FIRST INDUSTRIAL REALTY TRUST INC - Quarter Report: 2010 September (Form 10-Q)

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

Form 10-Q

 

 

 

 

 

 

Commission file number 1-13102

 

 

 

 

First Industrial Realty Trust, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

311 S. Wacker Drive, Suite 3900, Chicago, Illinois 60606

(Address of Principal Executive Offices)

 

(312) 344-4300

(Registrant’s Telephone number, including area code)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No o

 

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o     No o

 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

(Do not check if a smaller reporting company)

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o     No þ

 

 

Number of shares of Common Stock, $.01 par value, outstanding as of November 3, 2010: 63,771,063.

 

 

 

FIRST INDUSTRIAL REALTY TRUST, INC.

 

Form 10-Q

 

For the Period Ended September 30, 2010

 

INDEX

 

 

 

FIRST INDUSTRIAL REALTY TRUST, INC.

CONSOLIDATED BALANCE SHEETS

 

 

 

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

FIRST INDUSTRIAL REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

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

FIRST INDUSTRIAL REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

 

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

FIRST INDUSTRIAL REALTY TRUST, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

 

 

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

FIRST INDUSTRIAL REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

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

FIRST INDUSTRIAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
(Unaudited)

 

 

First Industrial Realty Trust, Inc. (the “Company”) was organized in the state of Maryland on August 10, 1993. The Company is a real estate investment trust (“REIT”) as defined in the Internal Revenue Code of 1986 (the “Code”). Unless the context otherwise requires, the terms “Company,” “we,” “us,” and “our” refer to First Industrial Realty Trust, Inc., First Industrial, L.P. and their other controlled subsidiaries. We refer to our operating partnership, First Industrial, L.P., as the “Operating Partnership.” Effective September 1, 2009, our taxable real estate investment trust subsidiary, First Industrial Investment, Inc. (the “old TRS”) merged into First Industrial Investment II, LLC (“FI LLC”), which is wholly owned by the Operating Partnership. Immediately thereafter, certain assets and liabilities of FI LLC were contributed to a new subsidiary, FR Investment Properties, LLC (“FRIP”). FRIP is 1% owned by FI LLC and 99% owned by a new taxable real estate investment trust subsidiary, First Industrial Investment Properties, Inc. (the “new TRS,” which, collectively with the old TRS and certain wholly owned taxable real estate investment trust subsidiaries of FI LLC, will be referred to as the “TRSs”), which is wholly owned by FI LLC.

 

We began operations on July 1, 1994. Our operations are conducted primarily through the Operating Partnership, of which we are the sole general partner with an approximate 92.2% and 89.7% ownership interest at September 30, 2010 and September 30, 2009, respectively, and through the old TRS prior to September 1, 2009, and through FI LLC, the new TRS and FRIP subsequent to September 1, 2009. We also conduct operations through other partnerships, corporations, and limited liability companies, the operating data of which, together with that of the Operating Partnership, FI LLC, FRIP and the TRSs, is consolidated with that of the Company as presented herein. Noncontrolling interest at September 30, 2010 and September 30, 2009 of approximately 7.8% and 10.3%, respectively, represents the aggregate partnership interest in the Operating Partnership held by the limited partners thereof.

 

We also own or owned noncontrolling equity interests in, and provide or provided various services to, seven joint ventures whose purpose is to invest in industrial properties (the “2003 Net Lease Joint Venture,” the “2005 Development/Repositioning Joint Venture,” the “2005 Core Joint Venture,” the “2006 Net Lease Co-Investment Program,” the “2006 Land/Development Joint Venture,” the “2007 Canada Joint Venture,” and the “2007 Europe Joint Venture” together the “Joint Ventures”). The 2007 Europe Joint Venture does not own any properties. The Joint Ventures are accounted for under the equity method of accounting. The operating data of our Joint Ventures is not consolidated with that of the Company as presented herein. On May 25, 2010, we sold our interest in the 2006 Net Lease Co-Investment Program to our joint venture partner. On August 5, 2010, we sold our interest in the 2005 Development/Repositioning Joint Venture, the 2005 Core Joint Venture, the 2006 Land/Development Joint Venture and the 2007 Canada Joint Venture to our joint venture partner. See Note 4 for more information on the Joint Ventures.

