Form 10-Q |
ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
First Industrial, L.P. (Exact Name of Registrant as Specified in its Charter) |
Delaware | 36-3924586 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
(312) 344-4300 (Registrant’s telephone number, including area code) |
Large accelerated filer | ¨ | Accelerated filer | ý | |||
Non-accelerated filer | o (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Page | |
Item 1. | Financial Statements |
June 30, 2013 | December 31, 2012 | ||||||
(Unaudited) (In thousands except unit and per unit data) | |||||||
ASSETS | |||||||
Assets: | |||||||
Investment in Real Estate: | |||||||
Land | $ | 618,830 | $ | 598,404 | |||
Buildings and Improvements | 2,143,136 | 2,146,375 | |||||
Construction in Progress | 25,025 | 19,228 | |||||
Less: Accumulated Depreciation | (652,845 | ) | (639,481 | ) | |||
Net Investment in Real Estate | 2,134,146 | 2,124,526 | |||||
Real Estate and Other Assets Held for Sale, Net of Accumulated Depreciation and Amortization of $1,435 and $3,050 | 2,085 | 6,765 | |||||
Investments in and Advances to Other Real Estate Partnerships | 189,886 | 178,104 | |||||
Cash and Cash Equivalents | 4,077 | 4,357 | |||||
Tenant Accounts Receivable, Net | 3,736 | 3,867 | |||||
Investments in Joint Ventures | 1,079 | 1,012 | |||||
Deferred Rent Receivable, Net | 48,948 | 47,930 | |||||
Deferred Financing Costs, Net | 9,058 | 10,948 | |||||
Deferred Leasing Intangibles, Net | 24,945 | 29,374 | |||||
Prepaid Expenses and Other Assets, Net | 97,255 | 96,999 | |||||
Total Assets | $ | 2,515,215 | $ | 2,503,882 | |||
LIABILITIES AND PARTNERS’ CAPITAL | |||||||
Liabilities: | |||||||
Indebtedness: | |||||||
Mortgage Loans Payable, Net | $ | 631,880 | $ | 656,329 | |||
Senior Unsecured Notes, Net | 445,925 | 474,150 | |||||
Unsecured Credit Facility | 108,000 | 98,000 | |||||
Accounts Payable, Accrued Expenses and Other Liabilities | 63,303 | 78,876 | |||||
Deferred Leasing Intangibles, Net | 12,337 | 13,597 | |||||
Rents Received in Advance and Security Deposits | 24,698 | 27,327 | |||||
Distributions Payable | 11,801 | 452 | |||||
Total Liabilities | 1,297,944 | 1,348,731 | |||||
Commitments and Contingencies | — | — | |||||
Partners’ Capital: | |||||||
General Partner Preferred Units | 121,492 | 217,971 | |||||
General Partner Units (109,922,433 and 98,767,913 units outstanding) | 1,017,659 | 859,727 | |||||
Limited Partners Units (4,617,313 and 4,702,341 units outstanding) | 82,711 | 84,282 | |||||
Accumulated Other Comprehensive Loss | (4,591 | ) | (6,829 | ) | |||
Total Partners’ Capital | 1,217,271 | 1,155,151 | |||||
Total Liabilities and Partners’ Capital | $ | 2,515,215 | $ | 2,503,882 |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | ||||||||||||
(Unaudited) (In thousands except per unit data) | |||||||||||||||
Revenues: | |||||||||||||||
Rental Income | $ | 57,092 | $ | 55,276 | $ | 113,320 | $ | 109,260 | |||||||
Tenant Recoveries and Other Income | 17,654 | 16,025 | 34,861 | 32,149 | |||||||||||
Total Revenues | 74,746 | 71,301 | 148,181 | 141,409 | |||||||||||
Expenses: | |||||||||||||||
Property Expenses | 24,700 | 22,662 | 49,277 | 45,722 | |||||||||||
General and Administrative | 5,388 | 5,916 | 11,844 | 11,475 | |||||||||||
Impairment of Real Estate | 1,429 | — | 1,429 | 19 | |||||||||||
Depreciation and Other Amortization | 26,179 | 26,133 | 50,307 | 53,539 | |||||||||||
Total Expenses | 57,696 | 54,711 | 112,857 | 110,755 | |||||||||||
Other Income (Expense): | |||||||||||||||
Interest Income | 621 | 697 | 1,207 | 1,643 | |||||||||||
Interest Expense | (17,284 | ) | (19,695 | ) | (34,932 | ) | (40,904 | ) | |||||||
Amortization of Deferred Financing Costs | (788 | ) | (799 | ) | (1,590 | ) | (1,622 | ) | |||||||
Mark-to-Market Gain (Loss) on Interest Rate Protection Agreements | 56 | (429 | ) | 52 | (305 | ) | |||||||||
Loss from Retirement of Debt | (4,222 | ) | (6,223 | ) | (5,372 | ) | (6,222 | ) | |||||||
Total Other Income (Expense) | (21,617 | ) | (26,449 | ) | (40,635 | ) | (47,410 | ) | |||||||
Loss from Continuing Operations Before Equity in Income of Other Real Estate Partnerships, Equity in Income of Joint Ventures, Gain on Change in Control of Interests and Income Tax (Provision) Benefit | (4,567 | ) | (9,859 | ) | (5,311 | ) | (16,756 | ) | |||||||
Equity in Income of Other Real Estate Partnerships | 2,399 | 2,468 | 4,571 | 3,566 | |||||||||||
Equity in Income of Joint Ventures | 27 | 37 | 47 | 128 | |||||||||||
Gain on Change in Control of Interests | — | — | — | 776 | |||||||||||
Income Tax (Provision) Benefit | (3 | ) | (5,354 | ) | 59 | (5,263 | ) | ||||||||
Loss from Continuing Operations | (2,144 | ) | (12,708 | ) | (634 | ) | (17,549 | ) | |||||||
Discontinued Operations: | |||||||||||||||
Income Attributable to Discontinued Operations | 56 | 949 | 230 | 695 | |||||||||||
Gain on Sale of Real Estate | 13,481 | 1,415 | 10,407 | 7,614 | |||||||||||
