial, L.L.C. as of December 31, 2007 and 2006 (not covered by the report included herein)
    93  
Consolidated Statements of Operations of FirstCal Industrial, L.L.C. for the Years Ended December 31, 2007 and 2006 (not covered by the report included herein) and for the period from March 18, 2005 (inception) to December 31, 2005
    94  
Consolidated Statements of Changes in Members’ Capital of FirstCal Industrial, L.L.C. for the Years Ended December 31, 2007 and 2006 and for the period from March 18, 2005 (inception) to December 31, 2005
    95  
Consolidated Statements of Cash Flows of FirstCal Industrial, L.L.C. for the Years Ended December 31, 2007 and 2006 (not covered by the report included herein) and for the period from March 18, 2005 (inception) to December 31, 2005
    96  
Notes to the Consolidated Financial Statements
    97  


91


 

 
Report of Independent Registered Accounting Firm
 
To the Members of
FirstCal Industrial, LLC:
 
In our opinion, the accompanying consolidated statements of operations, changes in members’ capital and cash flows present fairly, in all material respects, the results of operations and cash flows of FirstCal Industrial, LLC and its subsidiaries (the “Joint Venture”) for the period from March 18, 2005 (inception) though December 31, 2005 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Joint Venture’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statements of operations, changes in members’ capital and cash flows are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statements of operations, changes in members’ capital and cash flows, assessing the accounting principles used and significant estimates made by management, and evaluating the overall presentation of the statements of operations, changes in members’ capital and cash flows. We believe that our audit provides a reasonable basis for our opinion.
 
/s/  PricewaterhouseCoopers LLP
Chicago, Illinois
May 16, 2006, except with respect to our opinion on the consolidated statement of operations insofar as it relates to the effects of discontinued operations discussed in Note 5, as to which the date is February 25, 2008.


92


 

 
FIRSTCAL INDUSTRIAL, LLC
 
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 
                 
    December 31,
    December 31,
 
    2007
    2006
 
    (Not covered by the
    (Not covered by the
 
    report included herein)     report included herein)  
    ($ in 000’s)  
 
ASSETS
Assets:
               
Investment in Real Estate:
               
Land and Land Improvements
  $ 440,136     $ 257,758  
Buildings and Improvements
    146,282       142,403  
Furniture and Fixtures
    106        
Construction in Progress
    83,558       46,776  
                 
Gross Real Estate Investment
    670,082       446,937  
Less: Accumulated Depreciation
    (6,420 )     (6,416 )
                 
Net Investment in Real Estate
    663,662       440,521  
Real Estate Held for Sale, net of Accumulated Depreciation and Amortization of $2,658 and $717 at December 31, 2007 and December 31, 2006, respectively
    57,509       9,411  
Cash and Cash Equivalents
    13,234       3,018  
Restricted Cash
    4,238       3,571  
Tenant Accounts Receivable, Net
    156       384  
Deferred Rent Receivable
    3,981       923  
Deferred Financing Costs, Net
    1,943       748  
Prepaid Expenses and Other Assets, Net
    7,904       15,159  
                 
Total Assets
  $ 752,627     $ 473,735  
                 
 
LIABILITIES AND MEMBERS’ CAPITAL
Liabilities:
               
Unsecured Line of Credit
  $ 211,015     $ 305,643  
Related Party Notes
    277,500        
Accounts Payable and Accrued Expenses
    29,111       18,469  
Rents Received in Advance and Security Deposits
    1,880       1,344  
Other Liabilities, Net
    1,138       1,604  
                 
Total Liabilities
    520,644       327,060  
                 
Commitments and Contingencies
           
Members’ Capital
    231,983       146,675  
                 
Total Liabilities and Members’ Capital
  $ 752,627     $ 473,735  
                 
 
The accompanying notes are an integral part of the consolidated financial statements.


93


 

 
FIRSTCAL INDUSTRIAL, LLC
 
CONSOLIDATED STATEMENTS OF OPERATIONS
 
                         
                Period from
 
                March 18,
 
    Year Ended
    Year Ended
    2005
 
    December 31,
    December 31,
    (inception)
 
    2007
    2006
    through
 
    (Not covered by the
    (Not covered by the
    December 31,
 
    report included herein)     report included herein)     2005  
    ($ in 000’s)  
 
Revenues:
                       
Rental Income
  $ 7,312     $ 4,192     $ 427  
Tenant Recoveries and Other Income
    2,142       925       94  
                         
Total Revenues
    9,454       5,117       521  
                         
Expenses:
                       
Real Estate Tax
    3,544       1,386       258  
Repairs and Maintenance
    771       261       49  
Property Management
    134       124       15  
Utilities
    452       272       21  
Insurance
    317       67       5  
Other
    1,208       354       20  
General and Administrative
    1,305       1,143       246  
Depreciation and Other Amortization
    5,584       5,837       383  
                         
Total Expenses
    13,315       9,444       997  
                         
Other Income (Expense):
                       
Interest Income
    642       283       10  
Interest Expense
    (19,108 )     (12,530 )     (3,941 )
Amortization of Deferred Financing Costs
    (316 )     (576 )     (221 )
                         
Total Other Income (Expense)
    (18,782 )     (12,823 )     (4,152 )
                         
Loss from Continuing Operations
  $ (22,643 )   $ (17,150 )     (4,628 )
                         
Income (Loss) from Discontinued Operations (Including Gain on Sale of Real Estate of $35,765, $34,669 and $0 for the years ended December 31, 2007, December 31, 2006 and for the period from March 18, 2005 through December 31, 2005, respectively)
    35,160       32,971       (2,096 )
                         
Income Before Gain on Sale of Real Estate
  $ 12,517     $ 15,821     $ (6,724 )
                         
Gain on Sale of Real Estate
    19,411       27,535       9,434  
                         
Net Income
  $ 31,928     $ 43,356       2,710  
                         
 
The accompanying notes are an integral part of the consolidated financial statements.


94


 

 
FIRSTCAL INDUSTRIAL, LLC
 
CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’ CAPITAL
For the Years Ended December 31, 2007 and 2006 (not covered by the report included herein) and for the Period from March 18, 2005 (inception) through December 31, 2005
 
                         
    Total     CSJV FirstCal, LLC     FR FirstCal, LLC  
          ($ in 000’s)        
 
Balance at March 18, 2005 (Inception)
  $     $     $  
Cash Contributions
    126,656       113,990       12,666  
Cash Distributions
    (26,046 )     (19,966 )     (6,080 )
Net Income
    2,711       (1,035 )     3,746  
                         
Balance at December 31, 2005
  $ 103,321     $ 92,989     $ 10,332  
                         
Cash Contributions
    136,677       123,009       13,668  
Cash Distributions
    (136,679 )     (106,302 )     (30,377 )
Net Income
    43,356       22,311       21,045  
                         
Balance at December 31, 2006
  $ 146,675     $ 132,007     $ 14,668  
                         
Cash Contributions
    167,812       151,031       16,781  
Cash Distributions
    (114,432 )     (87,408 )     (27,024 )
Net Income
    31,928       13,080       18,848  
                         
Balance at December 31, 2007
  $ 231,983     $ 208,710     $ 23,273  
                         
 
The accompanying notes are an integral part of the consolidated financial statements.


95


 

 
FIRSTCAL INDUSTRIAL, LLC
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                         
                Period from
 
                March 18,
 
    Year Ended
    Year Ended
    2005
 
    December 31,
    December 31,
    (inception)
 
    2007
    2006
    through
 
    (Not covered by the
    (Not covered by the
    December 31,
 
    report included herein)     report included herein)     2005  
          ($ in 000’s)        
 
CASH FLOWS FROM OPERATING ACTIVITIES:
                       
Net Income
  $ 31,928     $ 43,356     $ 2,711  
Adjustments to Reconcile Net Income to Net Cash Used in Operating Activities:
                       
Gain on Sale of Real Estate
    (55,176 )     (62,204 )     (9,434 )
Depreciation and Amortization
    10,473       14,741       6,735  
Deferred Financing Cost Amortization
    316       576       221  
Provision for Bad Debt
    (136 )     153       16  
Decrease (Increase) in Tenant Accounts Receivable and Prepaid Expenses and Other Assets
    (9 )     (717 )     (1,370 )
Increase in Deferred Rent Receivable
    (4,183 )     (1,075 )     (1,074 )
Increase in Accounts Payable and Accrued Expenses, Rents Received in Advance and Security Deposits and Other Liabilities
    9,082       1,214       1,790  
                         
Net Cash Used in Operating Activities
    (7,705 )     (3,956 )     (405 )
                         
CASH FLOWS FROM INVESTING ACTIVITIES:
                       
Purchases of and Additions to Investment in Real Estate
    (449,374 )     (374,400 )     (322,003 )
Net Proceeds from Sales of Investments in Real Estate
    233,221       275,338       27,309  
Increase in Restricted Cash
    (599 )     (2,293 )      
                         
Net Cash Used in Investing Activities
    (216,752 )     (101,355 )     (294,694 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES:
                       
Proceeds from Unsecured Lines of Credit
    283,138       442,608       188,938  
Repayments on Unsecured Lines of Credit
    (377,766 )     (314,588 )     (11,315 )
Proceeds / (Repayments of) from Related Party Note
    277,500       (30,964 )     30,964  
Cost of Debt Issuance
    (1,511 )     (594 )     (951 )
Increase in Restricted Cash
    (68 )     (1,278 )      
Contributions from Members
    167,812       136,677       126,656  
Distributions to Members
    (114,432 )     (136,679 )     (26,046 )
                         
Net Cash Provided by Financing Activities
    234,673       95,182       308,246  
                         
Net Increase / (Decrease) in Cash and Cash Equivalents
    10,216       (10,129 )     13,147  
                         
Cash and Cash Equivalents, Beginning of Period
    3,018       13,147        
                         
Cash and Cash Equivalents, End of Period
  $ 13,234     $ 3,018     $ 13,147  
                         
Supplemental Information:
                       
Interest Paid, Net of Capitalized Interest
  $ 18,548     $ 11,666     $ 3,470  
                         
Capitalized Interest
  $ 3,397     $ 1,480     $ 292  
                         
Accounts Receivable Write Off
  $ 250     $     $  
Non-Cash Investing Activities:
                       
Security Deposits Assumed in Conjunction with the Acquisition of Real Estate
  $     $ 330     $ 1,078  
                         
Real Estate Taxes Assumed in Conjunction with the Acquisition of Real Estate
  $ 285     $ 140     $ 82  
                         
Liabilities Assumed in Conjunction with Sale of Real Estate
  $ 1,954     $ 368     $ 534  
                         
Capital Expenditures Recorded, Included in Liabilities
  $ 2,212     $ 5,512     $ 9,476  
                         
Write-off of Fully Amortized Assets
  $ 2,181     $ 3,588     $ 1,653  
                         
 
The accompanying notes are an integral part of the consolidated financial statements.


96


 

 
FIRSTCAL INDUSTRIAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AMOUNTS AS OF DECEMBER 31, 2007 AND 2006 AND FOR THE YEARS THEN ENDED NOT
COVERED BY THE REPORT INCLUDED HEREIN
($ in 000’s)
 
1.   Organization and Formation of Joint Venture
 
FirstCal Industrial, LLC (the “Joint Venture”) was organized in the state of Delaware on March 18, 2005. The Joint Venture was formed to invest in, own, develop, redevelop, operate and hold for long term capital appreciation interests in certain industrial properties. CSJV FirstCal, LLC, a wholly owned subsidiary of California State Teachers’ Retirement System, holds a 90% membership interest. FR FirstCal, LLC, a wholly owned subsidiary of First Industrial Investment, Inc. (“FIII”), holds the remaining 10% membership interest and acts as manager to the Joint Venture. FIII is a wholly owned subsidiary of First Industrial, LP (“FILP”). FILP is a limited partnership organized in the state of Delaware on November 23, 1993. The sole general partner of FILP is First Industrial Realty Trust, Inc. (the “REIT”) which is a real estate investment trust organized in the state of Maryland on August 10, 1993.
 
The Joint Venture finances its investments with capital contributions from its Members, or proceeds from its unsecured line of credits or such other financing as the Members deem appropriate. Properties are managed on a day to day basis by FirstCal Industrial Property Manager, LLC, a wholly owned subsidiary of First Industrial LP (“FILP”) through August 14, 2006 and a wholly owned subsidiary of FIII thereafter. Major decisions are made by the board of the Joint Venture.
 
As of December 31, 2007, the Joint Venture owned 24 industrial properties comprising approximately 5.0 million square feet (unaudited) of gross leaseable area (“GLA”) and several land parcels. The Joint Venture had 18 development projects in progress. As of December 31, 2006, the Joint Venture owned 45 industrial properties comprising approximately 4.7 million square feet (unaudited) of GLA and several land parcels, and had 22 development projects in progress.
 
2.   Summary of Significant Accounting Policies
 
Basis of Presentation
 
The consolidated financial statements as of December 31, 2007 and December 31, 2006 and for the years ended December 31, 2007 and December 31, 2006 and for the period from March 18, 2005 through December 31, 2005 reflect the assets, liabilities, results of operations and cash flows of the Joint Venture on a consolidated basis in accordance with generally accepted accounting principles (“GAAP”). The Joint Venture wholly owns Limited Liability Companies (“LLCs”), whose purpose is to hold, develop and operate single industrial properties. The financial statements presented consolidate the wholly owned LLCs. All inter-company transactions have been eliminated.
 
Management Estimates
 
In order to conform with GAAP, management, in preparation of the Joint Venture’s consolidated financial statements, is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of December 31, 2007 and December 31, 2006 and the reported amounts of revenues and expenses for the years ended December 31, 2007 and December 31, 2006 and for the period from March 18, 2005 through December 31, 2005. Actual results differ from those estimates.
 
Cash and Cash Equivalents
 
Cash and cash equivalents include all cash and liquid investments with an initial maturity of three months or less. The carrying amount approximates fair value due to the short term maturity of these investments.


97


 

 
FIRSTCAL INDUSTRIAL, LLC
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
AMOUNTS AS OF DECEMBER 31, 2007 AND 2006 AND FOR THE YEARS THEN ENDED NOT
COVERED BY THE REPORT INCLUDED HEREIN
($ in 000’s)
 
Restricted Cash
 
At December 31, 2007 and December 31, 2006, restricted cash includes cash held in escrow accounts managed by third parties for earnest deposits on prospective property and land acquisitions and miscellaneous obligations arising from the sales of certain properties. At December 31, 2007 and December 31, 2006, restricted cash also includes gross proceeds from the sales of certain properties which will be disbursed to FR FirstCal, LLC upon satisfaction of the terms of a resolution passed by the board of the Joint Venture.
 
Investment in Real Estate and Depreciation
 
Investment in real estate is carried at cost. The Joint Venture reviews its properties on an annual basis for impairment. To determine if an impairment may exist, the Joint Venture reviews its properties and identifies those that have had either an event of change or event of circumstances warranting further assessment of recoverability (such as a decrease in occupancy). If further assessment of recoverability is needed, the Joint Venture estimates the future net cash flows expected to result from the use of the property and its eventual disposition, on an individual property basis. If the sum of the expected future net cash flows (undiscounted and without interest charges) is less than the carrying amount of the property on an individual property basis, the Joint Venture will recognize an impairment loss based upon the estimated fair value of such property. For properties management considers held for sale, the Joint Venture ceases depreciating the properties and values the properties at the lower of depreciated cost or fair value, less costs to dispose. If circumstances arise that were previously considered unlikely and, as a result, the Joint Venture decides not to sell a property previously classified as held for sale, the Joint Venture will reclassify such property as held and used. Such property is measured at the lower of its carrying amount (adjusted for any depreciation and amortization expense that would have been recognized had the property been continuously classified as held and used) or fair value at the date of the subsequent decision not to sell. The Joint Venture determines fair value of properties that are held for use by discounting the future expected cash flows of the properties. To calculate the fair value of properties held for sale, the Joint Venture deducts from the contract price of the property the estimated costs to close the sale. The Joint Venture classifies properties as held for sale when the board of the Joint Venture approves the sale of the property.
 
Costs such as interest, real estate taxes and other directly related costs incurred during construction periods begin to be capitalized to the development projects from the point the Joint Venture is undergoing necessary activities to get the development ready for its intended use and ceases when the development projects are substantially completed and held available for occupancy. Upon substantial completion, the Joint Venture reclassifies construction in progress to building, tenant improvements and leasing commissions. Depreciation expense is computed using the straight-line method based on the following useful lives:
 
     
    Years
 
Buildings and Improvements
  10 to 45
Land Improvements
  3 to 15
 
Construction expenditures for tenant improvements, leasehold improvements and leasing commissions are capitalized and amortized over the terms of each specific lease. Repairs and maintenance are charged to expense when incurred. Expenditures for improvements are capitalized.
 
The Joint Venture accounts for all acquisitions in accordance with Financial Accounting Standards Board’s (“FASB”) Statement of Financial Accounting Standard No. 141, “Business Combinations”. Upon acquisition of a property, the Joint Venture allocates the purchase price of the property based upon the fair value of the assets acquired, which generally consist of land, buildings, tenant improvements, leasing


98


 

 
FIRSTCAL INDUSTRIAL, LLC
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
AMOUNTS AS OF DECEMBER 31, 2007 AND 2006 AND FOR THE YEARS THEN ENDED NOT
COVERED BY THE REPORT INCLUDED HEREIN
($ in 000’s)
 
commissions and intangible assets including in-place leases, tenant relationships, above market and below market leases. The Joint Venture allocates the purchase price to the fair value of the tangible assets of an acquired property by valuing the property as if it were vacant. Acquired above and below market leases are valued based on the present value of the difference between prevailing market rates and the in-place rates over the remaining lease term and are amortized over the remaining non-cancelable terms of the respective leases as an adjustment to rental income on the Joint Venture’s consolidated statement of operations.
 
The purchase price is further allocated to in-place lease and tenant relationship values based on management’s evaluation of the specific characteristics of each tenant’s lease and the Joint Venture’s overall relationship with the respective tenant. The value of in-place lease intangible assets are amortized to depreciation and amortization expense over the remaining lease term of the respective lease. The value allocated to tenant relationship is amortized to depreciation and amortization expense over the expected term of the relationship, which includes an estimate of the probability of lease renewal and its estimated term. If a tenant terminates its lease before maturity, the unamortized portion of the tenant improvements, leasing commissions, above and below market leases, in-place lease and the tenant relationship value is immediately expensed.
 