 

As of September 30, 2010, we owned 778 industrial properties located in 28 states in the United States and one province in Canada, containing an aggregate of approximately 68.9 million square feet of gross leasable area (“GLA”).

 

 

The accompanying unaudited interim financial statements have been prepared in accordance with the accounting policies described in the financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2009 (“2009 Form 10-K”) and should be read in conjunction with such financial statements and related notes. The 2009 year end consolidated balance sheet data included in this Form 10-Q filing was derived from the audited financial statements in our 2009 Form 10-K, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). The following notes to these interim financial statements highlight significant changes to the notes included in the

FIRST INDUSTRIAL REALTY TRUST, INC.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

December 31, 2009 audited financial statements included in our 2009 Form 10-K and present interim disclosures as required by the Securities and Exchange Commission. In order to conform with GAAP, we, in preparation of our financial statements, are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of September 30, 2010 and December 31, 2009, and the reported amounts of revenues and expenses for the three and nine months ended September 30, 2010 and September 30, 2009. Actual results could differ from those estimates. In our opinion, the accompanying unaudited interim financial statements reflect all adjustments necessary for a fair statement of our financial position as of September 30, 2010 and December 31, 2009, and the results of our operations and comprehensive income for each of the three and nine months ended September 30, 2010 and September 30, 2009, and our cash flows for each of the nine months ended September 30, 2010 and September 30, 2009, and all adjustments are of a normal recurring nature.

 

Income Taxes

 

As of December 31, 2008, we had paid approximately $1,400 (representing tax and interest for the years 1997-2000) to the State of Michigan regarding business loss carryforwards the appropriateness of which was the subject of litigation initiated by us. On December 11, 2007, the Michigan Court of Claims rendered a decision against us regarding the business loss carryforwards. Also, the court ruled against us on an alternative position involving Michigan’s Capital Acquisition Deduction. We filed an appeal to the Michigan Appeals Court in January 2008; however, as a result of the lower court’s decision, an additional approximately $800 (representing tax and interest for the year 2001) had been accrued through June 30, 2009 for both tax and financial statement purposes. On August 18, 2009, the Michigan Appeals Court issued a decision in our favor on the business loss carryforward issue. The Michigan Department of Treasury appealed the decision to the Michigan Supreme Court on September 29, 2009; however, we believed there was a very low probability that the Michigan Supreme Court would accept the case. Therefore, in September 2009 we reversed our accrual of $800 (related to the 2001 tax year) and set up a receivable of $1,400 for the amount paid in 2006 (related to the 1997-2000 tax years), resulting in an aggregate reversal of prior tax expense of approximately $2,200. On April 23, 2010, the Michigan Supreme Court reversed the decision of the Michigan Appeals Court and reinstated the decision of the Michigan Court of Claims. Based on the most recent ruling of the Michigan Supreme Court, we reversed the receivable of $1,400 and paid approximately $800, for a total of approximately $2,200 of tax expense for the nine months ended September 30, 2010.

 

Recent Accounting Pronouncements

 

In June 2009, the Financial Accounting Standards Board (the “FASB”) issued new guidance which revises and updates previously issued guidance related to variable interest entities. This new guidance, which became effective January 1, 2010, revises the previous guidance by eliminating the exemption for qualifying special purpose entities, by establishing a new approach for determining who should consolidate a variable-interest entity and by changing when it is necessary to reassess who should consolidate a variable- interest entity. We adopted this new guidance on January 1, 2010. However, the adoption of this guidance did not impact our financial position or results of operations.

 

 

Acquisitions

 

During the nine months ended September 30, 2010, we acquired three industrial properties comprising approximately 0.5 million square feet of GLA, including one industrial property purchased from the 2005 Development/Repositioning Joint Venture (see Note 4). The purchase price of these acquisitions totaled approximately $22,408, excluding costs incurred in conjunction with the acquisition of the industrial properties.