Income from Discontinued Operations | 13,537 | 2,364 | 10,637 | 8,309 | |||||||||||
Income (Loss) Before Gain on Sale of Real Estate | 11,393 | (10,344 | ) | 10,003 | (9,240 | ) | |||||||||
Gain on Sale of Real Estate | — | — | 262 | — | |||||||||||
Net Income (Loss) | 11,393 | (10,344 | ) | 10,265 | (9,240 | ) | |||||||||
Less: Preferred Unit Distributions | (2,277 | ) | (4,798 | ) | (6,114 | ) | (9,560 | ) | |||||||
Less: Redemption of Preferred Units | (3,546 | ) | — | (3,546 | ) | — | |||||||||
Net Income (Loss) Available to Unitholders and Participating Securities | $ | 5,570 | $ | (15,142 | ) | $ | 605 | $ | (18,800 | ) | |||||
Basic and Diluted Earnings Per Unit: | |||||||||||||||
Loss from Continuing Operations Available to Unitholders | $ | (0.07 | ) | $ | (0.19 | ) | $ | (0.09 | ) | $ | (0.29 | ) | |||
Income from Discontinued Operations Attributable to Unitholders | $ | 0.12 | $ | 0.03 | $ | 0.10 | $ | 0.09 | |||||||
Net Income (Loss) Available to Unitholders | $ | 0.05 | $ | (0.16 | ) | $ | 0.01 | $ | (0.20 | ) | |||||
Distributions Per Unit | $ | 0.085 | $ | 0.00 | $ | 0.17 | $ | 0.00 | |||||||
Weighted Average Units Outstanding | 112,808 | 93,106 | 109,163 | 92,458 | |||||||||||
Net Income (Loss) Available to Unitholders Attributable to: | |||||||||||||||
General Partner | $ | 5,325 | $ | (14,304 | ) | $ | 580 | $ | (17,755 | ) | |||||
Limited Partners | 245 | (838 | ) | 25 | (1,045 | ) | |||||||||
Net Income (Loss) Available to Unitholders and Participating Securities | $ | 5,570 | $ | (15,142 | ) | $ | 605 | $ | (18,800 | ) |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | ||||||||||||
(Unaudited) (In thousands) | |||||||||||||||
Net Income (Loss) | $ | 11,393 | $ | (10,344 | ) | $ | 10,265 | $ | (9,240 | ) | |||||
Amortization of Interest Rate Protection Agreements | 598 | 571 | 1,183 | 1,111 | |||||||||||
Write-off of Unamortized Settlement Amounts of Interest Rate Protection Agreements | 916 | 2,599 | 1,099 | 2,619 | |||||||||||
Foreign Currency Translation Adjustment | (46 | ) | (31 | ) | (44 | ) | (3 | ) | |||||||
Comprehensive Income (Loss) | $ | 12,861 | $ | (7,205 | ) | $ | 12,503 | $ | (5,513 | ) |
General Partner Preferred Units | General Partner Units | Limited Partner Units | Accumulated Other Comprehensive Loss | Total | |||||||||||||||
(Unaudited) (In thousands) | |||||||||||||||||||
Balance as of December 31, 2012 | $ | 217,971 | $ | 859,727 | $ | 84,282 | $ | (6,829 | ) | $ | 1,155,151 | ||||||||
Issuance of General Partner Units, Net of Issuance Costs | — | 173,820 | — | — | 173,820 | ||||||||||||||
Redemption of Preferred Units | (96,479 | ) | — | — | — | (96,479 | ) | ||||||||||||
Stock Based Compensation Activity | — | 1,222 | — | — | 1,222 | ||||||||||||||
Conversion of Limited Partner Units to General Partner Units | — | 804 | (804 | ) | — | — | |||||||||||||
Common Unit Distributions | — | (18,494 | ) | (792 | ) | — | (19,286 | ) | |||||||||||
Preferred Unit Distributions | (9,660 | ) | — | — | — | (9,660 | ) | ||||||||||||
Net Income | 9,660 | 580 | 25 | — | 10,265 | ||||||||||||||
Other Comprehensive Income | — | — | — | 2,238 | 2,238 | ||||||||||||||
Balance as of June 30, 2013 | $ | 121,492 | $ | 1,017,659 | $ | 82,711 | $ | (4,591 | ) | $ | 1,217,271 |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | ||||||
(Unaudited) (In thousands) | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net Income (Loss) | $ | 10,265 | $ | (9,240 | ) | ||
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities: | |||||||
Depreciation | 41,334 | 45,445 | |||||
Amortization of Deferred Financing Costs | 1,590 | 1,622 | |||||
Other Amortization | 14,155 | 14,704 | |||||
Impairment of Real Estate | 1,605 | 1,101 | |||||
Provision for Bad Debt | 484 | 550 | |||||
Equity in Income of Joint Ventures | (47 | ) | (128 | ) | |||
Distributions from Joint Ventures | — | 27 | |||||
Gain on Sale of Real Estate | (10,669 | ) | (7,614 | ) | |||
Gain on Change in Control of Interests | — | (776 | ) | ||||
Loss from Retirement of Debt | 5,372 | 6,222 | |||||
Mark-to-Market (Gain) Loss on Interest Rate Protection Agreements | (52 | ) | 305 | ||||
Equity in Income of Other Real Estate Partnerships | (4,571 | ) | (3,566 | ) | |||
Distributions from Investment in Other Real Estate Partnerships | 4,571 | 3,566 | |||||
(Increase) Decrease in Tenant Accounts Receivable, Prepaid Expenses and Other Assets, Net | (249 | ) | 3,223 | ||||
Increase in Deferred Rent Receivable | (2,283 | ) | (1,704 | ) | |||
(Decrease) Increase in Accounts Payable, Accrued Expenses, Other Liabilities, Rents Received in Advance and Security Deposits | (16,545 | ) | 1,571 | ||||
Payments of Premiums, Discounts and Prepayment Penalties Associated with Retirement of Debt | (3,990 | ) | (3,287 | ) | |||
Net Cash Provided by Operating Activities | 40,970 | 52,021 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Acquisitions of Real Estate | (47,293 | ) | (48,519 | ) | |||