Deferred leasing intangibles included in the Joint Venture’s Other Assets and Real Estate Held for Sale consist of the following:
 
                 
    December 31,
    December 31,
 
    2007     2006  
 
In-Place Leases
  $ 1,672     $ 6,585  
Less: Accumulated Amortization
    (666 )     (1,760 )
                 
    $ 1,006     $ 4,825  
                 
Above Market Leases
  $ 741     $ 5,349  
Less: Accumulated Amortization.
    (465 )     (604 )
                 
    $ 276     $ 4,745  
                 
Tenant Relationship
  $ 609     $ 2,721  
Less: Accumulated Amortization.
    (121 )     (249 )
                 
    $ 488     $ 2,472  
                 
 
Deferred Leasing Intangibles included in the Joint Venture’s other liabilities consist of the following:
Below Market Leases
  $ 135     $ 1,336  
Less: Accumulated Amortization
    (110 )     (444 )
                 
    $ 25     $ 892  
                 
 
Amortization expense related to in-place leases and tenant relationships of deferred leasing intangibles was $1,878, $4,905, and $1,807, for the years ended December 31, 2007 and 2006 and for the period from March 18, 2005 through December 31, 2005, respectively. Rental revenues decreased by $299, $174, and $197 related to amortization of above/(below) market leases for the years ended December 31, 2007 and 2006 and for the period from March 18, 2005 through December 31, 2005, respectively. We will recognize net


99


 

 
FIRSTCAL INDUSTRIAL, LLC
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
AMOUNTS AS OF DECEMBER 31, 2007 AND 2006 AND FOR THE YEARS THEN ENDED NOT
COVERED BY THE REPORT INCLUDED HEREIN
($ in 000’s)
 
amortization expense related to the deferred leasing intangibles over the next five years, for properties owned as of December 31, 2007, as follows:
 
                 
          Estimated Net
 
    Estimated Net Amortization of
    Decrease to Rental Revenues
 
    In-Place Leases and Tenant
    Related to Above and Below
 
    Relationships     Market Leases  
 
2008
  $ 374     $ 152  
2009
    287       93  
2010
    263       5  
2011
    206       1  
2012
    169        
 
Deferred Financing Costs
 
Deferred financing costs include fees and costs incurred to obtain long-term financing. These fees and costs are being amortized over the terms of the respective loans. Accumulated amortization of deferred financing costs at December 31, 2007 and December 31, 2006 was $1,113 and $797, respectively. Unamortized deferred financing costs are immediately expensed when debt is retired before the maturity date.
 
Revenue Recognition
 
Rental income is recognized on a straight-line method under which contractual rent increases are recognized evenly over the lease term. Tenant recovery income includes payments from tenants for real estate taxes, insurance and other property operating expenses and is recognized as revenue in the same period the related expenses are incurred by the Joint Venture.
 
Revenue is recognized on payments received from tenants for early lease terminations after the Joint Venture determines that all the necessary criteria have been met in accordance with FASB Statement of Financial Accounting Standards No. 13, “Accounting for Leases.”
 
The Joint Venture provides an allowance for doubtful accounts against the portion of tenant accounts receivable which is estimated to be uncollectible. Accounts receivable in the consolidated balance sheets are shown net of an allowance for doubtful accounts of $33 and $169 as of December 31, 2007 and December 31, 2006, respectively.
 
Gain on Sale of Real Estate
 
Gain on sale of real estate is recognized using the full accrual method, when appropriate. Gains relating to transactions which do not meet the full accrual method of accounting are deferred and recognized when the full accrual method of accounting criteria are met or by using the installment or deposit methods of profit recognition, as appropriate in the circumstances. As the assets are sold, their costs and related accumulated depreciation are removed from the accounts with resulting gains or losses reflected in net income or loss. Estimated future costs to be incurred by the Joint Venture after completion of each sale are included in the determination of the gains on sales.
 
Income Taxes
 
In accordance with limited liability company taxation, each of the members is responsible for reporting their share of taxable income or loss. Accordingly, no provision has been made in the consolidated financial


100


 

 
FIRSTCAL INDUSTRIAL, LLC
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
AMOUNTS AS OF DECEMBER 31, 2007 AND 2006 AND FOR THE YEARS THEN ENDED NOT
COVERED BY THE REPORT INCLUDED HEREIN
($ in 000’s)
 
statements for federal income taxes. Certain subsidiaries are subject to state and franchise taxes. The provision for state income and franchise taxes has been allocated to General and Administrative expense and Income from Discontinued Operations in the consolidated statements of operations and has not been separately stated.
 
Fair Value of Financial Instruments
 
FASB Statement of Financial Accounting Standards No. 107, “Disclosures About Fair Value of Financial Instruments,” requires disclosures about the fair value of financial instruments whether or not such instruments are recognizable in the balance sheet. The Joint Venture’s financial instruments include net tenant accounts receivable, accounts payable, other accrued expenses, related party notes and unsecured lines of credit.
 
The fair values of the net tenant accounts receivable, accounts payable and other accrued expenses were not materially different from their carrying or contract values due to the short-term nature of these financial instruments. See Note 3 for the fair values of the unsecured lines of credit and related party notes.
 
Discontinued Operations
 
FASB Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long Lived Assets” (“FAS 144”) addresses financial accounting and reporting for the disposal of long lived assets. FAS 144 requires that the results of operations and gains or losses on the sale of property be presented in discontinued operations if both of the following criteria are met: (a) the operations and cash flows of the property have been (or will be) eliminated from the ongoing operations of the Joint Venture as a result of the disposal transaction and (b) the Joint Venture will not have any significant continuing involvement in the operations of the property after the disposal transaction. FAS 144 also requires prior period results of operations for these properties to be reclassified and presented in discontinued operations in prior period consolidated statements of operations.
 
3.   Unsecured Lines of Credit and Due to Related Party
 
On March 18, 2005, the Joint Venture entered into a revolving unsecured line of credit (the “March 2005 LOC”) with a borrowing capacity of $100,000 which matured on June 16, 2005 and bore interest at a floating rate of LIBOR plus 0.675%. The March 2005 LOC was paid off and retired utilizing proceeds received under the June 2005 LOC (as defined below).
 
On June 6, 2005, the Joint Venture entered into a revolving unsecured line of credit (the “June 2005 LOC”) with a borrowing capacity of $125,000, with the right, subject to certain conditions, to increase the borrowing capacity up to $200,000, which had a maturity date of December 17, 2007 and bears interest at a floating rate of LIBOR plus 0.675%. On August 18, 2005, the Joint Venture amended the June 2005 LOC to increase the borrowing capacity to $180,000. On January 13, 2006, the Joint Venture entered into a second amendment to the June 2005 LOC to increase the borrowing capacity to $300,000 subject to certain conditions. On August 14, 2006, the Joint Venture entered into a third amendment to the June 2005 LOC to extend the maturity date to April 21, 2009. The unsecured line of credit contains certain covenants, including limitations on occurrence of debt and debt service coverage. The Joint Venture is in compliance with these covenants at December 31, 2007 and 2006.
 
On November 14, 2005, the Joint Venture entered into a note payable (the “November 2005 Note”) to FirstCal Industrial 2, LLC, a joint venture between CSJV FirstCal 2, LLC and FR FirstCal 2, LLC, which are wholly owned entities of the California State Teachers’ Retirement System and FIII, respectively. The November 2005 Note had a borrowing capacity of $36,000, matured on September 30, 2006 and bore interest


101


 

 
FIRSTCAL INDUSTRIAL, LLC
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
AMOUNTS AS OF DECEMBER 31, 2007 AND 2006 AND FOR THE YEARS THEN ENDED NOT
COVERED BY THE REPORT INCLUDED HEREIN
($ in 000’s)
 
at a floating rate of LIBOR plus 0.65%. The Joint Venture paid off the November 2005 Note in January 2006 utilizing proceeds received under the January 2006 LOC (as defined below).
 
On January 13, 2006, the Joint Venture entered into an unsecured line of credit (the “January 2006 LOC”) which has a borrowing capacity of $125,000, matures on January 31, 2009 and bears a fixed interest rate of 5.065%. The unsecured line of credit contains certain covenants, including limitations on occurrence of debt and debt service coverage. The Joint Venture is in compliance with these covenants at December 31, 2007 and 2006.
 
On February 1, 2006, the Joint Venture entered into an unsecured line of credit (the “February 2006 LOC”) which has a borrowing capacity of $75,000, matures on February 1, 2009 and bears a fixed interest rate of 5.95%. The unsecured line of credit contains certain covenants, including limitations on occurrence of debt and debt service coverage. The Joint Venture is in compliance with these covenants at December 31, 2007 and 2006
 
On June 4, 2007, the Joint Venture entered into a note payable (the “June 2007 Note”) to FirstCal Industrial 2, LLC. The June 2007 Note matures on September 30, 2009 and bears interest at a floating rate of the Effective Federal Funds Rate plus 0.85%. The outstanding balance at December 31, 2007 totaled $155,000, which is reflected on the consolidated balance sheet as Related Party Notes.
 
On November 15, 2007, the Joint Venture entered into a note payable (the “November 2007 Note I”) to FirstCal Industrial 3, LLC, a joint venture between CSJV FirstCal 3, LLC and FR FirstCal 3, LLC, which are wholly owned entities of the California State Teachers’ Retirement System and FIII respectively. The November 2007 Note I matures on November 15, 2011 and bears interest at a floating rate of LIBOR plus 0.375%. The outstanding balance at December 31, 2007 totaled $100,000, which is reflected on the consolidated balance sheet as Related Party Notes.
 
On November 15, 2007, the Joint Venture entered into a note payable (the “November 2007 Note II”) to FirstCal Industrial 3, LLC. The November 2007 Note II matures on November 15, 2013 and bears interest at a floating rate of LIBOR plus 0.4%. The outstanding balance at December 31, 2007 totaled $22,500, which is reflected on the consolidated balance sheet as Related Party Notes.
 
All lines of credit are guaranteed by California State Teachers’ Retirement System, sole owner of the CSJV FirstCal, LLC member.
 
The net unamortized deferred financing fees related to the lines of credit are being amortized over the life of the lines of credit in accordance with Emerging Issues Task Force Issue 98-14, “Debtor’s Accounting for Changes in Line-of-Credit or Revolving-Debt Arrangements.”


102


 

 
FIRSTCAL INDUSTRIAL, LLC
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
AMOUNTS AS OF DECEMBER 31, 2007 AND 2006 AND FOR THE YEARS THEN ENDED NOT
COVERED BY THE REPORT INCLUDED HEREIN
($ in 000’s)
 
The following table discloses certain information regarding the Joint Venture’s unsecured lines of credit and the related party notes:
 
                                 
    Outstanding
    Accrued
             
    Balance at
    Interest
    Interest Rate at
       
    December 31,
    at December 31,
    December 31,
    Maturity
 
    2007     2007     2007     Date  
 
Unsecured Lines of Credit
                               
June 2005 LOC
  $ 11,015     $ 78       7.250 %     4/21/2009  
January 2006 LOC
    125,000       510       5.065 %     1/1/2009  
February 2006 LOC
    75,000       360       5.953 %     2/1/2009  
                                 
Total
  $ 211,015     $ 948                  
                                 
Related Party Notes
                               
June 2007 Note
  $ 155,000     $ 671       3.910 %     9/30/2009  
November 2007 Note I
    100,000       225       5.405 %     11/15/2011  
November 2007 Note II
    22,500       51       5.430 %     11/15/2013  
                                 
Total
  $ 277,500     $ 1,895                  
                                 
 
                                 
    Outstanding
    Accrued
             
    Balance at
    Interest at
    Interest Rate at
       
    December 31,
    December 31,
    December 31,
    Maturity
 
    2006     2006     2006     Date  
 
Unsecured Lines of Credit
                               
June 2005 LOC
  $ 105,643     $ 406       5.646 %     4/21/2009  
January 2006 LOC
    125,000       545       5.065 %     1/1/2009  
February 2006 LOC
    75,000       384       5.953 %     2/1/2009  
                                 
Total
  $ 305,643     $ 1,335                  
                                 
 
The following is a schedule of the stated maturities and scheduled principal payments of the unsecured lines of credit inclusive of related party debt:
 
         
    Amount  
 
2008
  $  
2009
    366,015  
2010
     
2011
    100,000  
2012
     
Thereafter
    22,500  
         
Total
  $ 488,515  
         
 
The Joint Venture is charged an unused commitment fee that is equal to 0.15% of the unused portion of the June 2005 LOC. Total fees are $135, $119 and $24 for the years ended December 31, 2007 and December 31, 2006 and for the period from March 18, 2005 through December 31, 2005, respectively, and are recorded in General and Administrative expense.


103


 

 
FIRSTCAL INDUSTRIAL, LLC
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
AMOUNTS AS OF DECEMBER 31, 2007 AND 2006 AND FOR THE YEARS THEN ENDED NOT
COVERED BY THE REPORT INCLUDED HEREIN
($ in 000’s)
 
Fair Value of Financial Instruments
 
At December 31, 2007 and December 31, 2006 the fair value of the Joint Venture’s unsecured lines of credit were as follows:
 
                                 
    December 31,
    December 31,
 
    2007     2006  
    Carrying Value     Fair Value     Carrying Value     Fair Value  
 
Unsecured Lines of Credit
                               
June 2005 LOC
  $ 11,015     $ 11,015     $ 105,643     $ 105,643  
January 2006 LOC
    125,000       119,831       125,000       123,294  
February 2006 LOC
    75,000       72,200       75,000       75,686  
                                 
Total
  $ 211,015     $ 203,046     $ 305,643     $ 304,623  
                                 
Related Party Notes
                               
June 2007 Note
    155,000       155,000              
November 2007 Note I
    100,000       100,000              
November 2007 Note II
    22,500       22,500              
                                 
Total
  $ 277,500     $ 277,500     $     $  
                                 
 
The fair values of the January 2006 LOC and February 2006 LOC 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 values of the June 2005 LOC, June 2007 Note, November 2007 Note I and November Note II approximate their carrying values due to the variable interest rate nature of the loans.
 
4.   Acquisition and Development of Real Estate
 
In 2007, the Joint Venture acquired three industrial properties comprising, in aggregate, approximately 1.2 million square feet (unaudited) of GLA and several land parcels for approximately $289,359, excluding costs of $3,394 incurred in conjunction with the acquisition of the properties. The Joint Venture also substantially completed development of four properties comprising approximately 2.0 million square feet (unaudited) of GLA for approximately $87,554. The Joint Venture reclassified the costs of the substantially completed developments from construction in progress to building, tenant improvements and leasing commissions.
 
On March 2, 2007, the Joint Venture acquired an operating golf course in Litchfield Park, Arizona, for purposes of future development. The following are the results of operations for the ownership period in 2007. The Total Revenues are included in Other Income in the consolidated statement of operations and Costs of Goods Sold and Operating Expenses are included in Other Expenses in the consolidated statement of operations:
 
         
Total Revenues
  $ 941  
Cost of Goods Sold
    (134 )
Operating Expenses
    (594 )
General and Administrative
    (151 )
         
Income from Operations
  $ 62  
         


104


 

 
FIRSTCAL INDUSTRIAL, LLC
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
AMOUNTS AS OF DECEMBER 31, 2007 AND 2006 AND FOR THE YEARS THEN ENDED NOT
COVERED BY THE REPORT INCLUDED HEREIN
($ in 000’s)
 
In 2006, the Joint Venture acquired 21 industrial properties comprising, in aggregate, approximately 3.1 million square feet (unaudited) of GLA and several land parcels for approximately $298,031, excluding costs of $4,966 incurred in conjunction with the acquisition of the properties. The Joint Venture also substantially completed development of three properties comprising approximately 0.8 million square feet (unaudited) of GLA at a cost of approximately $35,367. The Joint Venture reclassified the costs of the substantially completed developments from construction in progress to building, tenant improvements and leasing commissions.
 
In 2005, the Joint Venture acquired 47 industrial properties comprising, in aggregate, approximately 4.2 million square feet (unaudited) of GLA and several land parcels. The gross purchase price for 47 industrial properties and several land parcels totaled approximately $309,308, excluding costs of $1,198 incurred in conjunction with the acquisition of the properties
 
Intangible Assets Subject To Amortization in the Period of Acquisition
 
There were no in-place leases, above market leases, leasing commissions, tenant relationships and below market leases recorded as a result of the 2007 acquisitions.
 
The fair value of in-place leases, above market leases, leasing commissions and tenant relationships recorded as a result of the 2006 acquisitions was $3,925, $3,898, $1,262 and $3,169, respectively. The fair value of below market leases recorded as a result of the 2006 acquisitions was $1,065. The weighted average life in months of in-place leases, above market leases, leasing commissions and tenant relationships recorded as a result of 2006 acquisitions were 38, 114, 79 and 86 months, respectively. The weighted average life in months of below market leases recorded as a result of 2006 acquisitions was 25 months.
 
5.   Sale of Real Estate, Real Estate Held for Sale and Discontinued Operations
 
In 2007, the Joint Venture sold 31 industrial properties comprising, in aggregate, approximately 3.1 million square feet (unaudited) of GLA and eight land parcels. Gross proceeds from the sales of the 31 industrial properties and eight land parcels were approximately $244,767. The gain on sale of real estate was approximately $55,176, of which $35,765 is shown in discontinued operations as 28 of the 31 properties meet the criteria of FAS 144. The results of operations and gain on sale of real estate for the three properties and eight land parcels that do not meet the criteria established by FAS 144 are included in Gain on Sale of Real Estate in continuing operations.
 
In 2006, the Joint Venture sold 26 industrial properties comprising, in aggregate, approximately 3.3 million square feet (unaudited) of GLA and seven land parcels. Gross proceeds from the sales of the 26 industrial properties and seven land parcels were approximately $287,106. The gain on sale of real estate was approximately $62,204, of which $34,669 is shown in discontinued operations as all 26 properties meet the criteria of FAS 144. The results of operations and gain on sale of real estate for the seven land parcels that do not meet the criteria established by FAS 144 are included in Gain on Sale of Real Estate in continuing operations.
 
In 2005, the Joint Venture sold two land parcels. Gross proceeds from the sales of the two land parcels were $28,908. The gain on sale of real estate was approximately $9,434. The two land parcels do not meet the criteria established by the Financial Accounting Standards Board’s (“FASB”) Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“FAS 144”) to be included in discontinued operations.


105


 

 
FIRSTCAL INDUSTRIAL, LLC
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
AMOUNTS AS OF DECEMBER 31, 2007 AND 2006 AND FOR THE YEARS THEN ENDED NOT
COVERED BY THE REPORT INCLUDED HEREIN
($ in 000’s)
 
At December 31, 2007, the Joint Venture had six industrial properties comprising approximately 0.9 million square feet (unaudited) of GLA held for sale. In accordance with FAS 144, the results of operations of the six industrial properties held for sale at December 31, 2007 are included in discontinued operations. There can be no assurance that such industrial properties held for sale will be sold.
 
The following table discloses certain information regarding the industrial properties included in discontinued operations by the Company for the years ended December 31, 2007 and December 31, 2006 and for the period from March 18, 2005 through December 31, 2005.
 