FIRST INDUSTRIAL REALTY TRUST, INC.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

Intangible Assets Subject to Amortization in the Period of Acquisition

 

The fair value of in-place leases, above market leases and tenant relationships recorded due to real estate properties acquired for the nine months ended September 30, 2010 and included in deferred leasing intangibles is as follows:

 

 

The weighted average life in months of in-place leases, above market leases and tenant relationships recorded as a result of the real estate properties acquired for the nine months ended September 30, 2010 is as follows:

 

 

Sales and Discontinued Operations

 

During the nine months ended September 30, 2010, we sold nine industrial properties comprising approximately 0.8 million square feet of GLA and several land parcels. Gross proceeds from the sales of the nine industrial properties and several land parcels were approximately $62,781. The gain on sale of real estate was approximately $10,426, of which $9,568 is shown in discontinued operations. The nine sold industrial properties and one land parcel that received ground rental revenues meet the criteria to be included in discontinued operations. Therefore the results of operations and gain on sale of real estate for the nine sold industrial properties and the land parcel that received ground rental revenues are included in discontinued operations. The results of operations and gain on sale of real estate for the several land parcels that do not meet the criteria to be included in discontinued operations are included in continuing operations.

 

At September 30, 2010, we had two industrial properties comprising approximately 0.1 million square feet of GLA and several land parcels held for sale. The results of operations of the two industrial properties held for sale at September 30, 2010 are included in discontinued operations. There can be no assurance that such industrial properties or land parcels held for sale will be sold.

 

Income from discontinued operations, net of income taxes, for the nine months ended September 30, 2009 reflects the results of operations of the nine industrial properties and one land parcel that received ground rental revenues that were sold during the nine months ended September 30, 2010, the results of operations of 15 industrial properties that were sold during the year ended December 31, 2009, the results of operations of the two industrial properties identified as held for sale at September 30, 2010 and the gain on sale of real estate relating to 11 industrial properties that were sold during the nine months ended September 30, 2009.

FIRST INDUSTRIAL REALTY TRUST, INC.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

The following table discloses certain information regarding the industrial properties included in our discontinued operations for the three and nine months ended September 30, 2010 and September 30, 2009:

 

 

At September 30, 2010 and December 31, 2009, we had mortgage notes receivables outstanding of approximately $58,873 and $60,029 net of a discount of $399 and $449, respectively, issued primarily in conjunction with certain property sales for which we provided seller financing, which is included as a component of Prepaid Expenses and Other Assets, Net. At September 30, 2010 and December 31, 2009, the fair values of the mortgage notes receivables were $60,121 and $56,812, respectively. The fair values of our mortgage notes receivables were determined by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

 

Impairment Charges

 

As of September 30, 2010, management anticipated an amendment to its $500,000 revolving credit facility (as amended, the “Unsecured Line of Credit”) (see Note 12). Based on the anticipated amendment, management reassessed the holding period of a pool of real estate assets including 195 industrial properties comprising approximately 16.4 million square feet of GLA and land parcels comprising approximately 724 acres based on its intentions to sell those assets and the likelihood of possible outcomes of sales which existed at the balance sheet date. Management evaluated whether that pool of real estate assets should be classified as “held for sale” at September 30, 2010 but concluded that the pool of assets did not meet the “held for sale” criteria because management did not have the authority to sell and were not committed to a plan to sell until the formal amendment to the Unsecured Line of Credit had been executed. As a result of this reassessment, the Company determined that 129 of the industrial properties comprising approximately 10.6 million square feet of GLA and land parcels comprising approximately 503 acres were impaired (collectively referred to as the “Impaired Real Estate Assets”) and as such, the Company recorded an aggregate impairment charge of approximately $163,862 during the three months ended September 30, 2010. With respect to each of the impaired industrial properties and parcels of land comprising 474 acres, the impairment charge was calculated as the excess of the carrying value of the properties and land parcels over the fair value of such assets since such assets did not qualify to be classified as “held for sale” as of September 30, 2010. With respect to parcels of land comprising 29 acres, the impairment charge was calculated as the excess of the carrying value over the fair value less costs to sell, since those land parcels met the criteria to be classified as “held for sale” as of September 30, 2010. The valuation of the 129 impaired industrial properties comprising approximately 10.6 million square feet of GLA and land parcels comprising approximately 474 acres was determined using widely accepted valuation techniques including internal valuations of real estate and/or discounted cash flow analysis on expected cash flows.