Additions to Investment in Real Estate and Non-Acquisition Tenant Improvements and Lease Costs | (43,767 | ) | (35,107 | ) | |||
Net Proceeds from Sales of Investments in Real Estate | 50,375 | 22,002 | |||||
Investments in and Advances to Other Real Estate Partnerships | (24,646 | ) | (7,970 | ) | |||
Distributions from Other Real Estate Partnerships in Excess of Equity in Income | 12,864 | 8,047 | |||||
Contributions to and Investments in Joint Ventures | (18 | ) | (184 | ) | |||
Repayments of Notes Receivable | 295 | 8,306 | |||||
Increase in Escrows | (409 | ) | — | ||||
Net Cash Used in Investing Activities | (52,599 | ) | (53,425 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Debt and Equity Issuance Costs | (311 | ) | (287 | ) | |||
Unit Contributions | 174,081 | 18,063 | |||||
Repurchase and Retirement of Restricted Units | (2,732 | ) | (855 | ) | |||
Common Unit Distributions | (9,540 | ) | — | ||||
Preferred Unit Distributions Paid / Advanced | (6,114 | ) | (9,525 | ) | |||
Redemption of Preferred Units | (100,000 | ) | — | ||||
Payments on Interest Rate Swap Agreement | (598 | ) | (572 | ) | |||
Repayments on Mortgage and Other Loans Payable | (24,429 | ) | (17,432 | ) | |||
Repayments of Senior Unsecured Notes | (28,965 | ) | (148,310 | ) | |||
Proceeds from Unsecured Credit Facility | 194,000 | 241,000 | |||||
Repayments on Unsecured Credit Facility | (184,000 | ) | (84,000 | ) | |||
Net Cash Provided by (Used in) Financing Activities | 11,392 | (1,918 | ) | ||||
Net Effect of Exchange Rate Changes on Cash and Cash Equivalents | (43 | ) | (1 | ) | |||
Net Decrease in Cash and Cash Equivalents | (237 | ) | (3,322 | ) | |||
Cash and Cash Equivalents, Beginning of Year | 4,357 | 7,624 | |||||
Cash and Cash Equivalents, End of Year | $ | 4,077 | $ | 4,301 |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | ||||||||||||
Total Revenues | $ | 595 | $ | 3,395 | $ | 1,637 | $ | 7,345 | |||||||
Property Expenses | (282 | ) | (1,509 | ) | (703 | ) | (3,287 | ) | |||||||
Impairment of Real Estate | (176 | ) | — | (176 | ) | (1,082 | ) | ||||||||
Depreciation and Amortization | (81 | ) | (937 | ) | (528 | ) | (2,281 | ) | |||||||
Gain on Sale of Real Estate | 13,481 | 1,415 | 10,407 | 7,614 | |||||||||||
Income from Discontinued Operations | $ | 13,537 | $ | 2,364 | $ | 10,637 | $ | 8,309 |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | ||||||||||||
Held for Sale and Sold Operating Properties — Discontinued Operations | $ | 176 | $ | — | $ | 176 | $ | 1,082 | |||||||
Held for Use Operating Properties — Continuing Operations | 1,429 | — | 1,429 | 19 | |||||||||||
Total Net Impairment | $ | 1,605 | $ | — | $ | 1,605 | $ | 1,101 |
Fair Value Measurements on a Non-Recurring Basis Using: | |||||||||||||||||
Description | At June 30, | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | Total Impairment for the Six Months Ended | ||||||||||||
Long-lived Assets Held and Used or Held for Sale - June 30, 2013 | $ | 6,993 | — | — | $ | 6,993 | $ | (1,605 | ) | ||||||||
Long-lived Assets Held for Sale - June 30, 2012* | $ | 24,069 | — | — | $ | 24,069 | $ | (1,194 | ) | ||||||||
_____________________ |
Quantitative Information about Level 3 Fair Value Measurements: | ||||||||||
Description | Fair Value | Valuation Technique | Unobservable Inputs | Range | ||||||
Four industrial properties comprising approximately 0.3 million square feet of GLA at June 30, 2013 | $ | 6,993 | 3rd Party Pricing | (A) | N/A | |||||
Five industrial properties comprising approximately 1.8 million square feet of GLA at June 30, 2012 | $ | 24,069 | 3rd Party Pricing | (A) | N/A |
(A) | The fair value for the properties is based upon the value of a third party purchase contract or letter of intent, which is subject to our corroboration for reasonableness. |
June 30, 2013 | December 31, 2012 | ||||||
ASSETS | |||||||
Assets: | |||||||
Net Investment in Real Estate | $ | 269,077 | $ | 264,284 | |||
Note Receivable | 128,444 | 142,982 | |||||
Other Assets, Net | 33,047 | 34,476 | |||||
Total Assets | $ | 430,568 | $ | 441,742 | |||
LIABILITIES AND PARTNERS’ CAPITAL | |||||||
Liabilities: | |||||||
Mortgage Loans Payable | $ | 98,541 | $ | 107,287 | |||
Other Liabilities, Net | 12,577 | 11,570 | |||||
Partners’ Capital | 319,450 | 322,885 | |||||
Total Liabilities and Partners’ Capital | $ | 430,568 | $ | 441,742 | |||
Operating Partnership's Share of Equity | $ | 318,202 | $ | 321,663 | |||
Basis Differentials (1) | (128,316 | ) | (143,559 | ) | |||
Carrying Value of the Operating Partnership's Investments in Other Real Estate Partnerships | $ | 189,886 | $ | 178,104 |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | ||||||||||||
Total Revenues | $ | 9,941 | $ | 10,258 | $ | 19,741 | $ | 20,294 | |||||||
Property Expenses | (3,074 | ) | (2,911 | ) | (6,250 | ) | (5,911 | ) | |||||||
Impairment of Real Estate | — | — | — | 172 | |||||||||||
Depreciation and Other Amortization | (3,059 | ) | (3,351 | ) | (6,109 | ) | (7,636 | ) | |||||||