                         
    2007     2006     2005  
 
Total Revenues
  $ 7,769     $ 12,894     $ 6,881  
Operating Expenses
    (3,439 )     (5,309 )     (2,552 )
Depreciation and Amortization
    (4,588 )     (8,729 )     (6,155 )
General and Administrative
    (347 )     (554 )     (270 )
Gain on Sale of Real Estate
    35,765       34,669        
                         
Income (Loss) from Discontinued Operations
  $ 35,160     $ 32,971     $ (2,096 )
                         
 
6.   Future Minimum Rental Revenues
 
The Joint Venture’s properties are leased to tenants under net and semi-net operating leases. Minimum lease payments from rent, excluding tenant reimbursements of expenses, under non-cancelable operating leases in effect as of December 31, 2007 are approximately as follows:
 
         
2008
  $ 13,739  
2009
    13,256  
2010
    13,194  
2011
    13,167  
2012
    12,924  
Thereafter
    56,975  
         
Total
  $ 123,255  
         
 
Credit Risk
 
For the year ended December 31, 2007, JC Penney Corporation accounted for 14.3% of rental revenue. For the year ended December 31, 2006, no individual tenants accounted for more than 10% of rental revenue. For the period of March 18, 2005 (inception) through December 31, 2005, Edron Fixture Corporation accounted for 18.5% of rental revenue.
 
7.   Member’s Equity
 
Capital Contributions
 
The Members are required to make capital contributions in accordance with their ownership percentages from time to time as required by the LLC agreement.


106


 

 
FIRSTCAL INDUSTRIAL, LLC
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
AMOUNTS AS OF DECEMBER 31, 2007 AND 2006 AND FOR THE YEARS THEN ENDED NOT
COVERED BY THE REPORT INCLUDED HEREIN
($ in 000’s)
 
Distributions and Allocations of Profits and Losses
 
Distributions of operating cash flows are made to Members in proportion to their ownership interests. Distributions of extraordinary cash flows from a capital event are distributed to the Members with FR FirstCal, LLC receiving a higher allocation of distributions compared to its ownership interest if certain IRR hurdles are met.
 
8.   Related Party Transactions
 
In 2007, the Joint Venture sold one parcel of land to FIII and one parcel of land to FILP, the sole owner of FIII. Gross proceeds from the sales of the two land parcels were approximately $10,093. The gain on sale of real estate was approximately $3,524.
 
The Joint Venture acquired two land parcels in June 2006 from FIII for a total purchase price of $12,305.
 
The Joint Venture acquired six industrial properties and several land parcels in March 2005 from FILP for a total purchase price of $77,061. An additional industrial property was acquired from FILP in June 2005 for a purchase price of $7,000. The Joint Venture acquired one industrial property from the REIT in June 2005 for a purchase price of $3,580.
 
The properties owned by the Joint Venture are managed by FR FirstCal, LLC, a wholly owned subsidiary of FIII, which is a 10% member of the Joint Venture. Fees earned by FIII from the Joint Venture through its wholly owned subsidiaries include portfolio management fees, development fees and disposition fees. Portfolio management fees totaled $420, $270 and $195 for the years ended December 31, 2007 and December 31, 2006 and for the period from March 18, 2005 through December 31, 2005, respectively. The portfolio management fee is a fixed amount per year plus a percentage of the Excess Management Fee Basis, as defined per the Joint Venture Operating Agreement, of $500,000, which was achieved in 2006. The portfolio management fees were prorated for 2005, based on the fixed rate of $250 per year. Development fees, which are based on a percentage of any hard or soft costs incurred with respect to the construction, development or repositioning of a property, totaled $7,282, $3,041 and $1,091 for the years ended December 31, 2007 and December 31, 2006 and for the period from March 18, 2005 through December 31, 2005, respectively. Disposition fees are based on the market rate that would be paid for the sale of similar properties, in the geographic market in which the property is located, provided there is no external broker or a percentage of the sales price if an external broker is engaged. The Joint Venture paid $864, $1,094 and $196 of disposition fees for the years ended December 31, 2007 and December 31, 2006 and for the period from March 18, 2005 through December 31, 2005, respectively. FILP, the sole owner of FIII, earns property management fees, leasing fees and administrative fees through its wholly owned subsidiaries. As of August 15, 2006, the property management, leasing management and administration was assigned to FIII. Property management fees incurred are based on a percentage of gross receipts. Property Management fees totaled $362, $478 and $190 for the years ended December 31, 2007 and December 31, 2006 and for the period from March 18, 2005 through December 31, 2005, respectively. Leasing fees are based on the market rate provided there is no tenant broker or a percentage of the market rate if there is a tenant broker. Leasing fees totaled $1,984, $895 and $215 for the years ended December 31, 2007 and December 31, 2006 and


107


 

 
FIRSTCAL INDUSTRIAL, LLC
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
AMOUNTS AS OF DECEMBER 31, 2007 AND 2006 AND FOR THE YEARS THEN ENDED NOT
COVERED BY THE REPORT INCLUDED HEREIN
($ in 000’s)
 
for the period from March 18, 2005 through December 31, 2005, respectively. Administrative fees related to reimbursement for FIII employees managing the Joint Venture properties totaled $242, $268 and $29 for the years ended December 31, 2007 and December 31, 2006 and for the period from March 18, 2005 through December 31, 2005, respectively.
 
In 2007 and 2006, the Joint Venture engaged FIII to act as general contractor for several development projects. Under the terms of the contract between FIII and the Joint Venture, general contracting fees incurred are based on a percentage of hard costs. These fees totaled $719 and $941 for the years ended December 31, 2007 and 2006, respectively.
 
At December 31, 2007 and December 31, 2006, the Joint Venture accrued property management fees, portfolio management fees, development fees, maintenance services, construction reimbursements and other reimbursements payable to FIII and FILP of $3,259 and $5,711, respectively.
 
As stated in Note 3, the Joint Venture entered into a note payable to FirstCal Industrial 2, LLC, a joint venture between CSJV FirstCal 2, LLC and FR FirstCal 2, LLC, which are wholly owned entities of the California State Teachers’ Retirement System and FIII, respectively. Additionally, the Joint Venture entered into a note payable to FirstCal Industrial 3, LLC, a joint venture between CSJV FirstCal 3, LLC and FR FirstCal 3, LLC, which are wholly owned entities of the California State Teachers’ Retirement System and FIII, respectively. In 2005, the Joint Venture entered into a revolving line of credit with FirstCal Industrial 2, LLC, which was paid off in January 2006.
 
9.   Commitments and Contingencies
 
In the normal course of business, the Joint Venture is involved in legal actions arising from the ownership of its properties. In management’s opinion, the liabilities, if any, that may ultimately result from such legal actions are not expected to have a materially adverse effect on the consolidated financial position, operations or liquidity of the Joint Venture.
 
The Joint Venture has committed to the construction of certain industrial properties totaling approximately 10.7 million square feet (unaudited) of GLA. The estimated total construction costs are approximately $855.6 million (unaudited). Of this amount, approximately $383.2 million (unaudited) remains to be funded. There can be no assurance that the actual completion cost will not exceed the estimated completion cost stated above.
 
10.   Subsequent Events
 
During the period from January 1, 2008 through February 21, 2008, the Joint Venture acquired 2 land parcels. The gross purchase price for the land parcels was approximately $19,098, excluding costs incurred in conjunction with the acquisition of the properties.
 
On January 25, 2008, the Joint Venture entered into a note payable (the “January 2008 Note”) to FirstCal Industrial 2, LLC. The January 2008 Note matures on September 30, 2009 and bears interest at a floating rate of LIBOR plus 0.65%. As of the issuance date of the report, $122,500 has been drawn upon. On January 25, 2008, the Joint Venture paid off the November 2007 Note I and the November 2007 Note II using proceeds received under the January 2008 Note.
 
During the period January 1, 2008 through February 21, 2008, the Joint Venture received contributions totaling $16,529 from the members of the Joint Venture and distributed $1,347 to the members of the Joint Venture.


108


 

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
SCHEDULE III:
 
REAL ESTATE AND ACCUMULATED DEPRECIATION
As Of December 31, 2007
 
                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
Atlanta
                                                                                   
4250 River Green Parkway
  Duluth, GA           $ 264     $ 1,522     $ 215     $ 264     $ 1,737     $ 2,001     $ 587       1994       (m )
3450 Corporate Parkway
  Duluth, GA             506       2,904       452       506       3,356       3,861       1,235       1994       (m )
1650 GA Highway 155
  McDonough, GA             788       4,544       289       788       4,833       5,622       1,576       1994       (m )
1665 Dogwood Drive
  Conyers, GA             635       3,662       482       635       4,144       4,778       1,618       1994       (m )
1715 Dogwood Drive
  Conyers, GA             288       1,675       1,744       288       3,419       3,707       639       1994       (m )
11235 Harland Drive
  Covington, GA             125       739       161       125       900       1,024       278       1994       (m )
4050 Southmeadow Parkway
  Atlanta, GA             401       2,813       328       425       3,117       3,542       1,113       1994       (m )
4051 Southmeadow Parkway
  Atlanta, GA             726       4,130       1,328       726       5,458       6,184       1,939       1994       (m )
4071 Southmeadow Parkway
  Atlanta, GA             750       4,460       1,307       828       5,690       6,517       1,816       1994       (m )
4081 Southmeadow Parkway
  Atlanta, GA             1,012       5,918       1,733       1,157       7,506       8,663       2,321       1994       (m )
370 Great Southwest Parkway(d)
  Atlanta, GA             527       2,984       655       546       3,619       4,165       1,080       1996       (m )
955 Cobb Place
  Kennesaw, GA             780       4,420       636       804       5,032       5,836       1,325       1997       (m )
1005 Sigman Road
  Conyers, GA             566       3,134       419       574       3,545       4,119       689       1999       (m )
2050 East Park Drive
  Conyers, GA             452       2,504       111       459       2,608       3,067       535       1999       (m )
1256 Oakbrook Drive
  Norcross, GA             336       1,907       387       339       2,291       2,630       468       2001       (m )
1265 Oakbrook Drive
  Norcross, GA             307       1,742       636       309       2,377       2,686       427       2001       (m )
1266 Oakbrook Drive
  Norcross, GA             234       1,326       141       235       1,465       1,701       244       2001       (m )
1280 Oakbrook Drive
  Norcross, GA             281       1,592       346       283       1,937       2,219       370       2001       (m )
1300 Oakbrook Drive
  Norcross, GA             420       2,381       209       423       2,588       3,011       410       2001       (m )
1325 Oakbrook Drive
  Norcross, GA             332       1,879       320       334       2,197       2,531       385       2001       (m )
1351 Oakbrook Drive
  Norcross, GA             370       2,099       246       373       2,343       2,716       388       2001       (m )
1346 Oakbrook Drive
  Norcross, GA             740       4,192       489       744       4,676       5,420       719       2001       (m )
1412 Oakbrook Drive
  Norcross, GA             313       1,776       198       315       1,972       2,288       352       2001       (m )
Greenwood Industrrial Park
  McDonough, GA             1,550             7,485       1,550       7,485       9,035       629       2004       (m )
3060 South Park Blvd
  Ellenwood, GA             1,600       12,464       862       1,603       13,323       14,926       1,781       2003       (m )


S-1


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
46 Kent Drive
  Cartersville, GA             875       2,476       13       879       2,485       3,364       241       2005       (m )
100 Dorris Williams Industrial -King
  Atlanta, GA     (n )     401       3,754       42       406       3,791       4,197       560       2005       (m )
605 Stonehill Diver
  Atlanta, GA             485       1,979       27       490       2,001       2,491       538       2005       (m )
5095 Phillips Lee Drive
  Atlanta, GA             735       3,627       232       740       3,854       4,594       604       2005       (m )
6514 Warren Drive
  Norcross, GA             510       1,250       (132 )     513       1,115       1,628       105       2005       (m )
6544 Warren Drive
  Norcross, GA             711       2,310       63       715       2,369       3,083       259       2005       (m )
720 Industrial Boulevard
  Dublin, GA             250       2,632       40       255       2,667       2,922       723       2005       (m )
5356 East Ponce DeLeon
  One Mountain, GA             604       3,888       12       610       3,894       4,504       547       2005       (m )
5390 East Ponce DeLeon
  One Mountain, GA             397       1,791       16       402       1,802       2,204       227       2005       (m )
1755 Enterprise Drive
  Buford, GA             712       2,118       52       716       2,166       2,882       179       2006       (m )
4555 Atwater Court
  Buford, GA             881       3,550       300       885       3,846       4,731       280       2006       (m )
80 Liberty Industrial Parkway
  McDonough, GA             756       3,695       176       763       3,864       4,627       139       2007       (m )
195 & 197 Collins Boulevard
  Athens, GA             1,410       5,344       65       1,426       5,393       6,819       1,388       2005       (m )
596 Bonnie Valentine Way
  Pendergrass, GA             2,580       21,730       144       2,596       21,857       24,454       53       2007       (m )
Baltimore
                                                                                   
1820 Portal
  Baltimore, MD             884       4,891       455       899       5,330       6,230       1,284       1998       (m )
8900 Yellow Brick Road
  Baltimore, MD             447       2,473       384       475       2,829       3,304       672       1998       (m )
9700 Martin Luther King Hwy
  Lanham, MD             700       1,920       728       700       2,648       3,348       625       2003       (m )
9730 Martin Luther King Hwy
  Lanham, MD             500       955       501       500       1,456       1,956       286       2003       (m )
4621 Boston Way
  Lanham, MD             1,100       3,070       780       1,100       3,850       4,950       788       2003       (m )
4720 Boston Way
  Lanham, MD             1,200       2,174       686       1,200       2,860       4,060       669       2003       (m )
2250 Randolph Drive
  Dulles, VA             3,200       8,187       36       3,208       8,215       11,423       944       2004       (m )
22630 Dulles Summit Court
  Dulles, VA             2,200       9,346       128       2,206       9,468       11,674       1,097       2004       (m )
4201 Forbes Boulevard
  Lanham, MD             356       1,823       396       375       2,200       2,575       319       2005       (m )
4370-4383 Lottsford Vista Road
  Lanham, MD             279       1,358       192       296       1,533       1,829       174       2005       (m )
4400 Lottsford Vista Road
  Lanham, MD             351       1,955       93       372       2,027       2,399       185       2005       (m )
4420 Lottsford Vista Road
  Lanham, MD             539       2,196       241       568       2,408       2,976       254       2005       (m )
11204 McCormick Road
  Hunt Valley, MD             1,017       3,132       99       1,038       3,210       4,248       341       2005       (m )
11110 Pepper Road
  Hunt Valley, MD             918       2,529       253       938       2,762       3,700       299       2005       (m )

S-2


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
11100 Gilroy Road
  Hunt Valley, MD             901       1,455       43       919       1,480       2,399       206       2005       (m )
318 Clubhouse
  Hunt Valley, MD             701       1,691       (4 )     718       1,670       2,388       246       2005       (m )
336 Clubhouse
  Hunt Valley, MD             982       3,158       633       1,004       3,769       4,773       545       2005       (m )
10709 Gilroy Road
  Hunt Valley, MD             907       2,884       (173 )     913       2,705       3,618       375       2005       (m )
10707 Gilroy Road
  Hunt Valley, MD             1,111       3,819       96       1,136       3,890       5,026       526       2005       (m )
10947 Golden West
  Hunt Valley, MD             1,134       3,436       70       1,135       3,504       4,640       322       2005       (m )
38 Loveton Circle
  Hunt Valley, MD             1,648       2,151       (174 )     1,690       1,935       3,625       245       2005       (m )
7120-7132 Ambassador Road
  Hunt Valley, MD             829       1,329       254       847       1,565       2,412       230       2005       (m )
7142 Ambassador Road
  Hunt Valley, MD             924       2,876       115       942       2,973       3,915       229       2005       (m )
7144-7160 Ambassador Road
  Hunt Valley, MD             979       1,672       101       1,000       1,752       2,752       302       2005       (m )
7223-7249 Ambassador Road
  Hunt Valley, MD             1,283       2,674       229       1,311       2,875       4,186       507       2005       (m )
7200 Rutherford
  Hunt Valley, MD             1,032       2,150       122       1,054       2,250       3,304       316       2005       (m )
2700 Lord Baltimore
  Hunt Valley, MD             875       1,826       262       897       2,066       2,963       346       2005       (m )
9800 Martin Luther King Hwy
  Lanham, MD             1,200       2,457       309       1,200       2,766       3,966       478       2003       (m )
Central Pennsylvania
                                                                                   
1214-B Freedom Road
  Cranberry Township, PA             31       994       612       200       1,438       1,637       874       1994       (m )
401 Russell Drive
  Middletown, PA             262       857       2,065       287       2,896       3,184       1,785       1994       (m )
2700 Commerce Drive
  Middletown, PA             196       997       710       206       1,697       1,903       956       1994       (m )
2701 Commerce Drive
  Middletown, PA             141       859       1,174       164       2,010       2,174       975       1994       (m )
2780 Commerce Drive
  Middletown, PA             113       743       1,169       209       1,817       2,025       982       1994       (m )
350 Old Silver Springs Road
  Mechanicsburg, PA             510       2,890       5,678       541       8,537       9,078       1,906       1997       (m )
16522 Hunters Green Parkway
  Hagerstown, MD     (o )     1,390       13,104       3,902       1,863       16,534       18,396       1,903       2003       (m )
18212 Shawley Drive
  Hagerstown, MD             1,000       5,847       501       1,016       6,332       7,348       693       2004       (m )
301 Railroad Avenue
  Shiremanstown, PA             1,181       4,447       1,530       1,328       5,830       7,158       1,018       2005       (m )
431 Railroad Avenue
  Shiremanstown, PA             1,293       7,164       1,695       1,341       8,810       10,152       1,160       2005       (m )
Golden Eagle Business Center
  Harrisburg, PA             585       3,176       120       601       3,281       3,881       302       2005       (m )
37 Valleyview Business Park
  Jessup, PA             542             2,972       542       2,972       3,513       225       2004       (m )
1351 Eisenhower Blvd., Bldg 1
  Harrisburg, PA             382       2,343       25       387       2,363       2,750       170       2006       (m )
1351 Eisenhower Blvd., Bldg 2
  Harrisburg, PA             436       1,587       16       443       1,596       2,039       125       2006       (m )

S-3


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
320 Museum Road
  Washington, PA             201       1,819       57       208       1,869       2,077       237       2005       (m )
Chicago
                                                                                   