 

In addition, all of the 195 industrial properties comprising approximately 16.4 million square feet of GLA and land parcels comprising approximately 695 acres in the pool will qualify to be classified as “held for sale” in the financial statements of the Company for the fiscal quarter ended December 31, 2010. As a result, the Company estimates that it will record a non-cash impairment charge of approximately $3,000 with respect to 11 properties

FIRST INDUSTRIAL REALTY TRUST, INC.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

comprising approximately 1.6 million square feet of GLA, as these properties will be considered impaired under held for sale accounting. The Company also estimates that it will record a non-cash impairment charge of approximately $11,000 with respect to 140 industrial properties comprising approximately 12.2 million square feet of GLA and those parcels of land comprising 474 acres in the pool relating to the estimated costs to sell because they will be classified as “held for sale”.

 

Additionally, during the first quarter of 2010 we recorded an impairment charge in the amount of $9,155 related to a certain property comprised of 0.3 million square feet of GLA located in Grand Rapids, Michigan (“Grand Rapids Property”). The non-cash impairment charge related to the Grand Rapids Property was based upon the difference between the fair value of the property and its carrying value. The valuation of the Grand Rapids Property was determined using widely accepted valuation techniques including discounted cash flow analysis on expected cash flows and the income capitalization approach considering prevailing market capitalization rates.

 

We adopted the fair value measurement provisions as of January 1, 2009, for the impairment of long-lived assets recorded at fair value. The new guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

 

The following table presents information about our impairment charges that were measured on a fair value basis for the nine months ended September 30, 2010. The table indicates the fair value hierarchy of the valuation techniques we utilized to determine fair value.

 

 

 

On August 5, 2010, we sold our interests in the 2005 Development/Repositioning Joint Venture, the 2005 Core Joint Venture, the 2006 Land/Development Joint Venture and the 2007 Canada Joint Venture to our joint venture partner. In connection with this sale, we received approximately $5.0 million. As a result of this sale, we will no longer serve as asset manager for these ventures. Pursuant to the sale agreement, we are entitled to proceeds related to sales of certain assets (the “Sale Assets”), if the sale of such assets was consummated by a stated timeframe. The sale of one of the Sale Assets closed on August 30, 2010. In connection with the sale, we earned approximately $1.3 million in proceeds and a disposition fee of $68. Additionally, we are entitled to earn leasing and development fees related to certain assets identified at the time of sale within the sale agreement. We earned approximately $81 in leasing and development fees on transactions for the period August 6, 2010 to September 30, 2010. In connection with the sale, we wrote off our carrying value for the 2005 Development/Repositioning Joint Venture, the 2005 Core Joint Venture, the 2006 Land/Development Joint Venture and the 2007 Canada Joint Venture as well as $1,625 of unrealized loss recorded in Other Comprehensive Income (see Note 10) and recorded a $9,874 gain, which is included in Gain on Sale of Joint Venture Interests.

 

We continue to hold our 10% equity interest in the 2007 Europe Joint Venture. At September 30, 2010, the 2007 Europe Joint Venture does not own any properties.

 

On June 11, 2010, we purchased an industrial property from the 2005 Development/Repositioning Joint Venture for a purchase price of $14,627.

FIRST INDUSTRIAL REALTY TRUST, INC.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

At September 30, 2010, the 2003 Net Lease Joint Venture owned 10 industrial properties comprising approximately 5.1 million square feet of GLA. The 2003 Net Lease Joint Venture is considered a variable interest entity in accordance with the FASB’s guidance on the consolidation of variable interest entities. However, we continue to not be the primary beneficiary in this venture. As of September 30, 2010, our investment in the 2003 Net Lease Joint Venture is $3,076. Our maximum exposure to loss is equal to our investment plus any future contributions we make to the venture.

 

Pursuant to the buy/sell provision in the 2006 Net Lease Co-Investment Program’s governing agreement that our counterparty exercised on May 25, 2010, we sold our 15% interest in the real estate property assets in the 2006 Net Lease Co-Investment Program to our counterparty and received $4,541 in net proceeds. In connection with the sale, we wrote off our carrying value for the 2006 Net Lease Co-Investment Program and recorded a $852 gain, which is included in Equity in Loss of Joint Ventures.

 

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 three industrial properties (the “July 2007 Fund”). We do not own an equity interest in the July 2007 Fund. Effective September 2, 2009, we ceased to provide any services for two of the industrial properties in the July 2007 Fund and, effective May 24, 2010, we ceased to provide any services to the remaining industrial property in the July 2007 Fund.