Interest Income | 1,253 | 2,243 | 2,572 | 4,386 | |||||||||||
Interest Expense | (1,147 | ) | (1,477 | ) | (2,462 | ) | (2,961 | ) | |||||||
Amortization of Deferred Financing Costs | (45 | ) | (51 | ) | (97 | ) | (103 | ) | |||||||
Loss from Retirement of Debt | (214 | ) | — | (214 | ) | — | |||||||||
Income from Continuing Operations | 3,655 | 4,711 | 7,181 | 8,241 | |||||||||||
Discontinued Operations: | |||||||||||||||
Income (Loss) Attributable to Discontinued Operations | — | 64 | — | (197 | ) | ||||||||||
Loss on Sale of Real Estate | — | (29 | ) | — | (29 | ) | |||||||||
Income (Loss) from Discontinued Operations | — | 35 | — | (226 | ) | ||||||||||
Net Income | $ | 3,655 | $ | 4,746 | $ | 7,181 | $ | 8,015 |
Outstanding Balance at | Interest Rate at June 30, 2013 | Effective Interest Rate at Issuance | Maturity Date | ||||||||||||
June 30, 2013 | December 31, 2012 | ||||||||||||||
Mortgage Loans Payable, Net | $ | 631,880 | $ | 656,329 | 4.03% – 8.26% | 4.03% – 8.26% | January 2014- September 2022 | ||||||||
Unamortized Premiums | (141 | ) | (161 | ) | |||||||||||
Mortgage Loans Payable, Gross | $ | 631,739 | $ | 656,168 | |||||||||||
Senior Unsecured Notes, Net | |||||||||||||||
2016 Notes | $ | 159,538 | $ | 159,510 | 5.750 | % | 5.91 | % | 1/15/2016 | ||||||
2017 Notes | 55,388 | 55,385 | 7.500 | % | 7.52 | % | 12/1/2017 | ||||||||
2027 Notes | 6,066 | 6,066 | 7.150 | % | 7.11 | % | 5/15/2027 | ||||||||
2028 Notes | 32,257 | 55,261 | 7.600 | % | 8.13 | % | 7/15/2028 | ||||||||
2032 Notes | 10,511 | 11,500 | 7.750 | % | 7.87 | % | 4/15/2032 | ||||||||
2014 Notes | 80,401 | 79,683 | 6.420 | % | 6.54 | % | 6/1/2014 | ||||||||
2017 II Notes | 101,764 | 106,745 | 5.950 | % | 6.37 | % | 5/15/2017 | ||||||||
Subtotal | $ | 445,925 | $ | 474,150 | |||||||||||
Unamortized Discounts | 1,776 | 2,570 | |||||||||||||
Senior Unsecured Notes, Gross | $ | 447,701 | $ | 476,720 | |||||||||||
Unsecured Credit Facility | $ | 108,000 | $ | 98,000 | 1.893 | % | 1.893 | % | 12/12/2014 |
Principal Amount Repurchased | Purchase Price | ||||||
2017 II Notes | $ | 5,000 | $ | 5,300 | |||
2028 Notes | 23,019 | 26,125 | |||||
2032 Notes | 1,000 | 1,163 | |||||
$ | 29,019 | $ | 32,588 |
Amount | |||
Remainder of 2013 | $ | 6,157 | |
2014 | 241,771 | ||
2015 | 35,264 | ||
2016 | 288,953 | ||
2017 | 167,213 | ||
Thereafter | 448,082 | ||
Total | $ | 1,187,440 |
June 30, 2013 | December 31, 2012 | ||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
Mortgage Loans Payable, Net | $ | 631,880 | $ | 648,411 | $ | 656,329 | $ | 699,903 | |||||||
Senior Unsecured Notes, Net | 445,925 | 481,764 | 474,150 | 516,943 | |||||||||||
Unsecured Credit Facility | 108,000 | 108,400 | 98,000 | 98,192 | |||||||||||
Total | $ | 1,185,805 | $ | 1,238,575 | $ | 1,228,479 | $ | 1,315,038 |
Six Months Ended June 30, 2013 | |||||||
Distribution per Unit | Total Distribution | ||||||
General Partner/Limited Partner Units | $ | 0.17 | $ | 19,286 | |||
Series F Preferred Units | $ | 2,725.32 | $ | 1,363 | |||
Series G Preferred Units | $ | 3,618.00 | $ | 905 | |||
Series J Preferred Units * | $ | 5,085.12 | $ | 2,034 | |||
Series K Preferred Units | $ | 9,062.60 | $ | 1,812 |
Interest Rate Protection Agreements | Foreign Currency Translation Adjustment | Total | |||||||||
Balance as of December 31, 2012 | $ | (7,008 | ) | $ | 179 | $ | (6,829 | ) | |||
Other Comprehensive Loss Before Reclassifications | — | (44 | ) | (44 | ) | ||||||
Amounts Reclassified from Accumulated Other Comprehensive Loss | 2,282 | — | 2,282 | ||||||||
Net Current Period Other Comprehensive Income (Loss) | 2,282 | (44 | ) | 2,238 | |||||||
Balance as of June 30, 2013 | $ | (4,726 | ) | $ | 135 | $ | (4,591 | ) |
Amount Reclassified from Accumulated Other Comprehensive Loss | ||||||||||
Details about Accumulated Other Comprehensive Loss Components | Three Months Ended June 30, 2013 | Six Months Ended June 30, 2013 | Affected Line Item in the Consolidated Statements of Operations | |||||||
Interest Rate Protection Agreements | ||||||||||
Amortization of Interest Rate Protection Agreements | $ | 598 | $ | 1,183 | Interest Expense | |||||
Write-off of Unamortized Settlement Amounts of Interest Rate Protection Agreements | 916 | 1,099 | Loss from Retirement of Debt | |||||||
$ | 1,514 | 2,282 | Total |
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | ||||||
Interest Expense Capitalized in Connection with Development Activity | $ | 1,623 | $ | 473 | |||
Supplemental Schedule of Non-Cash Investing and Financing Activities: | |||||||
Distribution Payable on General and Limited Partner Units | $ | 9,745 | $ | — | |||
Distribution Payable on Preferred Units | $ | 2,056 | $ | 4,798 | |||
Exchange of Limited Partnership Units for General Partnership Units: | |||||||
Limited Partnership Units | $ | (804 | ) | $ | (2,469 | ) | |
General Partnership Units | 804 | 2,469 | |||||
Total | $ | — | $ | — | |||