720-730 Landwehr Road
  Northbrook, IL             521       2,982       1,340       521       4,322       4,843       1,494       1994       (m )
20W201 101st Street
  Lemont, IL             967       5,554       650       968       6,204       7,171       2,089       1994       (m )
3600 West Pratt Avenue
  Lincolnwood, IL             1,050       5,767       1,199       1,050       6,966       8,016       2,368       1994       (m )
6750 South Sayre Avenue
  Bedford Park, IL             224       1,309       585       224       1,894       2,118       561       1994       (m )
585 Slawin Court
  Mount Prospect, IL             611       3,505       941       611       4,446       5,058       1,230       1994       (m )
2300 Windsor Court
  Addison, IL             688       3,943       590       696       4,525       5,221       1,625       1994       (m )
3505 Thayer Court
  Aurora, IL             430       2,472       33       430       2,505       2,936       844       1994       (m )
305-311 Era Drive
  Northbrook, IL             200       1,154       146       205       1,296       1,501       431       1994       (m )
12241 Melrose Street
  Franklin Park, IL             332       1,931       1,901       469       3,695       4,164       1,480       1995       (m )
3150-3160 MacArthur Boulevard
  Northbrook, IL             429       2,518       32       429       2,551       2,979       864       1994       (m )
365 North Avenue
  Carol Stream, IL             1,081       6,882       4,609       1,111       11,460       12,572       3,898       1994       (m )
305-307 East North Ave
  Carol Stream, IL             126             2,648       128       2,647       2,775       417       2000       (m )
11939 S Central Avenue
  Alsip, IL             1,208       6,843       3,185       1,305       9,931       11,235       2,440       1997       (m )
405 East Shawmut
  LaGrange, IL             368       2,083       434       388       2,497       2,884       675       1997       (m )
1010-50 Sesame Street
  Bensenville, IL             979       5,546       2,300       1,048       7,776       8,825       1,688       1997       (m )
7501 S. Pulaski
  Chicago, IL             318       2,038       895       318       2,934       3,251       669       1997       (m )
385 Fenton Lane
  West Chicago, IL             868       4,918       (242 )     884       4,658       5,543       1,198       1998       (m )
905 Paramount
  Batavia, IL             243       1,375       439       252       1,804       2,056       459       1998       (m )
1005 Paramount
  Batavia, IL             282       1,600       451       293       2,040       2,333       546       1998       (m )
2120-24 Roberts
  Broadview, IL             220       1,248       460       231       1,698       1,929       456       1998       (m )
700 Business Center Drive
  Mount Prospect, IL             270       1,492       297       288       1,771       2,059       287       2000       (m )
800 Business Center Drive
  Mount Prospect, IL             631       3,493       237       666       3,695       4,361       630       2000       (m )
580 Slawin Court
  Mount Prospect, IL             233       1,292       234       254       1,505       1,760       255       2000       (m )
1150 Feehanville Drive
  Mount Prospect, IL             260       1,437       131       273       1,555       1,829       291       2000       (m )
19W661 101st Street
  Lemont, IL             1,200       6,643       2,300       1,220       8,923       10,142       1,692       2001       (m )
175 Wall Street
  Glendale Heights, IL             427       2,363       163       433       2,520       2,953       377       2002       (m )
800-820 Thorndale Avenue
  Bensenville, IL             751       4,159       637       761       4,786       5,547       623       2002       (m )
1661 Feehanville Drive
  Mount Prospect, IL             985       5,455       1,962       1,044       7,358       8,402       1,395       2004       (m )
2250 Arthur Avenue
  Elk Grove Village, IL             800       1,543       (3 )     811       1,529       2,340       330       2004       (m )

S-4


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
1850 Touhy & 1158-60 McCage Ave
  Elk Grove Village, IL             1,500       4,842       57       1,514       4,885       6,399       795       2004       (m )
1088-1130 Thorndale Avenue
  Bensenville, IL             2,103       3,674       4       2,108       3,673       5,781       496       2005       (m )
855-891 Busse(Route 83)
  Bensenville, IL             1,597       2,767       (28 )     1,601       2,735       4,336       363       2005       (m )
1060-1074 W. Thorndale Ave
  Bensenville, IL             1,704       2,108       31       1,709       2,134       3,843       341       2005       (m )
400 Crossroads Parkway
  Bolingbrook, IL             1,178       9,453       723       1,181       10,173       11,354       971       2005       (m )
7609 West Industrial Drive
  Forest Park, IL             1,207       2,343       207       1,213       2,544       3,757       347       2005       (m )
7801 West Industrial Drive
  Forest Park, IL             1,215       3,020       19       1,220       3,034       4,254       425       2005       (m )
825 East 26th Street
  LaGrange Park, IL             1,547       2,078       2,432       1,617       4,440       6,057       543       2005       (m )
1111 Davis Road
  Elgin, IL             998       1,859       635       1,046       2,447       3,493       460       2006       (m )
2900 W 166th St
  Markham, IL             1,132       4,293       2       1,133       4,294       5,427       268       2007       (m )
555 W Algonquin Rd
  Arlington Heights, IL             574       741       2,049       579       2,785       3,364       48       2007       (m )
7000 W 60th Street
  Chicago, IL             609       932       106       667       980       1,647       23       2007       (m )
251 Airport Road
  Aurora, IL             983             6,659       983       6,660       7,642       1,302       2002       (m )
725 Kimberly Drive
  Carol Stream, IL             793       1,395       (20 )     801       1,367       2,168       156       2005       (m )
17001 S. Vincennes
  Thornton, IL             497       504       30       513       518       1,031       120       2005       (m )
Cincinnati
                                                                                   
9900-9970 Princeton
  Cincinnati, OH             545       3,088       2,179       566       5,245       5,811       1,748       1996       (m )
2940 Highland Avenue
  Cincinnati, OH             1,717       9,730       2,162       1,772       11,837       13,609       3,894       1996       (m )
4700-4750 Creek Road
  Blue Ash, OH             1,080       6,118       673       1,109       6,761       7,870       2,116       1996       (m )
12072 Best Place
  Springboro, OH             426             3,198       443       3,181       3,625       801       1998       (m )
901 Pleasant Valley Drive
  Springboro, OH             304       1,721       332       316       2,042       2,357       490       1998       (m )
4434 Mulhauser Road
  Cincinnati, OH             444       16       4,721       463       4,718       5,181       954       1999       (m )
9449 Glades Drive
  Hamilton, OH             465             4,057       477       4,045       4,522       753       2000       (m )
4436 Muhlhauser Road
  Hamilton, OH             630             5,672       630       5,672       6,302       1,225       2002       (m )
4438 Muhlhauser Road
  Hamilton, OH             779             7,354       779       7,354       8,133       1,406       2002       (m )
9345 Princeton-Glendale Road
  West Chester, OH             818       1,648       360       827       1,998       2,826       239       2006       (m )
9525 Glades Drive
  West Chester, OH             347       1,323       37       355       1,351       1,707       71       2007       (m )
9776-9876 Windisch Road
  West Chester, OH             392       1,744       11       394       1,753       2,147       41       2007       (m )
9810-9822 Windisch Road
  West Chester, OH             395       2,541       16       397       2,556       2,952       39       2007       (m )
9842-9862 Windisch Road
  West Chester, OH             506       3,148       22       508       3,168       3,676       54       2007       (m )
9872-9898 Windisch Road
  West Chester, OH             546       3,039       17       548       3,054       3,602       45       2007       (m )

S-5


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
9902-9922 Windisch Road
  West Chester, OH             623       4,003       22       627       4,021       4,648       81       2007       (m )
420 Wars Corner Road
  Loveland, OH             600       1,083       994       606       2,071       2,677       477       2003       (m )
422 Wards Corner Road
  Loveland, OH             600       1,811       441       605       2,246       2,852       653       2003       (m )
4663 Dues Drive
  West Chester, OH             858       2,273       1,174       875       3,430       4,305       825       2005       (m )
Cleveland
                                                                                   
2368 E. Enterprise Parkway
  Twinsburg, OH             294       1,857       29       298       1,881       2,180       219       2006       (m )
30311 Emerald Valley Parkway
  Glenwillow, OH             681       11,838       320       691       12,148       12,839       708       2006       (m )
30333 Emerald Valley Parkway
  Glenwillow, OH             466       5,447       104       475       5,541       6,017       361       2006       (m )
7800 Cochran Road
  Glenwillow, OH             972       7,033       66       980       7,091       8,071       461       2006       (m )
7900 Cochran Road
  Glenwillow, OH             775       6,244       136       792       6,363       7,155       391       2006       (m )
7905 Cochran Road
  Glenwillow, OH             920       6,174       173       945       6,323       7,268       436       2006       (m )
30600 Carter Street
  Solon, OH             989       3,492       (231 )     1,022       3,227       4,249       540       2006       (m )
Columbus
                                                                                   
3800 Lockbourne Industrial Pkwy
  Columbus, OH             1,045       6,421       392       1,045       6,813       7,858       1,915       1996       (m )
3880 Groveport Road
  Columbus, OH             1,955       12,154       696       1,955       12,850       14,805       3,861       1996       (m )
1819 North Walcutt Road
  Columbus, OH             637       4,590       (309 )     634       4,284       4,918       1,350       1997       (m )
4300 Cemetary Road
  Hillard, OH             764       6,248       (5,628 )     764       620       1,384       18       1997       (m )
4115 Leap Road(d)
  Hillard, OH             756       4,297       1,121       756       5,418       6,174       1,211       1998       (m )
3300 Lockbourne
  Columbus, OH             708       3,920       1,671       710       5,589       6,299       1,534       1998       (m )
1076 Pittsburgh Drive
  Delaware, OH     (p )     2,497       5,103       37       2,505       5,132       7,637       695       2005       (m )
6150 Huntley Road
  Columbus, OH             986       5,162       17       990       5,175       6,165       447       2005       (m )
4985 Frusta Drive
  Obetz, OH             318       837       28       326       858       1,184       139       2006       (m )
4600 S. Hamilton Road
  Groveport, OH             681       5,941       77       688       6,011       6,699       296       2006       (m )
2200 Spiegel
  Groveport, OH             780       3,700       (209 )     793       3,478       4,271       91       2007       (m )
4311 Janitrol Road
  Columbus, OH             662       4,332       76       675       4,396       5,070       65       2007       (m )
Dallas/Fort Worth
                                                                                   
1275-1281 Roundtable Drive
  Dallas, TX             117       839       39       117       878       995       221       1997       (m )
2406-2416 Walnut Ridge
  Dallas, TX             178       1,006       247       183       1,247       1,431       287       1997       (m )
1324-1343 Roundtable Drive
  Dallas, TX             178       1,006       227       184       1,227       1,411       306       1997       (m )
2401-2419 Walnut Ridge
  Dallas, TX             148       839       128       153       962       1,115       266       1997       (m )

S-6


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
900-906 Great Southwest Pkwy
  Arlington, TX             237       1,342       596       270       1,905       2,175       521       1997       (m )
3000 West Commerce
  Dallas, TX             456       2,584       535       469       3,106       3,575       763       1997       (m )
3030 Hansboro
  Dallas, TX             266       1,510       477       276       1,977       2,253       448       1997       (m )
405-407 113th
  Arlington, TX             181       1,026       424       185       1,445       1,630       294       1997       (m )
816 111th Street
  Arlington, TX             251       1,421       266       258       1,680       1,938       509       1997       (m )
7341 Dogwood Park
  Richland Hills, TX             79       435       237       84       666       750       255       1998       (m )
7427 Dogwood Park
  Richland Hills, TX             96       532       571       102       1,098       1,200       265       1998       (m )
7348-54 Tower Street
  Richland Hills, TX             88       489       283       94       766       860       182       1998       (m )
7370 Dogwood Park
  Richland Hills, TX             91       503       128       96       626       722       131       1998       (m )
7339-41 Tower Street
  Richland Hills, TX             98       541       189       104       724       828       151       1998       (m )
7437-45 Tower Street
  Richland Hills, TX             102       563       86       108       642       750       144       1998       (m )
7331-59 Airport Freeway
  Richland Hills, TX             354       1,958       377       372       2,316       2,689       591       1998       (m )
7338-60 Dogwood Park
  Richland Hills, TX             106       587       118       112       699       811       156       1998       (m )
7450-70 Dogwood Park
  Richland Hills, TX             106       584       130       112       708       820       183       1998       (m )
7423-49 Airport Freeway
  Richland Hills, TX             293       1,621       312       308       1,918       2,226       466       1998       (m )
7400 Whitehall Street
  Richland Hills, TX             109       603       91       115       688       804       170       1998       (m )
1602-1654 Terre Colony
  Dallas, TX             458       2,596       783       468       3,369       3,837       567       2000       (m )
3330 Duncanville Road
  Dallas, TX             197       1,114       32       199       1,143       1,342       215       2000       (m )
2351-2355 Merritt Drive
  Garland, TX             101       574       120       103       693       795       121       2000       (m )
701-735 North Plano Road
  Richardson, TX             696       3,944       248       705       4,183       4,888       795       2000       (m )
2220 Merritt Drive
  Garland, TX             352       1,993       727       356       2,716       3,072       506       2000       (m )
2010 Merritt Drive
  Garland, TX             350       1,981       619       357       2,592       2,949       505       2000       (m )
2363 Merritt Drive
  Garland, TX             73       412       93       74       504       578       85       2000       (m )
2447 Merritt Drive
  Garland, TX             70       395       77       71       471       542       82       2000       (m )
2465-2475 Merritt Drive
  Garland, TX             91       514       141       92       654       746       107       2000       (m )
2485-2505 Merritt Drive
  Garland, TX             431       2,440       445       436       2,879       3,315       503       2000       (m )
2081 Hutton Drive(e)
  Carrolton, TX             448       2,540       407       453       2,942       3,395       510       2001       (m )
2150 Hutton Drive
  Carrolton, TX             192       1,089       410       194       1,497       1,692       278       2001       (m )
2110 Hutton Drive
  Carrolton, TX             374       2,117       353       377       2,466       2,843       387       2001       (m )
2025 McKenzie Drive
  Carrolton, TX             437       2,478       369       442       2,842       3,284       544       2001       (m )
2019 McKenzie Drive
  Carrolton, TX             502       2,843       538       507       3,376       3,883       653       2001       (m )

S-7


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
1420 Valwood Parkway — Bldg 1(d)
  Carrolton, TX             460       2,608       746       466       3,349       3,814       577       2001       (m )
1620 Valwood Parkway(e)
  Carrolton, TX             1,089       6,173       1,112       1,100       7,274       8,374       1,347       2001       (m )
1505 Luna Road — Bldg II
  Carrolton, TX             167       948       96       169       1,042       1,210       205       2001       (m )
1625 West Crosby Road
  Carrolton, TX             617       3,498       679       631       4,163       4,794       935       2001       (m )
2029-2035 McKenzie Drive
  Carrolton, TX             306       1,870       1,053       306       2,923       3,229       993       2001       (m )
1840 Hutton Drive(d)
  Carrolton, TX             811       4,597       677       819       5,267       6,085       959       2001       (m )
1420 Valwood Pkwy — Bldg II
  Carrolton, TX             373       2,116       363       377       2,475       2,852       456       2001       (m )
2015 McKenzie Drive
  Carrolton, TX             510       2,891       408       516       3,294       3,810       585       2001       (m )
2105 McDaniel Drive
  Carrolton, TX             502       2,844       735       507       3,573       4,080       662       2001       (m )
2009 McKenzie Drive
  Carrolton, TX             476       2,699       441       481       3,136       3,617       601       2001       (m )
1505 Luna Road — Bldg I
  Carrolton, TX             521       2,953       579       529       3,524       4,053       704       2001       (m )
900-1100 Avenue S
  Grand Prairie, TX             623       3,528       801       629       4,323       4,951       661       2002       (m )
Plano Crossing(f)
  Plano, TX             1,961       11,112       396       1,981       11,488       13,469       1,557       2002       (m )
7413A-C Dogwood Park
  Richland Hills, TX             110       623       110       111       732       843       95       2002       (m )
7450 Tower Street
  Richland Hills, TX             36       204       192       36       395       431       78       2002       (m )
7436 Tower Street
  Richland Hills, TX             57       324       161       58       485       543       89       2002       (m )
7501 Airport Freeway
  Richland Hills, TX             113       638       90       115       726       840       114       2002       (m )
7426 Tower Street
  Richland Hills, TX             76       429       146       76       575       651       77       2002       (m )
7427-7429 Tower Street
  Richland Hills, TX             75       427       21       76       447       523       59       2002       (m )
2840-2842 Handley Ederville Rd
  Richland Hills, TX             112       635       65       113       699       812       106       2002       (m )
7451-7477 Airport Freeway
  Richland Hills, TX             256       1,453       195       259       1,645       1,904       268       2002       (m )
7415 Whitehall Street
  Richland Hills, TX             372       2,107       196       375       2,299       2,675       331       2002       (m )
7450 Whitehall Street
  Richland Hills, TX             104       591       110       105       700       805       82       2002       (m )
7430 Whitehall Street
  Richland Hills, TX             143       809       16       144       823       967       110       2002       (m )
7420 Whitehall Street
  Richland Hills, TX             110       621       47       111       666       777       99       2002       (m )
300 Wesley Way
  Richland Hills, TX             208       1,181       17       211       1,196       1,407       157       2002       (m )
825-827 Avenue H(d)
  Arlington, TX             600       3,006       250       604       3,252       3,856       520       2004       (m )
1013-31 Avenue M
  Grand Prairie, TX             300       1,504       78       302       1,580       1,882       261       2004       (m )
1172-84 113th Street(d)
  Grand Prairie, TX             700       3,509       59       704       3,564       4,268       501       2004       (m )
1200-16 Avenue H(d)
  Arlington, TX             600       2,846       80       604       2,922       3,526       444       2004       (m )

S-8


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
1322-66 N. Carrier Parkway(e)
  Grand Prairie, TX             1,000       5,012       164       1,006       5,170       6,176       755       2004       (m )
2401-2407 Centennial Dr. 
  Arlington, TX             600       2,534       141       604       2,672       3,275       422       2004       (m )
3111 West Commerce Street
  Dallas, TX             1,000       3,364       69       1,011       3,421       4,433       580       2004       (m )
4201 Kellway
  Addison, TX             306       1,342       31       317       1,361       1,679       140       2005       (m )
9150 West Royal Lane
  Irving, TX             818       3,767       292       820       4,058       4,877       439       2005       (m )
13800 Senlac Drive
  Farmers Ranch, TX             823       4,042       12       825       4,052       4,877       553       2005       (m )
801-831 S. Great Southwest Pkwy(g)
  Grand Prairie, TX             2,581       16,556       502       2,586       17,053       19,639       3,142       2005       (m )
801-842 Heinz Way
  Grand Prairie, TX             599       3,327       110       601       3,435       4,036       430       2005       (m )
901-937 Heinz Way
  Grand Prairie, TX             493       2,823       (53 )     481       2,782       3,263       404       2005       (m )
2900 Avenue E
  Arlington, TX             296             1,970       296       1,970       2,266       133       2005       (m )
7451 Dogwood Park
  Richland Hills, TX             133       753       195       134       947       1,081       262       2002       (m )
2104 Hutton Drive
  Carrolton, TX             246       1,393       182       249       1,572       1,821       288       2001       (m )
3301 Century Circle
  Irving, TX             760       3,856       54       769       3,901       4,670       125       2007       (m )
3730 Wheeler Avenue
  Fort Smith, AR             720       2,800       27       726       2,822       3,547       131       2006       (m )
Denver
                                                                                   