 

At September 30, 2010 and December 31, 2009, we have receivables from the Joint Ventures and the July 2007 Fund of $1,566 and $1,218, respectively, which primarily relate to proceeds from the sale of one Sale Asset and development, leasing, property management and asset management fees due to us from the Joint Ventures and the July 2007 Fund. These receivable amounts are included in Prepaid Expenses and Other Assets, Net.

 

During the three and nine months ended September 30, 2010 and September 30, 2009, we invested the following amounts in, as well as received distributions and sale proceeds from, our Joint Ventures and recognized fees from disposition, leasing, development, property management and asset management services from our Joint Ventures and the July 2007 Fund in the following amounts:

 

FIRST INDUSTRIAL REALTY TRUST, INC.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

 

The following table discloses certain information regarding our indebtedness:

 

 

During the nine months ended September 30, 2010, we obtained the following mortgage loans:

 

 

For Mortgage Financings I, II, III and IV, early principal paydowns are prohibited for 36 months after loan origination. For Mortgage Financing V.1 through V.4 early principal paydowns are allowed at any payment due date. For Mortgage Financing VI, early principal paydowns are prohibited for 12 months after loan origination.

FIRST INDUSTRIAL REALTY TRUST, INC.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

Prepayment premiums typically decrease as the loan matures and range from 1% to 5% of the loan balance (or a yield maintenance amount).

 

As of September 30, 2010, mortgage and other loans payable are collateralized by, and in some instances cross-collateralized by, industrial properties with a net carrying value of $684,703 and one letter of credit.

 

On February 8, 2010, we closed on a tender offer in which we repurchased and retired certain of our senior unsecured debt prior to its maturity as described in the table below. In connection with these repurchases prior to maturity, we recognized $355 as gain on early retirement of debt for the nine months ended September 30, 2010, which is the difference between the repurchase amount and the principal amount retired, net of the pro rata write off of the unamortized debt issue discount, the unamortized loan fees, the unamortized settlement amount of the interest rate protection agreements and the professional services fees related to the repurchases of $1,547, $354, $(145) and $990, respectively.

 

On April 26, 2010, we redeemed and retired the remaining outstanding balance of our 2011 Notes at a redemption price of 105.97% of the principal amount, plus accrued and unpaid interest for the period March 15, 2010 to April 25, 2010. In connection with this redemption prior to maturity, we recognized $4,304 as loss on early retirement of debt in the second quarter of 2010, which is the difference between the purchase price and the principal amount redeemed, net of the pro rata write off of the unamortized debt issue discount, the unamortized loan fees, the unamortized settlement amount of the interest rate protection agreements and the professional services fees related to the redemption of $20, $70, $(13) and $1, respectively.

 

On August 17, 2010, we repurchased and retired a portion of our 2012 Notes prior to maturity. In connection with this repurchase prior to maturity, we recognized $20 as loss on early retirement of debt for the nine months ended September 30, 2010, which is the difference between the repurchase amount and the principal amount retired, net of the pro rata write off of the unamortized debt issue discount, the unamortized loan fees and the unamortized settlement amount of the interest rate protection agreements related to the repurchases of $19, $25 and $(24), respectively.

 

 

The following is a schedule of the stated maturities and scheduled principal payments as of September 30, 2010, of our indebtedness, exclusive of premiums and discounts, for the next five years ending December 31, and thereafter:

 

FIRST INDUSTRIAL REALTY TRUST, INC.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

The Unsecured Line of Credit and the indentures under which our senior unsecured indebtedness is, or may be, issued contain certain financial covenants, including, among other things, coverage ratios and limitations on our ability to incur total indebtedness and secured and unsecured indebtedness (see Note 12). Consistent with our prior practice, we will, in the future, continue to interpret and certify our performance under these covenants in a good faith manner that we deem reasonable and appropriate. However, these financial covenants are complex and there can be no assurance that these provisions would not be interpreted by our noteholders or lenders in a manner that could impose and cause us to incur material costs. Any violation of these covenants would subject us to higher finance costs and fees, or accelerated maturities. In addition, our credit facilities and senior debt securities contain certain cross-default provisions, which are triggered in the event that our other material indebtedness is in default. Under the Unsecured Line of Credit, an event of default can also occur if the lenders, in their good faith judgment, determine that a material adverse change has occurred which could prevent timely repayment or materially impair our ability to perform our obligations under the loan agreement. We believe that we were in compliance with our financial covenants as of September 30, 2010, and we anticipate that we will be able to operate in compliance with our financial covenants throughout 2010.