Mortgage Loan Payable Assumed in Conjunction with a Property Acquisition | $ | — | $ | 12,026 | |||
Write-off of Fully Depreciated Assets | $ | (29,561 | ) | $ | (23,135 | ) |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | ||||||||||||
Numerator: | |||||||||||||||
Loss from Continuing Operations | $ | (2,144 | ) | $ | (12,708 | ) | $ | (634 | ) | $ | (17,549 | ) | |||
Gain on Sale of Real Estate | — | — | 262 | — | |||||||||||
Preferred Unit Distributions | (2,277 | ) | (4,798 | ) | (6,114 | ) | (9,560 | ) | |||||||
Redemption of Preferred Units | (3,546 | ) | — | (3,546 | ) | — | |||||||||
Loss from Continuing Operations Available to Unitholders | $ | (7,967 | ) | $ | (17,506 | ) | $ | (10,032 | ) | $ | (27,109 | ) | |||
Income from Discontinued Operations | $ | 13,537 | $ | 2,364 | $ | 10,637 | $ | 8,309 | |||||||
Income from Discontinued Operations Allocable to Participating Securities | (42 | ) | — | (78 | ) | — | |||||||||
Income from Discontinued Operations Attributable to Unitholders | $ | 13,495 | $ | 2,364 | $ | 10,559 | $ | 8,309 | |||||||
Net Income (Loss) Available | $ | 5,570 | $ | (15,142 | ) | $ | 605 | $ | (18,800 | ) | |||||
Net Income Allocable to Participating Securities | (42 | ) | — | (78 | ) | — | |||||||||
Net Income (Loss) Available to Unitholders | $ | 5,528 | $ | (15,142 | ) | $ | 527 | $ | (18,800 | ) | |||||
Denominator: | |||||||||||||||
Weighted Average Units — Basic and Diluted | 112,808 | 93,106 | 109,163 | 92,458 | |||||||||||
Basic and Diluted EPU: | |||||||||||||||
Loss from Continuing Operations Available to Unitholders | $ | (0.07 | ) | $ | (0.19 | ) | $ | (0.09 | ) | $ | (0.29 | ) | |||
Income from Discontinued Operations Attributable to Unitholders | $ | 0.12 | $ | 0.03 | $ | 0.10 | $ | 0.09 | |||||||
Net Income (Loss) Available to Unitholders | $ | 0.05 | $ | (0.16 | ) | $ | 0.01 | $ | (0.20 | ) |
Number of Awards Outstanding At June 30, 2013 | Number of Awards Outstanding At June 30, 2012 | ||||
Non-Participating Securities: | |||||
Restricted Stock Unit Awards | 328,450 | 713,550 |
Hedge Product | Notional Amount | Strike | Trade Date | Maturity Date | Fair Value As of June 30, 2013 | Fair Value As of December 31, 2012 | ||||||||||||
Derivatives Not Designated as Hedging Instruments: | ||||||||||||||||||
Series F Agreement* | $ | 50,000 | 5.2175 | % | October 1, 2008 | October 1, 2013 | $ | (214 | ) | $ | (826 | ) | ||||||
_____________________ |
* | Fair value excludes quarterly settlement payment due on Series F Agreement. As of June 30, 2013 and December 31, 2012, the outstanding payable was $267 and $305, respectively. |
Three Months Ended | Six Months Ended | |||||||||||||||
Interest Rate Products | Location on Statement | June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | |||||||||||
Amortization Reclassified from OCI into Income (Loss) | Interest Expense | $ | (598 | ) | $ | (571 | ) | $ | (1,183 | ) | $ | (1,111 | ) |
Fair Value | Fair Value Measurements at Reporting Date Using: | ||||||||||||
Description | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | ||||||||||
Liabilities: | |||||||||||||
Series F Agreement at June 30, 2013 | $ | (214 | ) | — | — | $ | (214 | ) | |||||
Series F Agreement at December 31, 2012 | $ | (826 | ) | — | — | $ | (826 | ) |
Quantitative Information about Level 3 Fair Value Measurements: | |||||||||
Description | Fair Value | Valuation Technique | Unobservable Inputs | Range | |||||
Series F Agreement at June 30, 2013 | $ | (214 | ) | Discounted Cash Flow | Long Dated Treasuries (A) | 3.54% | |||
Series F Agreement at December 31, 2012 | $ | (826 | ) | Discounted Cash Flow | Long Dated Treasuries (A) | 2.82% - 2.91% | |||
Own Credit Risk (B) | 0.98% - 1.59% |
(A) | Represents the forward 30 year Treasury CMT Rate. |
(B) | Represents credit default swap spread curve used in the valuation analysis at December 31, 2012. |
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Derivatives | |||
Ending Liability Balance at December 31, 2012 | $ | (826 | ) |
Mark-to-Market of the Series F Agreement | 612 | ||
Ending Liability Balance at June 30, 2013 | $ | (214 | ) |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | $ Change | % Change | |||||||||||
($ in 000’s) | ||||||||||||||
REVENUES | ||||||||||||||
Same Store Properties | $ | 143,451 | $ | 139,189 | $ | 4,262 | 3.1 | % | ||||||
Acquired Properties | 1,126 | 832 | 294 | 35.3 | % | |||||||||
Sold Properties | 1,560 | 7,244 | (5,684 | ) | (78.5 | )% | ||||||||
(Re) Developments and Land, Not Included Above | 2,986 | 112 | 2,874 | 2,566.1 | % | |||||||||
Other | 695 | 1,377 | (682 | ) | (49.5 | )% | ||||||||
$ | 149,818 | $ | 148,754 | $ | 1,064 | 0.7 | % | |||||||
Discontinued Operations | (1,637 | ) | (7,345 | ) | 5,708 | (77.7 | )% | |||||||
Total Revenues | $ | 148,181 | $ | 141,409 | $ | 6,772 | 4.8 | % |
Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | $ Change | % Change | |||||||||||
($ in 000’s) | ||||||||||||||
PROPERTY EXPENSES | ||||||||||||||