4785 Elati
  Denver, CO             173       981       178       175       1,157       1,333       344       1997       (m )
4770 Fox Street
  Denver, CO             132       750       116       134       864       998       266       1997       (m )
1550 W. Evans
  Denver, CO             385       2,200       451       385       2,650       3,035       690       1997       (m )
3871 Revere
  Denver, CO             361       2,047       606       368       2,645       3,014       717       1997       (m )
4570 Ivy Street
  Denver, CO             219       1,239       172       220       1,409       1,630       368       1997       (m )
5855 Stapleton Drive North
  Denver, CO             288       1,630       262       290       1,890       2,180       525       1997       (m )
5885 Stapleton Drive North
  Denver, CO             376       2,129       268       380       2,392       2,773       602       1997       (m )
5977-5995 North Broadway
  Denver, CO             268       1,518       424       271       1,939       2,210       520       1997       (m )
2952-5978 North Broadway
  Denver, CO             414       2,346       700       422       3,039       3,461       800       1997       (m )
4721 Ironton Street
  Denver, CO             232       1,313       709       236       2,017       2,254       719       1997       (m )
445 Bryant Street
  Denver, CO             1,829       10,219       1,539       1,829       11,757       13,587       2,961       1998       (m )
East 47th Drive — A
  Denver, CO             441       2,689       (17 )     441       2,672       3,113       728       1997       (m )
9500 West 49th Street — A
  Wheatridge, CO             283       1,625       328       286       1,951       2,236       663       1997       (m )
9500 West 49th Street — B
  Wheatridge, CO             225       1,272       102       226       1,373       1,599       342       1997       (m )
9500 West 49th Street — C
  Wheatridge, CO             600       3,409       126       600       3,536       4,136       955       1997       (m )
9500 West 49th Street — D
  Wheatridge, CO             246       1,537       89       246       1,626       1,872       455       1997       (m )

S-9


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
451-591 East 124th Avenue
  Littleton, CO             383       2,145       816       383       2,961       3,344       1,006       1997       (m )
608 Garrison Street
  Lakewood, CO             265       1,501       408       267       1,907       2,173       521       1997       (m )
610 Garrison Street
  Lakewood, CO             264       1,494       433       266       1,925       2,191       562       1997       (m )
15000 West 6th Avenue
  Golden, CO             913       5,174       1,145       916       6,317       7,233       1,910       1997       (m )
14998 West 6th Avenue Bldg E
  Golden, CO             565       3,199       209       568       3,405       3,973       968       1997       (m )
14998 West 6th Avenue Bldg F
  Englewood, CO             269       1,525       57       271       1,580       1,851       429       1997       (m )
12503 East Euclid Drive
  Denver, CO             1,208       6,905       977       1,208       7,883       9,091       2,251       1997       (m )
6547 South Racine Circle
  Denver, CO             739       4,241       208       739       4,449       5,188       1,153       1997       (m )
1600 South Abilene
  Aurora, CO             465       2,633       83       467       2,714       3,181       717       1997       (m )
1620 South Abilene
  Aurora, CO             268       1,520       101       270       1,619       1,889       443       1997       (m )
1640 South Abilene
  Aurora, CO             368       2,085       111       382       2,183       2,564       581       1997       (m )
13900 East Florida Ave
  Aurora, CO             189       1,071       125       190       1,195       1,385       318       1997       (m )
11701 East 53rd Avenue
  Denver, CO             416       2,355       193       422       2,542       2,964       666       1997       (m )
5401 Oswego Street
  Denver, CO             273       1,547       419       278       1,960       2,238       624       1997       (m )
3811 Joilet
  Denver, CO             735       4,166       448       752       4,597       5,349       1,095       1998       (m )
14818 West 6th Avenue Bldg A
  Golden, CO             468       2,799       354       468       3,152       3,621       859       1997       (m )
14828 West 6th Avenue Bldg B
  Golden, CO             503       2,942       559       503       3,501       4,004       1,087       1997       (m )
12055 E 49th Ave/4955 Peoria
  Denver, CO             298       1,688       439       305       2,120       2,424       577       1998       (m )
4940-4950 Paris
  Denver, CO             152       861       187       156       1,045       1,200       268       1998       (m )
4970 Paris
  Denver, CO             95       537       121       97       656       753       145       1998       (m )
7367 South Revere Parkway
  Englewood, CO             926       5,124       620       934       5,736       6,670       1,441       1998       (m )
8200 East Park Meadows Drive(d)
  Lone Tree, CO             1,297       7,348       1,215       1,304       8,556       9,860       1,766       2000       (m )
3250 Quentin(d)
  Aurora, CO             1,220       6,911       603       1,230       7,503       8,733       1,521       2000       (m )
11585 E. 53rd Ave.(d)
  Denver, CO             1,770       10,030       945       1,780       10,965       12,745       1,918       2001       (m )
10500 East 54th Ave.(e)
  Denver, CO             1,253       7,098       892       1,260       7,983       9,242       1,688       2001       (m )
8835 W. 116th Street
  Broomfield, CO             1,151       6,523       975       1,304       7,345       8,649       934       2003       (m )
3101-3151 S. Platte River Dr. 
  Englewood, CO             2,500       8,549       168       2,504       8,713       11,217       1,104       2004       (m )
3155-3199 S. Platte River Dr. 
  Englewood, CO             1,700       7,787       1,413       1,702       9,198       10,900       1,007       2004       (m )

S-10


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
3201-3273 S. Platte River Dr. 
  Englewood, CO             1,600       6,592       167       1,602       6,757       8,359       982       2004       (m )
18150 E. 32nd Street
  Aurora, CO             563       3,188       1,033       572       4,212       4,784       1,116       2004       (m )
8820 W. 116th Street
  Broomfield, CO             338       1,918       392       372       2,275       2,647       322       2003       (m )
3400 Fraser Street
  Aurora, CO             616       3,593       9       620       3,598       4,218       409       2005       (m )
7005 East 46th Avenue
  Denver, CO             512       2,025       19       517       2,039       2,556       183       2005       (m )
Hilltop Business Center I — Bldg. B
  Littleton, CO             739             3,500       781       3,457       4,239       693       2000       (m )
Jeffco Business Center A
  Broomfield, CO             312             1,382       370       1,324       1,694       199       2001       (m )
Park Centre A
  Westminister, CO             441             4,282       441       4,281       4,723       1,105       2000       (m )
Park Centre B
  Westminister, CO             374             2,986       374       2,986       3,360       634       2000       (m )
Park Centre C
  Westminister, CO             374             2,876       374       2,876       3,250       549       2000       (m )
Park Centre D
  Westminister, CO             441             3,737       441       3,737       4,178       764       2001       (m )
4001 Salazar Way
  Frederick, CO             1,271       6,577       (43 )     1,276       6,529       7,805       504       2006       (m )
1690 S. Abilene
  Aurora, CO             406       2,814       83       411       2,892       3,302       230       2006       (m )
5909-5915 N. Broadway
  Denver, CO             495       1,268       38       500       1,301       1,801       146       2006       (m )
9586 Interstate 25 East Frontage
  Longmont, CO             898       5,038       377       967       5,346       6,313       667       2005       (m )
555 Corporate Circle
  Golden, CO             397       2,673       (62 )     448       2,561       3,009       171       2006       (m )
Detroit
                                                                                   
1731 Thorncroft
  Troy, MI             331       1,904       173       331       2,077       2,408       703       1994       (m )
1653 E. Maple
  Troy, MI             192       1,104       156       192       1,260       1,451       402       1994       (m )
47461 Clipper
  Plymouth Township, MI             122       723       128       122       851       973       276       1994       (m )
238 Executive Drive
  Troy, MI             52       173       554       100       679       779       623       1994       (m )
301 Executive Drive
  Troy, MI             71       293       731       133       962       1,095       859       1994       (m )
449 Executive Drive
  Troy, MI             125       425       1,030       218       1,362       1,580       1,145       1994       (m )
501 Executive Drive
  Troy, MI             71       236       678       129       856       985       529       1994       (m )
451 Robbins Drive
  Troy, MI             96       448       961       192       1,313       1,505       1,106       1994       (m )
1095 Crooks Road
  Troy, MI             331       1,017       2,216       360       3,204       3,564       1,359       1994       (m )
1416 Meijer Drive
  Troy, MI             94       394       496       121       863       984       563       1994       (m )
1624 Meijer Drive
  Troy, MI             236       1,406       940       373       2,209       2,582       1,472       1994       (m )
1972 Meijer Drive
  Troy, MI             315       1,301       738       372       1,982       2,354       1,268       1994       (m )
1621 Northwood Drive
  Troy, MI             85       351       954       215       1,176       1,390       1,075       1994       (m )
1707 Northwood Drive
  Troy, MI             95       262       1,310       239       1,428       1,667       967       1994       (m )

S-11


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
1788 Northwood Drive
  Troy, MI             50       196       549       103       692       795       568       1994       (m )
1821 Northwood Drive
  Troy, MI             132       523       756       220       1,192       1,411       1,099       1994       (m )
1826 Northwood Drive
  Troy, MI             55       208       394       103       554       657       520       1994       (m )
1864 Northwood Drive
  Troy, MI             57       190       437       107       577       684       541       1994       (m )
2277 Elliott Avenue
  Troy, MI             48       188       501       104       633       737       545       1994       (m )
2451 Elliott Avenue
  Troy, MI             78       319       766       164       999       1,163       896       1994       (m )
2730 Research Drive
  Rochester Hills, MI             903       4,215       800       903       5,015       5,918       3,012       1994       (m )
2791 Research Drive
  Rochester Hills, MI             557       2,731       719       560       3,447       4,007       1,854       1994       (m )
2871 Research Drive
  Rochester Hills, MI             324       1,487       647       327       2,131       2,458       1,057       1994       (m )
3011 Research Drive
  Rochester Hills, MI             457       2,104       406       457       2,510       2,967       1,546       1994       (m )
2870 Technology Drive
  Rochester Hills, MI             275       1,262       284       279       1,541       1,821       934       1994       (m )
2900 Technology Drive
  Rochester Hills, MI             214       977       534       219       1,506       1,725       792       1994       (m )
2930 Technology Drive
  Rochester Hills, MI             131       594       380       138       966       1,105       493       1994       (m )
2950 Technology Drive
  Rochester Hills, MI             178       819       353       185       1,165       1,350       591       1994       (m )
23014 Commerce Drive
  Farmington Hills, MI             39       203       169       56       355       411       242       1994       (m )
23028 Commerce Drive
  Farmington Hills, MI             98       507       247       125       727       852       492       1994       (m )
23035 Commerce Drive
  Farmington Hills, MI             71       355       262       93       596       688       405       1994       (m )
23042 Commerce Drive
  Farmintgon Hills, MI             67       277       311       89       565       655       382       1994       (m )
23065 Commerce Drive
  Farmington Hills, MI             71       408       207       93       593       686       378       1994       (m )
23070 Commerce Drive
  Farmington Hills, MI             112       442       398       125       827       952       559       1994       (m )
23079 Commerce Drive
  Farmington Hills, MI             68       301       316       79       605       685       387       1994       (m )
23093 Commerce Drive
  Farmington Hills, MI             211       1,024       844       295       1,784       2,079       1,214       1994       (m )
23135 Commerce Drive
  Farmington Hills, MI             146       701       295       158       984       1,142       591       1994       (m )
23163 Commerce Drive
  Farmington Hills, MI             111       513       342       138       828       966       491       1994       (m )
23177 Commerce Drive
  Farmington Hills, MI             175       1,007       573       254       1,501       1,755       924       1994       (m )
23206 Commerce Drive
  Farmington Hills, MI             125       531       350       137       868       1,006       550       1994       (m )
23370 Commerce Drive
  Farmington Hills, MI             59       233       308       66       534       600       391       1994       (m )
1451 East Lincoln Avenue
  Madison Heights, MI             299       1,703       228       306       1,925       2,231       618       1995       (m )
4400 Purks Drive
  Auburn Hills, MI             602       3,410       2,998       612       6,398       7,010       1,789       1995       (m )
6515 Cobb Drive
  Sterling Heights, MI             305       1,753       325       305       2,078       2,382       668       1994       (m )
32450 N Avis Drive
  Madison Heights, MI             281       1,590       193       286       1,778       2,064       514       1996       (m )
12707 Eckles Road
  Plymouth Township, MI             255       1,445       140       267       1,573       1,840       442       1996       (m )

S-12


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
9300-9328 Harrison Rd
  Romulus, MI             147       834       336       154       1,162       1,317       346       1996       (m )
9330-9358 Harrison Rd
  Romulus, MI             81       456       295       85       747       832       196       1996       (m )
28420-28448 Highland Rd
  Romulus, MI             143       809       190       149       993       1,142       311       1996       (m )
28450-28478 Highland Rd
  Romulus, MI             81       461       313       85       771       856       245       1996       (m )
28421-28449 Highland Rd
  Romulus, MI             109       617       386       114       998       1,112       270       1996       (m )
28451-28479 Highland Rd
  Romulus, MI             107       608       309       112       912       1,024       236       1996       (m )
28825-28909 Highland Rd
  Romulus, MI             70       395       313       73       705       778       180       1996       (m )
28933-29017 Highland Rd
  Romulus, MI             112       634       289       117       919       1,036       226       1996       (m )
28824-28908 Highland Rd
  Romulus, MI             134       760       234       140       987       1,128       276       1996       (m )
28932-29016 Highland Rd
  Romulus, MI             123       694       330       128       1,019       1,147       321       1996       (m )
9710-9734 Harrison Rd
  Romulus, MI             125       706       142       130       842       973       263       1996       (m )
9740-9772 Harrison Rd
  Romulus, MI             132       749       164       138       906       1,044       273       1996       (m )
9840-9868 Harrison Rd
  Romulus, MI             144       815       146       151       954       1,105       285       1996       (m )
9800-9824 Harrison Rd
  Romulus, MI             117       664       126       123       785       907       218       1996       (m )
29265-29285 Airport Dr
  Romulus, MI             140       794       254       147       1,042       1,188       297       1996       (m )
29185-29225 Airport Dr
  Romulus, MI             140       792       302       146       1,088       1,234       286       1996       (m )
29149-29165 Airport Dr
  Romulus, MI             216       1,225       379       226       1,594       1,820       464       1996       (m )
29101-29115 Airport Dr
  Romulus, MI             130       738       292       136       1,024       1,160       305       1996       (m )
29031-29045 Airport Dr
  Romulus, MI             124       704       144       130       842       972       257       1996       (m )
29050-29062 Airport Dr
  Romulus, MI             127       718       101       133       813       946       229       1996       (m )
29120-29134 Airport Dr
  Romulus, MI             161       912       244       169       1,149       1,317       306       1996       (m )
29200-29214 Airport Dr
  Romulus, MI             170       963       281       178       1,236       1,414       353       1996       (m )
9301-9339 Middlebelt Rd
  Romulus, MI             124       703       284       130       981       1,111       266       1996       (m )
26980 Trolley Industrial Drive
  Taylor, MI             450       2,550       1,019       463       3,556       4,019       1,035       1997       (m )
32975 Capitol Avenue
  Livonia, MI             135       748       332       144       1,071       1,215       295       1998       (m )
2725 S. Industrial Highway
  Ann Arbor, MI             660       3,654       484       704       4,094       4,798       978       1998       (m )
32920 Capitol Avenue
  Livonia, MI             76       422       88       82       504       586       124       1998       (m )
11923 Brookfield Avenue
  Livonia, MI             120       665       495       128       1,151       1,280       484       1998       (m )
11965 Brookfield Avenue
  Livonia, MI             120       665       67       128       724       852       174       1998       (m )
13405 Stark Road
  Livonia, MI             46       254       136       49       387       436       119       1998       (m )
1170 Chicago Road
  Troy, MI             249       1,380       256       266       1,618       1,885       373       1998       (m )
1200 Chicago Road
  Troy, MI             268       1,483       274       286       1,739       2,025       398       1998       (m )

S-13


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
450 Robbins Drive
  Troy, MI             166       920       272       178       1,180       1,358       270       1998       (m )
1230 Chicago Road
  Troy, MI             271       1,498       156       289       1,636       1,925       391       1998       (m )
12886 Westmore Avenue
  Livonia, MI             190       1,050       194       202       1,232       1,434       290       1998       (m )
12898 Westmore Avenue
  Livonia, MI             190       1,050       235       202       1,273       1,475       324       1998       (m )
33025 Industrial Road
  Livonia, MI             80       442       130       85       567       652       158       1998       (m )
47711 Clipper Street
  Plymouth Township, MI             539       2,983       265       575       3,212       3,787       772       1998       (m )
32975 Industrial Road
  Livonia, MI             160       887       343       171       1,219       1,390       356       1998       (m )
32985 Industrial Road
  Livonia, MI             137       761       149       147       900       1,047       219       1998       (m )
32995 Industrial Road
  Livonia, MI             160       887       186       171       1,062       1,233       274       1998       (m )
12874 Westmore Avenue
  Livonia, MI             137       761       239       147       990       1,137       263       1998       (m )
33067 Industrial Road
  Livonia, MI             160       887       305       171       1,181       1,352       301       1998       (m )
1775 Bellingham
  Troy, MI             344       1,902       297       367       2,176       2,543       502       1998       (m )
1785 East Maple
  Troy, MI             92       507       159       98       660       758       146       1998       (m )
1807 East Maple
  Troy, MI             321       1,775       359       342       2,113       2,455       479       1998       (m )
980 Chicago
  Troy, MI             206       1,141       176       220       1,303       1,523       297       1998       (m )
1840 Enterprise Drive
  Rochester Hills, MI             573       3,170       347       611       3,479       4,090       835       1998       (m )
1885 Enterprise Drive
  Rochester Hills, MI             209       1,158       134       223       1,278       1,501       305       1998       (m )
1935-55 Enterprise Drive
  Rochester Hills, MI             1,285       7,144       701       1,371       7,759       9,130       1,883       1998       (m )
5500 Enterprise Court
  Warren, MI             675       3,737       500       721       4,191       4,912       992       1998       (m )
750 Chicago Road
  Troy, MI             323       1,790       472       345       2,240       2,585       586       1998       (m )
800 Chicago Road
  Troy, MI             283       1,567       540       302       2,087       2,390       674       1998       (m )
850 Chicago Road
  Troy, MI             183       1,016       262       196       1,265       1,461       295       1998       (m )
2805 S. Industrial Highway
  Ann Arbor, MI             318       1,762       478       340       2,218       2,558       570       1998       (m )
6833 Center Drive
  Sterling Heights, MI             467       2,583       218       493       2,775       3,268       683       1998       (m )
32201 North Avis Drive
  Madison Heights, MI             345       1,911       476       349       2,383       2,732       776       1998       (m )
1100 East Mandoline Road
  Madison Heights, MI             888       4,915       1,262       897       6,168       7,066       1,590       1998       (m )
30081 Stephenson Highway
  Madison Heights, MI             271       1,499       399       274       1,895       2,169       485       1998       (m )
1120 John A. Papalas Drive(e)
  Lincold Park, MI             366       3,241       949       469       4,087       4,556       977       1998       (m )
4872 S. Lapeer Road
  Lake Orion Twsp, MI             1,342       5,441       2,200       1,412       7,571       8,983       2,448       1999       (m )
22701 Trolley Industrial
  Taylor, MI             795             7,223       849       7,168       8,017       1,236       1999       (m )
1400 Allen Drive
  Troy, MI             209       1,154       243       212       1,394       1,606       235       2000       (m )
1408 Allen Drive
  Troy, MI             151       834       171       153       1,003       1,156       271       2000       (m )