 

Fair Value

 

At September 30, 2010 and December 31, 2009, the fair value of our indebtedness was as follows:

 

 

The fair values of our mortgage and other 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 senior unsecured debt was estimated based upon quoted market prices for the same or similar issues. The fair value of the Unsecured Line of Credit was determined by discounting the future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining term, assuming no repayment until maturity.

 

 

Shares of Common Stock and Noncontrolling Interest:

 

During the nine months ended September 30, 2010, we issued 875,402 shares of the Company’s common stock under the direct stock purchase component of the Company’s Dividend Reinvestment and Direct Stock Purchase Plan (“DRIP”) for approximately $5,970. Under the terms of the DRIP, stockholders and non-stockholders may purchase shares at a discounted price, at our discretion, when the shares are issued and sold directly by us from authorized but unissued shares of the Company’s common stock, by making optional cash payments, subject to certain dollar thresholds.

 

On May 4, 2010, we entered into an agreement in which we may sell up to 10,000,000 shares of the Company’s common stock from time to time in “at-the-market” offerings (the “ATM”). During the three months ended September 30, 2010 we did not issue any shares of the Company’s common stock under the ATM. During the nine months ended September 30, 2010, we issued 548,704 shares of the Company’s common stock under the ATM for approximately $4,371, net of $89 paid to the sales agent. Under the terms of the ATM, sales are made primarily in transactions that are deemed to be “at-the-market” offerings, including sales made directly on the New York Stock Exchange or sales made through a market maker other than on an exchange or by privately negotiated transactions.

FIRST INDUSTRIAL REALTY TRUST, INC.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

During the nine months ended September 30, 2010, we awarded 23,567 shares of common stock to certain directors. The common stock shares had a fair value of approximately $128 upon issuance.

 

During the nine months ended September 30, 2010, 25,137 limited partnership interests in the Operating Partnership (“Units”) were converted into an equivalent number of shares of common stock, resulting in a reclassification of $294 of noncontrolling interest to First Industrial Realty Trust Inc.’s Stockholders’ Equity.

 

The following table summarizes the changes in Noncontrolling Interest for the nine months ended September 30, 2010 and September 30, 2009:

 

 

Restricted Stock:

 

During the nine months ended September 30, 2010, we awarded 573,198 shares of restricted common stock to certain employees. The restricted common stock had a fair value of approximately $3,336 on the date of approval by the Compensation Committee of the Board of Directors. The restricted common stock vests over a three year period. Compensation expense will be charged to earnings over the vesting period for the shares expected to vest.

 

We recognized $1,390 and $2,826 for the three months ended September 30, 2010 and September 30, 2009, respectively, and $4,667 and $10,873 for the nine months ended September 30, 2010 and September 30, 2009, respectively, in compensation expense related to restricted stock/unit awards, of which $0 was capitalized for each of the three months ended September 30, 2010 and September 30, 2009, and $0 and $45, respectively, was capitalized for the nine months ended September 30, 2010 and September 30, 2009, in connection with development activities. At September 30, 2010, we have $7,610 in unrecognized compensation related to unvested restricted stock/unit awards. The weighted average period that the unrecognized compensation is expected to be recognized is 1.09 years.

 

Dividend/Distributions:

 

The coupon rate of our Series F Preferred Stock resets every quarter at 2.375% plus the greater of (i) the 30 year U.S. Treasury rate, (ii) the 10 year U.S. Treasury rate or (iii) 3-month LIBOR. For the third quarter of 2010, the new coupon rate was 6.315%. See Note 10 for additional derivative information related to the Series F Preferred Stock coupon rate reset.

FIRST INDUSTRIAL REALTY TRUST, INC.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

The following table summarizes dividends/distributions paid or accrued during the nine months ended September 30, 2010.

 

 

 

Supplemental disclosure of cash flow information:

 

FIRST INDUSTRIAL REALTY TRUST, INC.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

 

The computation of basic and diluted EPS is presented below:

 

FIRST INDUSTRIAL REALTY TRUST, INC.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

Participating securities include unvested restricted stock awards and restricted unit awards outstanding that participate in non-forfeitable dividends of the Company.