Same Store Properties | $ | 44,130 | $ | 41,546 | $ | 2,584 | 6.2 | % | ||||||
Acquired Properties | 298 | 176 | 122 | 69.3 | % | |||||||||
Sold Properties | 654 | 3,216 | (2,562 | ) | (79.7 | )% | ||||||||
(Re) Developments and Land, Not Included Above | 810 | 291 | 519 | 178.4 | % | |||||||||
Other | 4,088 | 3,780 | 308 | 8.1 | % | |||||||||
$ | 49,980 | $ | 49,009 | $ | 971 | 2.0 | % | |||||||
Discontinued Operations | (703 | ) | (3,287 | ) | 2,584 | (78.6 | )% | |||||||
Total Property Expenses | $ | 49,277 | $ | 45,722 | $ | 3,555 | 7.8 | % |
Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | $ Change | % Change | |||||||||||
($ in 000’s) | ||||||||||||||
DEPRECIATION AND OTHER AMORTIZATION | ||||||||||||||
Same Store Properties | $ | 48,840 | $ | 52,711 | $ | (3,871 | ) | (7.3 | )% | |||||
Acquired Properties | 485 | 367 | 118 | 32.2 | % | |||||||||
Sold Properties | 465 | 2,053 | (1,588 | ) | (77.4 | )% | ||||||||
(Re) Developments and Land, Not Included Above | 673 | 111 | 562 | 506.3 | % | |||||||||
Corporate Furniture, Fixtures and Equipment | 372 | 578 | (206 | ) | (35.6 | )% | ||||||||
$ | 50,835 | $ | 55,820 | $ | (4,985 | ) | (8.9 | )% | ||||||
Discontinued Operations | (528 | ) | (2,281 | ) | 1,753 | (76.9 | )% | |||||||
Total Depreciation and Other Amortization | $ | 50,307 | $ | 53,539 | $ | (3,232 | ) | (6.0 | )% |
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
($ in 000’s) | |||||||
Total Revenues | $ | 1,637 | $ | 7,345 | |||
Property Expenses | (703 | ) | (3,287 | ) | |||
Impairment of Real Estate | (176 | ) | (1,082 | ) | |||
Depreciation and Amortization | (528 | ) | (2,281 | ) | |||
Gain on Sale of Real Estate | 10,407 | 7,614 | |||||
Income from Discontinued Operations | $ | 10,637 | $ | 8,309 |
Three Months Ended June 30, | ||||||||||||||
2013 | 2012 | $ Change | % Change | |||||||||||
($ in 000’s) | ||||||||||||||
REVENUES | ||||||||||||||
Same Store Properties | $ | 72,206 | $ | 69,923 | $ | 2,283 | 3.3 | % | ||||||
Acquired Properties | 565 | 565 | — | — | % | |||||||||
Sold Properties | 567 | 3,411 | (2,844 | ) | (83.4 | )% | ||||||||
(Re) Developments and Land, Not Included Above | 1,641 | (32 | ) | 1,673 | (5,228.1 | )% | ||||||||
Other | 362 | 829 | (467 | ) | (56.3 | )% | ||||||||
$ | 75,341 | $ | 74,696 | $ | 645 | 0.9 | % | |||||||
Discontinued Operations | (595 | ) | (3,395 | ) | 2,800 | (82.5 | )% | |||||||
Total Revenues | $ | 74,746 | $ | 71,301 | $ | 3,445 | 4.8 | % |
Three Months Ended June 30, | ||||||||||||||
2013 | 2012 | $ Change | % Change | |||||||||||
($ in 000’s) | ||||||||||||||
PROPERTY EXPENSES | ||||||||||||||
Same Store Properties | $ | 21,881 | $ | 20,455 | $ | 1,426 | 7.0 | % | ||||||
Acquired Properties | 159 | 132 | 27 | 20.5 | % | |||||||||
Sold Properties | 247 | 1,525 | (1,278 | ) | (83.8 | )% | ||||||||
(Re) Developments and Land, Not Included Above | 499 | 114 | 385 | 337.7 | % | |||||||||
Other | 2,196 | 1,945 | 251 | 12.9 | % | |||||||||
$ | 24,982 | $ | 24,171 | $ | 811 | 3.4 | % | |||||||
Discontinued Operations | (282 | ) | (1,509 | ) | 1,227 | (81.3 | )% | |||||||
Total Property Expenses | $ | 24,700 | $ | 22,662 | $ | 2,038 | 9.0 | % |
Three Months Ended June 30, | ||||||||||||||
2013 | 2012 | $ Change | % Change | |||||||||||
($ in 000’s) | ||||||||||||||
DEPRECIATION AND OTHER AMORTIZATION | ||||||||||||||
Same Store Properties | $ | 25,411 | $ | 25,629 | $ | (218 | ) | (0.9 | )% | |||||
Acquired Properties | 264 | 210 | 54 | 25.7 | % | |||||||||
Sold Properties | 48 | 897 | (849 | ) | (94.6 | )% | ||||||||
(Re) Developments and Land, Not Included Above | 373 | 56 | 317 | 566.1 | % | |||||||||
Corporate Furniture, Fixtures and Equipment | 164 | 278 | (114 | ) | (41.0 | )% | ||||||||
$ | 26,260 | $ | 27,070 | $ | (810 | ) | (3.0 | )% | ||||||
Discontinued Operations | (81 | ) | (937 | ) | 856 | (91.4 | )% | |||||||
Total Depreciation and Other Amortization | $ | 26,179 | $ | 26,133 | $ | 46 | 0.2 | % |
Three Months Ended June 30, | |||||||
2013 | 2012 | ||||||
($ in 000’s) | |||||||
Total Revenues | $ | 595 | $ | 3,395 | |||
Property Expenses | (282 | ) | (1,509 | ) | |||
Impairment of Real Estate | (176 | ) | — | ||||
Depreciation and Amortization | (81 | ) | (937 | ) | |||
Gain on Sale of Real Estate | 13,481 | 1,415 | |||||
Income from Discontinued Operations | $ | 13,537 | $ | 2,364 |
Number of Leases Signed | Square Feet Signed (in 000’s) | Net Effective Rent Per Square Foot (1) | GAAP Basis Rent Growth (2) | Weighted Average Lease Term (3) | Turnover Costs Per Square Foot (4) | Weighted Average Retention (5) | ||||||||||||||||
New Leases - Second Quarter 2013 | 54 | 895 | $ | 4.56 | (5.3 | )% | 5.6 | $ | 6.62 | N/A | ||||||||||||
Renewal Leases - Second Quarter 2013 | 106 | 1,549 | $ | 4.81 | 5.3 | % | 3.5 | $ | 1.59 | 67.8 | % | |||||||||||
Second Quarter 2013 | 160 | 2,444 | $ | 4.72 | 1.3 | % | 4.3 | $ | 3.43 | 67.8 | % | |||||||||||
New Leases - Year to Date 2013 | 102 | 1,375 | $ | 4.43 | (5.3 | )% | 5.8 | $ | 6.82 | N/A | ||||||||||||