S-14


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
1305 Stephenson Hwy
  Troy, MI             345       1,907       231       350       2,133       2,483       366       2000       (m )
32505 Industrial Drive
  Madison Heights, MI             345       1,910       418       351       2,322       2,673       560       2000       (m )
1799-1813 Northfield Drive(d)
  Rochester Hills, MI             481       2,665       254       490       2,910       3,400       530       2000       (m )
32200 N. Avis
  Madison Heights, MI             503       3,367       1,225       503       4,592       5,095       261       2005       (m )
100 Kay Industrial
  Orion, MI             677       2,018       403       685       2,414       3,098       460       2005       (m )
1849 West Maple Road
  Troy, MI             1,688       2,790       30       1,700       2,808       4,508       302       2005       (m )
42555 Merrill Road
  Sterling Heights, MI             1,080       2,300       3,702       1,090       5,992       7,082       459       2006       (m )
28435 Automation Blvd. 
  Wixom, MI             621               3,804       628       3,797       4,425       337       2004       (m )
2441 N. Opdyke Road
  Auburn Hills, MI             530       737       16       538       745       1,283       82       2006       (m )
200 Northpointe Drive
  Orion Township, MI             723       2,063       36       734       2,088       2,822       134       2006       (m )
32500 Capitol Avenue
  Livonia, MI             258       1,032       275       260       1,305       1,565       65       2005       (m )
32650 Capitol Avenue
  Livonia, MI             282       1,128       54       284       1,181       1,464       79       2005       (m )
11800 Sears Drive
  Livonia, MI             693       1,507       1,240       703       2,737       3,440       464       2005       (m )
1099 Church Road
  Troy, MI             702       1,332       45       721       1,358       2,079       274       2005       (m )
Houston
                                                                                   
2102-2314 Edwards Street
  Houston, TX             348       1,973       1,436       382       3,375       3,757       731       1997       (m )
3351 Rauch St
  Houston, TX             272       1,541       203       278       1,738       2,016       425       1997       (m )
3851 Yale St
  Houston, TX             413       2,343       639       425       2,971       3,395       839       1997       (m )
3337-3347 Rauch Street
  Houston, TX             227       1,287       215       233       1,498       1,730       365       1997       (m )
8505 N Loop East
  Houston, TX             439       2,489       741       449       3,220       3,670       816       1997       (m )
4749-4799 Eastpark Dr
  Houston, TX             594       3,368       987       611       4,339       4,949       1,097       1997       (m )
4851 Homestead Road
  Houston, TX             491       2,782       874       504       3,642       4,147       892       1997       (m )
3365-3385 Rauch Street
  Houston, TX             284       1,611       517       290       2,122       2,412       439       1997       (m )
5050 Campbell Road
  Houston, TX             461       2,610       388       470       2,988       3,458       746       1997       (m )
4300 Pine Timbers
  Houston, TX             489       2,769       597       499       3,355       3,854       857       1997       (m )
2500-2530 Fairway Park Drive
  Houston, TX             766       4,342       753       792       5,069       5,861       1,310       1997       (m )
6550 Longpointe
  Houston, TX             362       2,050       549       370       2,591       2,961       664       1997       (m )
1815 Turning Basin Dr
  Houston, TX             487       2,761       581       531       3,298       3,829       821       1997       (m )
1819 Turning Basin Dr
  Houston, TX             231       1,308       571       251       1,858       2,109       500       1997       (m )
1805 Turning Basin Drive
  Houston, TX             564       3,197       718       616       3,863       4,478       961       1997       (m )
9835A Genard Road
  Houston, TX             1,505       8,333       3,011       1,581       11,268       12,849       2,413       1999       (m )

S-15


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
9835B Genard Road
  Houston, TX             245       1,357       463       256       1,809       2,065       348       1999       (m )
8705 City Park Loop
  Houston, TX             710       2,983       933       714       3,912       4,626       590       2003       (m )
11505 State Highway 225
  LaPorte City, TX             940       4,675       615       940       5,290       6,230       529       2005       (m )
6955 Portwest Drive
  Houston, TX             314       1,686       354       320       2,033       2,354       196       2005       (m )
6925 Portwest Drive
  Houston, TX             402       1,360       234       407       1,589       1,996       199       2005       (m )
South by Southwest
  Sugarland , TX             608       3,679       257       617       3,928       4,544       114       2007       (m )
7230-7238 Wynnwood
  Houston, TX             254       764       28       259       787       1,046       36       2007       (m )
7240-7248 Wynnwood
  Houston, TX             271       726       26       276       747       1,023       30       2007       (m )
7250-7260 Wynnwood
  Houston, TX             200       481       18       203       496       699       20       2007       (m )
1500 E. Main
  LaPorte City, TX             201       1,328       24       204       1,349       1,553       225       2005       (m )
3300 Claymore Park Drive
  Houston, TX             232       812       2       232       814       1,046       33       2007       (m )
6400 Long Point
  Houston, TX             188       898       1       188       899       1,088       60       2007       (m )
12705 S Kirkwood Ste 100-150
  Houston, TX             154       626       5       154       631       785       39       2007       (m )
12705 S Kirkwood Ste 200-220
  Houston, TX             404       1,698       52       412       1,742       2,154       123       2007       (m )
8850 Jameel
  Houston, TX             171       826       15       171       841       1,012       45       2007       (m )
8800 Jameel
  Houston, TX             163       798             163       798       961       59       2007       (m )
8700 Jameel
  Houston, TX             170       1,020       (4 )     170       1,016       1,186       35       2007       (m )
8600 Jameel
  Houston, TX             163       818             163       817       981       55       2007       (m )
9362 Wallisville
  Houston, TX             114       564       1       114       565       679       42       2007       (m )
9366 Wallisville
  Houston, TX             233       1,200       14       233       1,214       1,447       74       2007       (m )
Indianapolis
                                                                                   
2900 N Shadeland Avenue
  Indianapolis, IN             2,057       13,565       3,605       2,057       17,169       19,226       5,412       1996       (m )
7901 West 21st St. 
  Indianapolis, IN             1,048       6,027       435       1,048       6,462       7,510       1,922       1997       (m )
1445 Brookville Way
  Indianapolis, IN             459       2,603       802       476       3,389       3,865       1,100       1996       (m )
1440 Brookville Way
  Indianapolis, IN             665       3,770       1,087       685       4,838       5,523       1,473       1996       (m )
1240 Brookville Way
  Indianapolis, IN             247       1,402       349       258       1,741       1,999       530       1996       (m )
1345 Brookville Way
  Indianapolis, IN     (q )     586       3,321       904       601       4,209       4,810       1,327       1996       (m )
1350 Brookville Way
  Indianapolis, IN             205       1,161       271       212       1,425       1,636       424       1996       (m )
1341 Sadlier Circle E Dr
  Indianapolis, IN     (r )     131       743       313       136       1,050       1,187       379       1996       (m )
1322-1438 Sadlier Circle E Dr
  Indianapolis, IN     (r )     145       822       291       152       1,107       1,259       365       1996       (m )

S-16


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
1327-1441 Sadlier Circle E Dr
  Indianapolis, IN     (r )     218       1,234       403       225       1,630       1,854       481       1996       (m )
1304 Sadlier Circle E Dr
  Indianapolis, IN     (r )     71       405       153       75       554       629       198       1996       (m )
1402 Sadlier Circle E Dr
  Indianapolis, IN     (r )     165       934       392       171       1,320       1,491       453       1996       (m )
1504 Sadlier Circle E Dr
  Indianapolis, IN     (r )     219       1,238       289       226       1,520       1,745       415       1996       (m )
1311 Sadlier Circle E Dr
  Indianapolis, IN     (r )     54       304       106       57       406       463       120       1996       (m )
1365 Sadlier Circle E Dr
  Indianapolis, IN     (r )     121       688       289       126       972       1,098       279       1996       (m )
1352-1354 Sadlier Circle E Dr
  Indianapolis, IN     (r )     178       1,008       399       184       1,400       1,584       442       1996       (m )
1335 Sadlier Circle E Dr
  Indianapolis, IN     (r )     81       460       309       85       765       850       193       1996       (m )
1327 Sadlier Circle E Dr
  Indianapolis, IN     (r )     52       295       53       55       345       400       103       1996       (m )
1425 Sadlier Circle E Dr
  Indianapolis, IN     (r )     21       117       39       23       154       177       44       1996       (m )
6951 E 30th St
  Indianapolis, IN             256       1,449       220       265       1,659       1,924       538       1996       (m )
6701 E 30th St
  Indianapolis, IN             78       443       41       82       480       562       142       1996       (m )
6737 E 30th St
  Indianapolis, IN             385       2,181       295       398       2,462       2,860       779       1996       (m )
1225 Brookville Way
  Indianapolis, IN             60             458       68       450       518       113       1997       (m )
6555 E 30th St
  Indianapolis, IN             484       4,760       1,833       484       6,593       7,077       2,042       1996       (m )
8402-8440 E 33rd St
  Indianapolis, IN             222       1,260       593       230       1,845       2,075       540       1996       (m )
8520-8630 E 33rd St
  Indianapolis, IN             326       1,848       731       336       2,570       2,906       857       1996       (m )
8710-8768 E 33rd St
  Indianapolis, IN             175       993       370       187       1,350       1,537       377       1996       (m )
3316-3346 N. Pagosa Court
  Indianapolis, IN             325       1,842       583       335       2,415       2,750       794       1996       (m )
6751 E 30th St
  Indianapolis, IN             728       2,837       277       741       3,101       3,842       835       1997       (m )
9200 East 146th Street
  Noblesville, IN             181       1,221       992       181       2,213       2,394       613       1998       (m )
6575 East 30th Street
  Indianapolis, IN             118             2,014       128       2,004       2,132       470       1998       (m )
6585 East 30th Street
  Indianapolis, IN             196             3,231       196       3,231       3,427       762       1998       (m )
8525 E. 33rd Street
  Indianapolis, IN             1,300       2,091       687       1,308       2,771       4,078       492       2003       (m )
5705-97 Park Plaza Ct
  Indianapolis, IN     (s )     600       2,194       792       609       2,977       3,586       797       2003       (m )
9319-9341 Castlegate Drive
  Indianapolis, IN             530       1,235       1,001       544       2,222       2,766       512       2003       (m )
9332-9350 Castlegate Drive
  Indianapolis, IN             420       646       662       429       1,299       1,728       391       2003       (m )
1133 Northwest L Street
  Richmond, IN     (t )     201       1,358       51       208       1,403       1,611       299       2006       (m )
1380 Perry Road
  Plainfield, IN             781       5,156       35       785       5,187       5,972       543       2005       (m )
9210 East 146th Street
  Noblesville, IN             66       684       818       66       1,502       1,568       596       1998       (m )
Helmer Spec BTS — 1
  Noblesville, IN             547             4,701       628       4,619       5,248       13       2007       (m )

S-17


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
Genco BTS
  Indianapolis, IN             886             6,819       1,037       6,668       7,705             2007       (m )
Inland Empire
                                                                                   
3411 N Perris Blvd
  Riverside, CA             8,125       7,150       68       8,166       7,177       15,343       390       2007       (m )
100 W Sinclair
  Riverside, CA             6,042       4,298       44       6,072       4,313       10,384       180       2007       (m )
Los Angeles
                                                                                   
350-390 Manville St. 
  Compton, CA             2,300       3,768       103       2,313       3,857       6,171       558       2004       (m )
1944 Vista Bella Way
  Rancho Dominguez, CA             1,746       3,148       646       1,821       3,719       5,540       415       2005       (m )
2000 Vista Bella Way
  Rancho Dominguez, CA             817       1,673       294       852       1,932       2,784       211       2005       (m )
2835 East Ana Street Drive
  Rancho Dominguez, CA             1,682       2,750       134       1,770       2,796       4,566       360       2005       (m )
665 N. Baldwin Park Blvd
  City of Industry, CA             2,124       5,219       (135 )     2,139       5,069       7,208       284       2006       (m )
27801 Avenue Scott
  Santa Clarita, CA             2,890       7,020       469       2,902       7,476       10,379       353       2006       (m )
2610 & 2660 Columbia Street
  Torrance, CA             3,008       5,826       (71 )     3,031       5,732       8,763       223       2006       (m )
433 Alaska Avenue
  Torrance, CA             681       168       5       684       170       854       29       2006       (m )
21730-21748 Marilla Street
  Chatsworth, CA             2,585       3,210       90       2,608       3,277       5,885       130       2007       (m )
8015 Paramount
  Pico Riviera, CA             3,616       3,902       51       3,653       3,916       7,569       135       2007       (m )
3365 E. Slauson
  Los Angeles, CA             2,367       3,243       37       2,393       3,254       5,647       118       2007       (m )
3015 E Ana & 18744 Reyes
  Los Angeles, CA             19,678       9,321       655       20,140       9,514       29,654       677       2007       (m )
19067 Reyes Ave
  Rancho Dominguez, CA             9,281       3,920       107       9,373       3,936       13,308       104       2007       (m )
1250 Rancho Conejo Blvd
  Thousand Oaks, CA             1,435       779       8       1,440       782       2,222       15       2007       (m )
1260 Rancho Conejo Blvd
  Thousand Oaks, CA             1,353       722       9       1,358       726       2,084       13       2007       (m )
1270 Rancho Conejo Blvd
  Thousand Oaks, CA             1,224       716       7       1,229       719       1,947       17       2007       (m )
1280 Rancho Conejo Blvd
  Thousand Oaks, CA             2,043       3,408       19       2,050       3,420       5,470       57       2007       (m )
1290 Rancho Conejo Blvd
  Thousand Oaks, CA             1,754       2,949       17       1,760       2,959       4,720       49       2007       (m )
4020 S. Compton Ave
  Los Angeles, CA             3,800       7,330       71       3,825       7,376       11,201       326       2006       (m )
500 N Nash St
  El Segundo, CA             1,189       3,167       99       1,198       3,257       4,455       65       2007       (m )
4790 Valley Blvd
  Los Angeles, CA             960       3,840       33       966       3,866       4,833       26       2007       (m )
Louisville
                                                                                   
Penske BTS
  Louisville, KY             2,074             9,639       2,079       9,634       11,713       172       2007       (m )
Miami
                                                                                   
4700 NW 15th Ave
  Ft.Lauderdale, FL             908       1,883       57       912       1,936       2,848       94       2007       (m )
4710 NW 15th Ave
  Ft.Lauderdale, FL             830       2,722       54       834       2,772       3,606       109       2007       (m )
4720 NW 15th Ave
  Ft.Lauderdale, FL             937       2,455       72       942       2,523       3,464       141       2007       (m )

S-18


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
4740 NW 15th Ave
  Ft.Lauderdale, FL             1,107       3,111       70       1,112       3,176       4,288       198       2007       (m )
4750 NW 15th Ave
  Ft.Lauderdale, FL             947       3,079       82       951       3,157       4,108       122       2007       (m )
4800 NW 15th Ave
  Ft.Lauderdale, FL             1,092       3,308       140       1,097       3,443       4,540       141       2007       (m )
Smurfit Container
  Medley, FL             857       3,428       181       864       3,602       4,466       24       2007       (m )
Milwaukee
                                                                                   
N25 W23050 Paul Road
  Pewaukee, WI             474       2,723       1,932       485       4,645       5,130       1,479       1994       (m )
N25 W23255 Paul Road
  Pewaukee, WI             569       3,270       183       569       3,453       4,022       1,117       1994       (m )
N27 W23293 Roundy Drive
  Pewaukee, WI             412       2,837       102       420       2,931       3,351       965       1994       (m )
6523 N Sydney Place
  Glendale, WI             172       976       349       176       1,322       1,498       362       1995       (m )
4560 N 124th Street
  Wauwatosa, WI             118       667       85       129       741       870       196       1997       (m )
4410-80 North 132nd Street
  Butler, WI             355             3,967       359       3,963       4,322       721       1999       (m )
5355 South Westridge Drive
  New Berlin, WI             1,630       7,058       94       1,646       7,136       8,782       798       2004       (m )
320-34 W. Vogel
  Milwaukee, WI             506       3,199       73       508       3,270       3,778       581       2005       (m )
4950 S. 6th Avenue
  Milwaukee, WI             299       1,565       85       301       1,648       1,949       357       2005       (m )
1711 Paramount Court
  Waukesha, WI             308       1,762       19       311       1,778       2,089       199       2005       (m )
17005 W. Ryerson Road
  New Berlin, WI             403       3,647       (63 )     405       3,581       3,987       444       2005       (m )
W 140 N9059 Lilly Road
  Iomonee Falls, WI             343       1,153       242       366       1,372       1,738       196       2005       (m )
200 W. Vogel Ave., Bldg B
  Milwaukee, WI             301       2,150       13       302       2,162       2,464       349       2005       (m )
16600 West Glendale Avenue
  New Berlin, WI             704       1,923       372       715       2,284       2,999       314       2006       (m )
4921 S. 2nd Street
  Milwaukee, WI             101       713       2       101       715       816       106       2005       (m )
1500 Peebles Drive
  Richland Center, WI             1,577       1,018       35       1,603       1,027       2,630       639       2005       (m )
2905 S 160th Street
  New Berlin, WI             261       672       18       265       686       951       23       2007       (m )
2855 S 160th Street
  New Berlin, WI             221       628       23       225       647       872       22       2007       (m )
2485 Commerce Drive
  New Berlin, WI             483       1,516       20       491       1,528       2,019       41       2007       (m )
14518 Whittaker Way
  New Berlin, WI             437       1,082       62       445       1,135       1,581       42       2007       (m )
Minneapolis/St. Paul
                                                                                   
6507-6545 Cecilia Circle
  Bloomington, MN             357       1,320       1,257       386       2,548       2,934       1,541       1994       (m )
6201 West 111th Street
  Bloomington, MN     (u )     1,358       8,622       4,421       1,499       12,903       14,401       6,819       1994       (m )
6403-6545 Cecilia Drive
  Bloomington, MN             366       1,363       1,168       395       2,502       2,897       1,603       1994       (m )
7251-7267 Washington Avenue
  Edina, MN             129       382       710       182       1,038       1,221       792       1994       (m )
7301-7325 Washington Avenue
  Edina, MN             174       391       84       193       456       649       193       1994       (m )

S-19


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
7101 Winnetka Avenue North
  Brooklyn Park, MN             2,195       6,084       4,126       2,228       10,177       12,405       5,465       1994       (m )
7600 Golden Triangle Drive
  Eden Prairie, MN             566       1,394       1,894       615       3,240       3,854       1,668       1994       (m )
9901 West 74th Street
  Eden Prairie, MN             621       3,289       3,283       639       6,554       7,193       3,810       1994       (m )
1030 Lone Oak Road
  Eagan, MN             456       2,703       563       456       3,266       3,721       1,048       1994       (m )
1060 Lone Oak Road
  Eagan, MN             624       3,700       717       624       4,417       5,042       1,519       1994       (m )
5400 Nathan Lane
  Plymouth, MN             749       4,461       1,167       757       5,620       6,377       2,054       1994       (m )
10120 W 76th Street
  Eden Prairie, MN             315       1,804       1,025       315       2,828       3,144       1,257       1995       (m )
7615 Golden Triangle
  Eden Prairie, MN             268       1,532       785       268       2,316       2,584       716       1995       (m )
7625 Golden Triangle
  Eden Prairie, MN             415       2,375       1,032       415       3,407       3,822       1,117       1995       (m )
12155 Nicollet Ave
  Burnsville, MN             286             1,731       288       1,729       2,017       528       1995       (m )
6655 Wedgewood Road
  Maple Grove, MN             1,466       8,342       3,291       1,466       11,633       13,099       3,516       1994       (m )
900 Apollo Road
  Eagan, MN             1,029       5,855       1,202       1,030       7,056       8,086       2,191       1995       (m )
7316 Aspen Lane North
  Brooklyn Park, MN             368       2,156       746       377       2,893       3,270       874       1995       (m )
4100 Peavey Road
  Chaska, MN             277       2,261       830       277       3,091       3,368       861       1996       (m )
11300 Hamshire Ave South
  Bloomington, MN             527       2,985       1,469       541       4,440       4,981       1,092       1996       (m )
5205 Highway 169
  Plymouth, MN             446       2,525       1,002       740       3,232       3,972       886       1996       (m )
6451-6595 Citywest Parkway
  Eden Prairie, MN             525       2,975       1,347       538       4,309       4,847       1,265       1996       (m )
7100-7198 Shady Oak Road
  Eden Prairie, MN             715       4,054       1,254       736       5,288       6,023       1,831       1996       (m )
7500-7546 Washington Square
  Eden Prairie, MN             229       1,300       776       235       2,071       2,306       585       1996       (m )
7550-7558 Washington Square
  Eden Prairie, MN             153       867       171       157       1,034       1,191       270       1996       (m )
5240-5300 Valley Industrial Blvd S
  Shakopee, MN             362       2,049       1,005       371       3,044       3,415       965       1996       (m )
7102 Winnetka Ave. North
  Brooklyn Park, MN             1,275             6,505       1,337       6,443       7,780       25       2007       (m )
6477-6525 City West Parkway
  Eden Prairie, MN             810       4,590       1,049       819       5,629       6,449       1,558       1997       (m )
1157 Valley Park Drive
  Shakopee, MN             760             6,192       888       6,064       6,952       1,247       1999       (m )
500-530 Kasota Avenue SE
  Minneapolis, MN             415       2,354       894       432       3,231       3,664       924       1998       (m )
770-786 Kasota Avenue SE
  Minneapolis, MN             333       1,888       510       347       2,383       2,730       561       1998       (m )
800 Kasota Avenue SE
  Minneapolis, MN             524       2,971       921       597       3,819       4,416       971       1998       (m )
2530-2570 Kasota Avenue
  St. Paul, MN             407       2,308       841       465       3,091       3,556       804       1998       (m )
1280 Energy Park Drive
  St. Paul, MN             700       2,779       23       705       2,797       3,502       387       2004       (m )
9600 West 76th Street
  Eden Prairie, MN             1,000       2,450       47       1,034       2,462       3,497       281       2004       (m )

S-20


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
9700 West 76th Street
  Eden Prairie, MN             1,000       2,709       145       1,038       2,815       3,854       295       2004       (m )
5017 Boone Avenue North
  New Hope, MN     (v )     1,000       1,599       58       1,009       1,648       2,657       407       2005       (m )
2300 West Highway 13(I-35 Dist Ctr)
  Burnsville, MN             2,517       6,069       604       2,524       6,665       9,190       2,072       2005       (m )
1087 Park Place
  Shakopee, MN             1,195       4,891       15       1,198       4,903       6,101       634       2005       (m )
5391 12th Avenue SE
  Shakopee, MN             1,392       8,149       185       1,395       8,331       9,726       943       2005       (m )
4701 Valley Industrial Boulevard
  Shakopee, MN             1,296       7,157       (81 )     1,299       7,073       8,372       886       2005       (m )
Park 2000 III
  Shakopee, MN             590             5,619       590       5,619       6,209       802       1998       (m )
7600 69th Avenue
  Greenfield, MN             1,500       8,328       1,808       1,510       10,126       11,636       1,310       2004       (m )
316 Lake Hazeltine Drive
  Chaska, MN             714       944       166       729       1,095       1,824       187       2006       (m )
6455 City West Parkway
  Eden Prairie, MN             659       3,189       92       665       3,274       3,939       701       2006       (m )
1225 Highway 169 North
  Plymouth, MN             1,190       1,979       59       1,207       2,022       3,228       191       2006       (m )
9200 10th Ave
  Golden Valley, MN             892       2,306       (5 )     902       2,291       3,193       155       2007       (m )
Nashville
                                                                                   
1621 Heil Quaker Boulevard
  Nashville, TN             413       2,383       1,687       430       4,053       4,483       1,301       1995       (m )
3099 Barry Drive
  Portland, TN             418       2,368       121       421       2,486       2,907       697       1996       (m )
3150 Barry Drive
  Portland, TN             941       5,333       520       981       5,813       6,794       1,605       1996       (m )
5599 Highway 31 West
  Portland, TN             564       3,196       131       571       3,320       3,891       919       1996       (m )
1650 Elm Hill Pike
  Nashville, TN             329       1,867       265       332       2,129       2,461       550       1997       (m )
1931 Air Lane Drive
  Nashville, TN             489       2,785       272       493       3,053       3,546       820       1997       (m )
4640 Cummings Park
  Nashville, TN             360       2,040       210       365       2,245       2,610       450       1999       (m )
1740 River Hills Drive
  Nashville, TN             848       4,383       572       888       4,915       5,803       954       2005       (m )
Royal Park Business Center — 211 Ellery Ct
  Nashville, TN             606       3,192       107       616       3,289       3,905       83       2007       (m )
Northern New Jersey
                                                                                   
14 World’s Fair Drive
  Franklin, NJ             483       2,735       605       503       3,320       3,823       926       1997       (m )
12 World’s Fair Drive
  Franklin, NJ             572       3,240       538       593       3,756       4,349       1,038       1997       (m )
22 World’s Fair Drive
  Franklin, NJ             364       2,064       469       375       2,522       2,897       612       1997       (m )
26 World’s Fair Drive
  Franklin, NJ             361       2,048       357       377       2,388       2,766       635       1997       (m )
24 World’s Fair Drive
  Franklin, NJ             347       1,968       525       362       2,478       2,840       671       1997       (m )
20 World’s Fair Drive Lot 13
  Sumerset, NJ             9             2,549       691       1,867       2,558       342       1999       (m )
45 Route 46
  Pine Brook, NJ             969       5,491       811       978       6,293       7,271       1,242       2000       (m )

S-21


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
43 Route 46
  Pine Brook, NJ             474       2,686       387       479       3,069       3,547       686       2000       (m )
39 Route 46
  Pine Brook, NJ             260       1,471       223       262       1,691       1,953       339       2000       (m )
26 Chapin Road
  Pine Brook, NJ             956       5,415       583       965       5,988       6,953       1,135       2000       (m )
30 Chapin Road
  Pine Brook, NJ             960       5,440       770       969       6,201       7,170       1,226       2000       (m )
20 Hook Mountain Road
  Pine Brook, NJ             1,507       8,542       2,650       1,534       11,166       12,700       1,847       2000       (m )
30 Hook Mountain Road
  Pine Brook, NJ             389       2,206       368       396       2,567       2,963       509       2000       (m )
55 Route 46
  Pine Brook, NJ             396       2,244       239       403       2,476       2,879       486       2000       (m )
16 Chapin Road
  Pine Brook, NJ             885       5,015       375       901       5,375       6,275       1,049       2000       (m )
20 Chapin Road
  Pine Brook, NJ             1,134       6,426       300       1,154       6,706       7,860       1,068       2000       (m )
Sayreville Lot 3
  Sayreville, NJ             996             5,315       996       5,315       6,311       458       2003       (m )
Sayreville Lot 4
  Sayreville, NJ             944             4,749       944       4,749       5,693       713       2002       (m )
400 Raritan Center Parkway
  Edison, NJ             829       4,722       525       851       5,226       6,077       851       2001       (m )
300 Columbus Circle
  Edison, NJ             1,257       7,122       969       1,277       8,071       9,348       1,457       2001       (m )
400 Apgar
  Franklin Township, NJ             780       4,420       758       822       5,136       5,958       816       2002       (m )
500 Apgar
  Franklin Township, NJ             361       2,044       449       368       2,486       2,854       444       2002       (m )
1 Pearl Ct
  Allendale, NJ             623       3,528       1,305       649       4,806       5,455       688       2002       (m )
2 Pearl Ct
  Allendale, NJ             255       1,445       1,294       403       2,590       2,994       371       2002       (m )
3 Pearl Ct
  Allendale, NJ             440       2,491       259       458       2,731       3,189       354       2002       (m )
5 Pearl Ct
  Allendale, NJ             505       2,860       546       526       3,386       3,911       501       2002       (m )
6 Pearl Ct
  Allendale, NJ             1,160       6,575       779       1,177       7,337       8,514       1,060       2002       (m )
7 Pearl Ct
  Allendale, NJ             513       2,907       245       520       3,145       3,665       418       2002       (m )
59 Route 17
  Allendale, NJ             518       2,933       1,133       539       4,044       4,583       847       2002       (m )
309-319 Pierce Street
  Somerset, NJ             1,300       4,628       947       1,309       5,566       6,875       648       2004       (m )
50 Triangle Blvd
  Carlstadt, NJ             497       2,195       259       532       2,419       2,951       249       2005       (m )
Philadelphia
                                                                                   
230-240 Welsh Pool Road
  Exton, PA             154       851       142       170       977       1,147       237       1998       (m )
264 Welsh Pool Road
  Exton, PA             147       811       84       162       880       1,042       215       1998       (m )
254 Welsh Pool Road
  Exton, PA             152       842       370       184       1,179       1,364       269       1998       (m )
213 Welsh Pool Road
  Exton, PA             149       827       171       173       974       1,147       242       1998       (m )
251 Welsh Pool Road
  Exton, PA             144       796       394       159       1,176       1,334       238       1998       (m )
253-255 Welsh Pool Road
  Exton, PA             113       626       175       125       789       914       196       1998       (m )
151-161 Philips Road
  Exton, PA             191       1,059       266       229       1,287       1,516       323       1998       (m )

S-22


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
216 Philips Road
  Exton, PA             199       1,100       238       220       1,317       1,537       327       1998       (m )
964 Postal Road
  Lehigh, PA             215       1,216       124       224       1,330       1,554       227       2001       (m )
966 Postal Road
  Lehigh, PA             268       1,517       133       279       1,639       1,918       294       2001       (m )
999 Postal Road
  Lehigh, PA             439       2,486       655       458       3,122       3,580       595       2001       (m )
7331 William Avenue
  Lehigh, PA             311       1,764       144       325       1,894       2,219       321       2001       (m )
7350 William Ave
  Lehigh, PA             552       3,128       767       576       3,871       4,447       890       2001       (m )
7377 William Ave
  Lehigh, PA             290       1,645       235       303       1,867       2,170       370       2001       (m )
2000 Cabot Boulevard West
  Langhorne, PA             414       2,346       660       424       2,996       3,420       466       2002       (m )
2005 Cabot Boulevard West
  Langhorne, PA             315       1,785       222       322       2,000       2,322       328       2002       (m )
2010 Cabot Boulevard West
  Langhorne, PA             513       2,907       581       525       3,476       4,001       535       2002       (m )
2200 Cabot Boulevard West
  Langhorne, PA             428       2,427       346       438       2,763       3,201       495       2002       (m )
2260-2270 Cabot Boulevard West
  Langhorne, PA             361       2,044       484       369       2,520       2,889       434       2002       (m )
3000 Cabot Boulevard West
  Langhorne, PA             509       2,886       652       521       3,526       4,047       624       2002       (m )
180 Wheeler Court
  Langhorne, PA             447       2,533       240       458       2,762       3,220       433       2002       (m )
2512 Metropolitan Drive
  Trevose, PA             242       1,369       248       248       1,610       1,858       271       2002       (m )
2515 Metropolitan Drive
  Trevose, PA             259       1,466       203       265       1,663       1,928       271       2002       (m )
2450 Metropolitan Drive
  Trevose, PA             571       3,234       586       586       3,805       4,391       663       2002       (m )
4667 Somerton Road
  Trevose, PA             637       3,608       782       652       4,375       5,027       911       2002       (m )
835 Wheeler Way
  Langhorne, PA             293       1,658       525       319       2,156       2,475       450       2002       (m )
14 McFadden Road
  Palmer, PA             600       1,349       56       625       1,380       2,005       257       2004       (m )
2801 Red Lion Road
  Philadelphia, PA             950       5,916       88       964       5,990       6,954       1,317       2005       (m )
200 Cascade Drive — Bldg 1
  Allentown, PA             2,133       17,562       913       2,769       17,838       20,608       835       2007       (m )
200 Cascade Drive — Bldg 2
  Allentown, PA             310       2,268       106       316       2,369       2,684       88       2007       (m )
3240 S.78th Street
  Philadelphia, PA             515       1,245       71       540       1,291       1,831       135       2005       (m )
Phoenix
                                                                                   
1045 South Edward Drive
  Tempe, AZ             390       2,160       86       394       2,242       2,636       495       1999       (m )
46 N. 49th Ave
  Phoenix, AZ             283       1,704       718       283       2,422       2,706       572       2002       (m )
10220 S. 51st Street
  Phoenix, AZ             400       1,493       184       406       1,671       2,077       245       2004       (m )
50 South 56th Street
  Chandler, AZ             1,200       3,333       (31 )     1,207       3,294       4,502       353       2004       (m )
4701 W. Jefferson
  Phoenix, AZ             926       2,195       628       929       2,820       3,749       515       2005       (m )
7102 W. Roosevelt
  Phoenix, AZ             1,613       6,451       984       1,620       7,428       9,048       418       2006       (m )
4137 West Adams Street
  Phoenix, AZ             990       2,661       146       1,033       2,764       3,797       148       2006       (m )

S-23


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
245 W Lodge
  Tempe, AZ             898       3,066       37       907       3,095       4,001       92       2007       (m )
Salt Lake City
                                                                                   
512 Lawndale Drive(i)
  Salt Lake City, UT             2,705       15,749       2,924       2,705       18,672       21,377       5,382       1997       (m )
1270 West 2320 South
  West Valley, UT             138       784       203       143       983       1,126       268       1998       (m )
1275 West 2240 South
  West Valley, UT             395       2,241       473       408       2,702       3,109       755       1998       (m )
1288 West 2240 South
  West Valley, UT             119       672       147       123       816       938       254       1998       (m )
2235 South 1300 West
  West Valley, UT             198       1,120       259       204       1,373       1,577       427       1998       (m )
1293 West 2200 South
  West Valley, UT             158       896       69       163       960       1,124       231       1998       (m )
1279 West 2200 South
  West Valley, UT             198       1,120       47       204       1,161       1,365       289       1998       (m )
1272 West 2240 South
  West Valley, UT             336       1,905       247       347       2,141       2,488       514       1998       (m )
1149 West 2240 South
  West Valley, UT             217       1,232       99       225       1,324       1,549       331       1998       (m )
1142 West 2320 South
  West Valley, UT             217       1,232       88       225       1,313       1,538       337       1998       (m )
1152 West 2240 South
  West Valley, UT             2,067             3,549       2,114       3,503       5,617       657       2000       (m )
369 Orange Street
  Salt Lake City, UT             600       2,855       163       606       3,012       3,618       430       2003       (m )
2323 South 900 W
  Salt Lake City, UT             886       2,995       59       898       3,041       3,940       432       2006       (m )
9140 South 150 East-Eckman
  Sandy City, UT             1,417       3,668       189       1,580       3,694       5,274       248       2006       (m )
4625 West 1730 South
  Salt Lake City, UT             903       4,005       20       907       4,021       4,928       215       2006       (m )
1815-1957 South 4650 West
  Salt Lake City, UT             1,707       10,873       170       1,713       11,037       12,750       510       2006       (m )
2100 Alexander Street
  West Valley, UT             373       1,675       (2 )     376       1,670       2,046       38       2007       (m )
2064 Alexander Street
  West Valley, UT             864       2,771       (9 )     869       2,758       3,626       76       2007       (m )
Bard Access System -5425 Amelia Earhart
  Salt Lake City, UT             615       2,461       43       628       2,491       3,119       8       2007       (m )
San Diego
                                                                                   
16275 Technology Drive
  San Diego, CA             2,848       8,641       42       2,859       8,672       11,531       706       2005       (m )
6305 El Camino Real
  Carlsbad, CA             1,590       6,360       214       1,590       6,574       8,163       345       2006       (m )
8572 Spectrum Lane
  San Diego, CA             806       3,225       402       807       3,626       4,433       89       2007       (m )
13100 Gregg St
  Poway, CA             1,040       4,160       271       1,073       4,399       5,471       115       2007       (m )
2325 Camino Vida Roble
  Carlsbad, CA             1,441       1,239       42       1,446       1,276       2,722       105       2006       (m )
2335 Camino Vida Roble
  Carlsbad, CA             817       762       100       821       858       1,679       84       2006       (m )
2345 Camino Vida Roble
  Carlsbad, CA             562       456       28       565       481       1,046       51       2006       (m )
2355 Camino Vida Roble
  Carlsbad, CA             481       365       59       483       422       905       49       2006       (m )
2365 Camino Vida Roble
  Carlsbad, CA             1,098       630       9       1,102       634       1,737       86       2006       (m )
2375 Camino Vida Roble
  Carlsbad, CA             1,210       874       121       1,214       991       2,205       103       2006       (m )