Renewal Leases - Year to Date 2013 | 209 | 4,096 | $ | 4.36 | 8.0 | % | 3.5 | $ | 1.22 | 76.0 | % | |||||||||||
Year to Date 2013 | 311 | 5,471 | $ | 4.37 | 4.3 | % | 4.1 | $ | 2.63 | 76.0 | % |
(1) | Net effective rent is the average net rent calculated in accordance with GAAP, over the term of the lease. |
(2) | GAAP basis rent growth is a ratio of the change in net effective rent (on a GAAP basis, including straight-line rent adjustments as required by GAAP) compared to the net effective rent (on a GAAP basis) of the comparable lease. |
(3) | The lease term is expressed in years. Assumes no exercise of lease renewal option, if any. |
(4) | Turnover costs are comprised of the costs incurred or capitalized for improvements of vacant and renewal spaces, as well as the commissions paid and costs capitalized for leasing transactions. Turnover costs per square foot represent the total turnover costs expected to be incurred on the leases signed during the period and do not reflect actual expenditures for the period. |
(5) | Represents the weighted average square feet of tenants renewing their respective leases. |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults Upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
Exhibit Number | Description | |
10.3 | Amended and Restated Unsecured Revolving Credit Agreement dated as of July 19, 2013 among First Industrial, L.P., First Industrial Realty Trust, Inc., Wells Fargo Bank, N.A and the other lenders thereunder (incorporated by reference to Exhibit 10.1 of the Form 8-K of the Company filed July 22, 2013). | |
31.1* | Certification of the Principal Executive Officer of First Industrial Realty Trust, Inc., registrant’s sole general partner, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended. | |
31.2* | Certification of the Principal Financial Officer of First Industrial Realty Trust, Inc., registrant’s sole general partner, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended. | |
32.1** | Certification of the Principal Executive Officer and the Principal Financial Officer of First Industrial Realty Trust, Inc., registrant’s sole general partner, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.1* | The following financial statements from First Industrial, L.P.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, formatted in XBRL: (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Statements of Operations (unaudited), (iii) Consolidated Statements of Comprehensive Income (unaudited), (iv) Consolidated Statement of Changes in Partbers’ Capital (unaudited), (v) Consolidated Statements of Cash Flows (unaudited) and (vi) Notes to Consolidated Financial Statements (unaudited). |
* | Filed herewith. |
** | Furnished herewith. |
FIRST INDUSTRIAL, L.P. | |||
By: FIRST INDUSTRIAL REALTY TRUST, INC. Its Sole General Partner | |||
By: | /s/ SCOTT A. MUSIL | ||
Scott A. Musil Chief Financial Officer (Principal Financial Officer) |
Exhibit Number | Description | |
10.3 | Amended and Restated Unsecured Revolving Credit Agreement dated as of July 19, 2013 among First Industrial, L.P., First Industrial Realty Trust, Inc., Wells Fargo Bank, N.A and the other lenders thereunder (incorporated by reference to Exhibit 10.1 of the Form 8-K of the Company filed July 22, 2013). | |
31.1* | Certification of the Principal Executive Officer of First Industrial Realty Trust, Inc., registrant’s sole general partner, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended. | |
31.2* | Certification of the Principal Financial Officer of First Industrial Realty Trust, Inc., registrant’s sole general partner, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended. | |
32.1** | Certification of the Principal Executive Officer and the Principal Financial Officer of First Industrial Realty Trust, Inc., registrant’s sole general partner, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.1* | The following financial statements from First Industrial, L.P.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, formatted in XBRL: (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Statements of Operations (unaudited), (iii) Consolidated Statements of Comprehensive Income (unaudited), (iv) Consolidated Statement of Changes in Partners’ Capital (unaudited), (v) Consolidated Statements of Cash Flows (unaudited) and (vi) Notes to Consolidated Financial Statements (unaudited). |
* | Filed herewith. |
** | Furnished herewith. |
/s/ BRUCE W. DUNCAN | |
Bruce W. Duncan | |
President and Chief Executive Officer (Principal Executive Officer) First Industrial Realty Trust, Inc. |
/s/ SCOTT A. MUSIL | |
Scott A. Musil | |
Chief Financial Officer (Principal Financial Officer) First Industrial Realty Trust, Inc. |
/s/ BRUCE W. DUNCAN | |
Bruce W. Duncan | |
President and Chief Executive Officer | |
(Principal Executive Officer) | |
First Industrial Realty Trust, Inc. |
/s/ SCOTT A. MUSIL | |
Scott A. Musil | |