S-24


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
6451 El Camino Real
  Carlsbad, CA             2,885       1,931       52       2,895       1,973       4,868       197       2006       (m )
Southern New Jersey
                                                                                   
4 Springdale Road(d)
  Cherry Hill, NJ             332       1,853       1,291       332       3,144       3,476       733       1998       (m )
8 Springdale Road
  Cherry Hill, NJ             258       1,436       854       258       2,290       2,548       580       1998       (m )
2050 Springdale Road
  Cherry Hill, NJ             277       1,545       1,052       277       2,597       2,874       599       1998       (m )
16 Springdale Road
  Cherry Hill, NJ             240       1,336       134       240       1,471       1,710       350       1998       (m )
5 Esterbrook Lane
  Cherry Hill, NJ             240       1,336       236       240       1,572       1,812       368       1998       (m )
2 Pin Oak Lane
  Cherry Hill, NJ             314       1,757       810       314       2,567       2,881       658       1998       (m )
28 Springdale Road
  Cherry Hill, NJ             190       1,060       213       190       1,273       1,463       304       1998       (m )
3 Esterbrook Lane
  Cherry Hill, NJ             198       1,102       486       198       1,588       1,786       371       1998       (m )
26 Springdale Road
  Cherry Hill, NJ             226       1,257       589       226       1,846       2,072       455       1998       (m )
1 Keystone Ave
  Cherry Hill, NJ             218       1,223       963       218       2,186       2,404       515       1998       (m )
21 Olnev Ave
  Cherry Hill, NJ             68       380       75       68       455       523       106       1998       (m )
19 Olnev Ave
  Cherry Hill, NJ             200       1,119       1,130       200       2,249       2,449       483       1998       (m )
2 Keystone Ave
  Cherry Hill, NJ             214       1,194       551       214       1,746       1,959       471       1998       (m )
18 Olnev Ave
  Cherry Hill, NJ             247       1,382       515       247       1,896       2,143       418       1998       (m )
2030 Springdale Rod
  Cherry Hill, NJ             523       2,914       1,389       523       4,304       4,826       1,118       1998       (m )
111 Whittendale Drive
  Morrestown, NJ             522       2,916       130       522       3,046       3,568       636       2000       (m )
9 Whittendale
  Morrestown, NJ             337       1,911       108       343       2,013       2,356       335       2001       (m )
1931 Olney Road
  Cherry Hill, NJ             262       1,486       117       267       1,598       1,865       217       2002       (m )
7851 Airport
  Pennsauken, NJ             160       508       382       163       888       1,050       210       2003       (m )
103 Central
  Mt. Laurel, NJ             610       1,847       1,542       619       3,380       3,999       855       2003       (m )
7890 Airport Hwy/7015 Central
  Pennsauken, NJ             300       989       1,062       425       1,926       2,351       714       2006       (m )
999 Grand Avenue
  Hammonton, NJ     (w )     969       8,793       713       979       9,495       10,475       1,541       2005       (m )
600 Creek Road
  Delanco, NJ             2,125       6,504       4       2,126       6,507       8,633       419       2007       (m )
1070 Thomas Busch Memorial Hwy
  Pennsauken, NJ             1,054       2,278       65       1,084       2,313       3,397       151       2007       (m )
1601 Schlumberger Drive
  Moorestown, NJ             560       2,240       272       608       2,464       3,072       61       2007       (m )
St. Louis
                                                                                   
8921-8971 Fost Avenue
  Hazelwood, MO             431       2,479       68       431       2,547       2,979       856       1994       (m )
9043-9083 Frost Avenue
  Hazelwood, MO             319       1,838       712       319       2,550       2,869       815       1994       (m )

S-25


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
10431-10449 Midwest Industrial Blvd
  Olivette, MO             237       1,360       555       237       1,915       2,152       766       1994       (m )
10751 Midwest Industrial Boulevard
  Olivette, MO             193       1,119       368       194       1,487       1,681       589       1994       (m )
6951 N Hanley(d)
  Hazelwood, MO             405       2,295       1,382       419       3,663       4,082       998       1996       (m )
1037 Warson — Bldg A
  St. Louis, MO             246       1,359       623       251       1,977       2,228       260       2002       (m )
1037 Warson — Bldg B
  St. Louis, MO             380       2,103       1,730       388       3,825       4,212       487       2002       (m )
1037 Warson — Bldg C
  St. Louis, MO             303       1,680       1,224       310       2,897       3,207       447       2002       (m )
1037 Warson — Bldg D
  St. Louis, MO             353       1,952       766       360       2,711       3,071       341       2002       (m )
6821-6857 Hazelwood Ave
  Berkeley, MO             985       6,205       775       985       6,979       7,965       1,073       2003       (m )
13701 Rider Trail North
  Earth City, MO             800       2,099       653       804       2,748       3,552       545       2003       (m )
1908-2000 Innerbelt(d)
  Overland, MO             1,590       9,026       1,057       1,591       10,083       11,673       1,951       2004       (m )
8449-95 Mid-County Industrial
  Vinita Park, MO             520       1,590       222       520       1,812       2,332       384       2004       (m )
84104-76 Mid County Industrial
  Vinita Park, MO             540       2,109       132       540       2,241       2,781       440       2004       (m )
2001 Innerbelt Business Center
  Overland, MO             1,050       4,451       256       1,050       4,707       5,757       910       2004       (m )
9060 Latty Avenue
  Berkeley, MO             687       1,947       43       694       1,984       2,678       480       2006       (m )
21-25 Gateway Commerce Center
  Edwardsville, IL     (x )     1,874       31,958       371       1,928       32,275       34,203       1,230       2006       (m )
Cenveno Building — 601 Cannonball
  O’Fallon, MO             584       2,336       34       595       2,359       2,954       8       2007       (m )
Tampa
                                                                                   
5313 Johns Road
  Tampa, FL             204       1,159       219       257       1,325       1,582       342       1997       (m )
5525 Johns Road
  Tampa, FL             192       1,086       435       200       1,513       1,713       357       1997       (m )
5709 Johns Road
  Tampa, FL             192       1,086       168       200       1,246       1,446       332       1997       (m )
5711 Johns Road
  Tampa, FL             243       1,376       183       255       1,546       1,801       388       1997       (m )
5453 W Waters Avenue
  Tampa, FL             71       402       138       82       529       611       142       1997       (m )
5455 W Waters Avenue
  Tampa, FL             307       1,742       387       326       2,111       2,436       537       1997       (m )
5553 W Waters Avenue
  Tampa, FL             307       1,742       267       326       1,990       2,316       517       1997       (m )
5501 W Waters Avenue
  Tampa, FL             154       871       133       142       1,015       1,157       290       1997       (m )
5503 W Waters Avenue
  Tampa, FL             71       402       41       66       449       514       118       1997       (m )
5555 W Waters Avenue
  Tampa, FL             213       1,206       143       221       1,340       1,562       369       1997       (m )

S-26


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
5557 W Waters Avenue
  Tampa, FL             59       335       47       62       379       442       100       1997       (m )
5463 W Waters Avenue
  Tampa, FL             497       2,751       782       560       3,470       4,030       883       1998       (m )
5461 W Waters
  Tampa, FL             261             1,406       265       1,402       1,667       297       1998       (m )
5481 W. Waters Avenue
  Tampa, FL             558             2,283       561       2,280       2,841       492       1999       (m )
4515-4519 George Road
  Tampa, FL             633       3,587       636       640       4,216       4,856       743       2001       (m )
6089 Johns Road
  Tampa, FL     (y )     180       987       104       186       1,086       1,271       166       2004       (m )
6091 Johns Road
  Tampa, FL     (y )     140       730       51       144       777       921       107       2004       (m )
6103 Johns Road
  Tampa, FL     (y )     220       1,160       75       226       1,230       1,455       165       2004       (m )
6201 Johns Road
  Tampa, FL     (y )     200       1,107       88       205       1,190       1,395       176       2004       (m )
6203 Johns Road
  Tampa, FL     (y )     300       1,460       105       311       1,555       1,865       265       2004       (m )
6205 Johns Road
  Tampa, FL     (y )     270       1,363       46       278       1,402       1,679       123       2004       (m )
6101 Johns Road
  Tampa, FL             210       833       179       216       1,006       1,222       147       2004       (m )
4908 Tampa West Blvd
  Tampa, FL             2,622       8,643       36       2,635       8,666       11,301       1,072       2005       (m )
7201-7245 Bryan Dairy Road(d)
  Largo, FL             1,895       5,408       525       1,909       5,918       7,827       466       2006       (m )
11701 Belcher Road South
  Largo, FL             1,657       2,768       314       1,669       3,070       4,739       318       2006       (m )
4900-4914 Creekside Drive(h)
  Clearwater, FL             3,702       7,338       301       3,730       7,611       11,341       718       2006       (m )
4908 Creekside Drive
  Clearwater, FL             506       645       329       509       971       1,480       82       2006       (m )
12345 Starkey Road
  Largo, FL             898       2,078       292       905       2,363       3,268       168       2006       (m )
Toronto
                                                                                   
114 Packham Rd — Brooks Industries
  Stratford, Ontario             1,000       3,526       55       1,012       3,569       4,581       281       2007       (m )
135 Dundas Street
  Cambridge Ontario, Canada             3,128       4,958       138       3,179       5,045       8,224       1,344       2005       (m )
678 Erie Street
  Stratford Ontario, Canada             786       557       78       829       592       1,421       459       2005       (m )
777 Bayly Street West
  Ajax Ontario, Canada             7,224       13,156       4,119 (z)     8,707       15,792       24,499       971       2006       (m )
Other
                                                                                   
3501 Maple Street
  Abilene, TX             67       1,057       1,422       266       2,280       2,546       1,140       1994       (m )
4200 West Harry Street(e)
  Wichita, KS             193       2,224       1,777       532       3,662       4,194       2,162       1994       (m )
5050 Kendrick Court
  Grand Rapids, MI             1,721       11,433       7,230       1,721       18,663       20,383       5,829       1994       (m )
5015 52nd Street SE
  Grand Rapids, MI             234       1,321       141       234       1,462       1,696       544       1994       (m )
2250 Delaware Ave
  Des Moines, IA             277       1,609       612       277       2,222       2,499       559       1998       (m )
9601A Dessau Road
  Austin, TX             255             2,184       366       2,073       2,439       645       1999       (m )
9601B Dessau Road
  Austin, TX             248             1,855       355       1,747       2,102       332       2000       (m )

S-27


 

                                                                                     
                          (c)
                                     
                          Costs
                                     
                          Capitalized
                                     
                          Subsequent to
          Gross Amount Carried
             
                          Acquisition or
          At Close of Period 12/31/07              
              (b)
    Completion
                      Accumulated
    Year
    Depreciable
 
    Location
  (a)
    Initial Cost     and Valuation
          Building and
          Depreciation
    Acquired/
    Lives
 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/07     Constructed     (Years)  
        (Dollars in thousands)  
 
9601C Dessau Road
  Austin, TX             248             2,186       355       2,079       2,434       855       1999       (m )
Lake Point IV
  Orlando, FL             909       4,613       129       920       4,731       5,651       498       2005       (m )
Ozburn Hessey Logistics — BTS
  Winchester, VA             2,320               10,821       2,401       10,740       13,141       151       2007       (m )
6266 Hurt Road
  Horn Lake, MS             427             3,270       427       3,271       3,697       459       2004       (m )
6266 Hurt Road Building B
  Horn Lake, MS                         868       99       769       868       92       2004       (m )
7601 NW 107th Terrace
  Kansas City, MO             746       4,712       50       750       4,758       5,508       987       2005       (m )
12626 Silicon Drive
  San Antonio, TX             768       3,448       22       779       3,459       4,238       432       2005       (m )
3100 Pinson Valley Parkway
  Birmingham, AL             303       742       21       310       756       1,066       84       2005       (m )
1021 W. First Street, Hwy 93
  Sumner, IA             99       2,540       20       100       2,559       2,659       365       2005       (m )
1245 N. Hearne Avenue
  Shreveport, LA             99       1,263       33       102       1,293       1,395       169       2005       (m )
2315 NW 21st Place
  Portland, OR             301       1,247       39       309       1,278       1,587       110       2005       (m )
10330 I Street
  Omaha, NE             1,808       8,340       15       1,809       8,354       10,163       1,115       2006       (m )
Kimberly Clark BTS
  Johnson County, KS                         17,518       25       17,492       17,518       57       2007       (m )
                                                                                     
Redevelopments / Developments / Developable Land(k)
                110,947       698       64,480 (z)     116,478       59,655       176,134       652                  
                                                                                     
                $ 639,306     $ 2,047,081     $ 608,144     $ 661,619 (1)   $ 2,632,920 (1)   $ 3,294,539     $ 512,781 (l)                
                                                                                     

S-28


 

 
NOTES:
 
(a) See description of encumbrances in Note 5 to Notes to Consolidated Financial Statements.
 
(b) Initial cost for each respective property is tangible purchase price allocated in accordance with SFAS No. 141.
 
(c) Improvements are net of write-off of fully depreciated assets.
 
(d) Comprised of two properties.
 
(e) Comprised of three properties.
 
(f) Comprised of four properties.
 
(g) Comprised of five properties.
 
(h) Comprised of eight properties.
 
(i) Comprised of 28 properties.
 
(j) Not used.
 
(k) These properties represent developable land and redevelopments that have not been placed in service.
 
(l)
 
                         
                Gross Amount
 
    Amounts
          Carried At
 
    Included
    Amounts Within
    Close of Period
 
    in Real Estate
    Net Investment
    December 31,
 
    Held for Sale     in Real Estate     2007  
 
Land
  $ 6,096     $ 655,523     $ 661,619  
Buildings & Improvements
    33,136       2,599,784       2,632,920  
Accumulated Depreciation
    (2,800 )     (509,981 )     (512,781 )
                         
Subtotal
    36,432       2,745,326       2,781,758  
Construction in Progress
          70,961       70,961  
                         
Net Investment in Real Estate
    36,432       2,816,287       2,852,719  
                         
Leasing Commissions, Net, Deferred Leasing Intangibles, Net and Deferred Rent Receivable, Net
    1,443                  
                         
Total at December 31, 2007
  $ 37,875                  
                         
 
(m) Depreciation is computed based upon the following estimated lives:
 
     
Buildings and Improvements
  8 to 50 years
Tenant Improvements, Leasehold Improvements
  Life of lease
 
(n) This property collateralizes a $2.8 million mortgage loan which matures on May 1, 2016.
 
(o) This property collateralizes a $14.7 million mortgage loan which matures on December 1, 2010.
 
(p) This property collateralizes a $5.0 million mortgage loan which matures on December 1, 2019.
 
(q) This property collateralizes a $1.4 million mortgage loan which matures on January 1, 2013.
 
(r) These properties collateralize a $1.1 million mortgage loan which matures on September 1, 2009.
 
(s) This property collateralizes a $2.4 million mortgage loan which matures on January 1, 2012.
 
(t) This property collateralizes a $1.7 million mortgage loan which matures on June 1, 2014.
 
(u) This property collateralizes a $5.1 million mortgage loan which matures on December 1, 2019.
 
(v) This property collateralizes a $1.8 million mortgage loan which matures on September 30, 2024.
 
(w) This property collateralizes a $6.4 million mortgage loan which matures on March 1, 2011.
 
(x) This property collateralizes a $13.8 million mortgage loan and a $11.7 million mortgage loan which both mature on January 1, 2014.
 
(y) These properties collateralize a $5.7 million mortgage loan which matures on July 1, 2009.
 
(z) Includes foreign currency translation adjustments.


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At December 31, 2007, the aggregate cost of land and buildings and equipment for federal income tax purpose was approximately $3.1 billion (excluding construction in progress.)
 
The changes in total real estate assets, including real estate held for sale, for the three years ended December 31, 2007 are as follows:
 
                         
    2007     2006     2005  
    (Dollars in thousands)  
 
Balance, Beginning of Year
  $ 3,331,382     $ 3,278,740     $ 2,910,468  
Acquisition of Real Estate Assets
    440,664       551,860       678,528  
Construction Costs and Improvements
    237,135       211,711       196,500  
Disposition of Real Estate Assets
    (619,785 )     (693,159 )     (473,743 )
Write-off of Fully Depreciated Assets
    (23,896 )     (17,770 )     (33,013 )
                         
Balance, End of Year
  $ 3,365,500     $ 3,331,382     $ 3,278,740  
                         
 
The changes in accumulated depreciation, including accumulated depreciation for real estate held for sale, for the three years ended December 31, 2007 are as follows:
 
                         
    2007     2006     2005  
 
Balance, Beginning of Year
  $ 473,882     $ 412,039     $ 381,297  
Depreciation for Year
    121,714       121,347       99,338  
Disposition of Assets
    (58,919 )     (41,734 )     (35,946 )
Write-off of Fully Depreciated Assets
    (23,896 )     (17,770 )     (32,650 )
                         
Balance, End of Year
  $ 512,781     $ 473,882     $ 412,039  
                         


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SIGNATURES
 
Pursuant to the requirements of Section 13 or 15 (d) 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/  Michael W. Brennan
Michael W. Brennan
President, Chief Executive Officer and Director
(Principal Executive Officer)
 
Date: February 25, 2008
 
  By: 
/s/  Michael J. Havala
Michael J. Havala
Chief Financial Officer
(Principal Financial Officer)
 
Date: February 25, 2008
 
  By: 
/s/  Scott A. Musil
Scott A. Musil
Chief Accounting Officer
(Principal Accounting Officer)
 
Date: February 25, 2008
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
 
             
Signature
 
Title
 
Date
 
         
/s/  Jay H. Shidler

Jay H. Shidler
  Chairman of the Board of Directors   February 25, 2008
         
/s/  Michael W. Brennan

Michael W. Brennan
  President, Chief Executive Officer and Director   February 25, 2008
         
/s/  John Brenninkmeijer

John Brenninkmeijer
  Director   February 25, 2008
         
/s/  Michael G. Damone

Michael G. Damone
  Director of Strategic Planning and Director   February 25, 2008
         
/s/  Kevin W. Lynch

Kevin W. Lynch
  Director   February 25, 2008


S-31


 

             
Signature
 
Title
 
Date
 
         
/s/  Robert D. Newman

Robert D. Newman
  Director   February 20, 2008
         
/s/  John E. Rau

John E. Rau
  Director   February 25, 2008
         
/s/  Robert J. Slater

Robert J. Slater
  Director   February 25, 2008
         
/s/  W. Edwin Tyler

W. Edwin Tyler
  Director   February 25, 2008
         
/s/  J. Steven Wilson

J. Steven Wilson
  Director   February 25, 2008


S-32