Chief Financial Officer | |
(Principal Financial Officer) | |
First Industrial Realty Trust, Inc. |
Earnings Per Unit ("EPU")
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Jun. 30, 2013
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Earnings Per Unit [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Unit ("EPU") | 10. Earnings Per Unit (“EPU”) The computation of basic and diluted EPU is presented below:
Participating securities include Units that correspond to the Company's 489,381 and 750,051 unvested restricted stock awards outstanding at June 30, 2013 and 2012, respectively, which participate in non-forfeitable distributions of the Operating Partnership. For the three and six months ended June 30, 2013, participating security holders were allocated income in proportion to the distributions declared during the year. Since participating security holders are not obligated to share in losses and no common distributions were declared during the six months ended June 30, 2012, there was no allocation of income to participating security holders for the three and six months ended June 30, 2012. The number of weighted average units—diluted is the same as the number of weighted average units — basic for the three and six months ended June 30, 2013 and 2012, as the effect of Units corresponding to the Company's restricted stock unit awards (that do not participate in non-forfeitable distributions of the Operating Partnership) was excluded as its inclusion would have been antidilutive to the loss from continuing operations available to Unitholders. Units corresponding to the following awards of the Company were anti-dilutive and could be dilutive in future periods:
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Earnings per Unit ("EPU") - Non-Participating Securities (Detail) (Restricted Stock Unit Awards)
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6 Months Ended | |
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Jun. 30, 2013
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Jun. 30, 2012
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Restricted Stock Unit Awards
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Antidilutive Securities Excluded from Computation of Earnings Per Unit | ||
Number of awards outstanding to non-participating securities | 328,450 | 713,550 |
Investment in Real Estate
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Jun. 30, 2013
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Investment in Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in Real Estate | 3. Investment in Real Estate Acquisitions During the six months ended June 30, 2013, we acquired one industrial property comprising approximately 0.5 million square feet of GLA and several land parcels. The purchase price of these acquisitions totaled approximately $46,463, excluding costs incurred in conjunction with the acquisition of the industrial property and land parcels. Sales and Discontinued Operations During the six months ended June 30, 2013, we sold 12 industrial properties comprising approximately 1.3 million square feet of GLA and two land parcels. Gross proceeds from the sales of the industrial properties and land parcels were approximately $52,598. The net gain on the sale of the industrial properties and land parcels was approximately $10,669. The 12 sold industrial properties meet the criteria to be included in discontinued operations. Therefore the results of operations and net gain on sale of real estate for the 12 industrial properties sold are included in discontinued operations. The results of operations and gain on sale of real estate for the two land parcels that do not meet the criteria to be included in discontinued operations are included in continuing operations. At June 30, 2013, we had two industrial properties comprising approximately 0.1 million square feet of GLA held for sale. The results of operations of these industrial properties held for sale at June 30, 2013 are included in discontinued operations. There can be no assurance that such industrial properties held for sale will be sold. Income from discontinued operations for the six months ended June 30, 2012 reflects the results of operations of the 12 industrial properties that were sold during the six months ended June 30, 2013, the results of operations of 26 industrial properties that were sold during the year ended December 31, 2012, the results of operations of the two industrial properties identified as held for sale at June 30, 2013 and the gain on sale of real estate relating to six industrial properties that were sold during the six months ended June 30, 2012. The following table discloses certain information regarding the industrial properties included in discontinued operations for the three and six months ended June 30, 2013 and 2012:
At June 30, 2013 and December 31, 2012, we had notes receivable outstanding of approximately $40,938 and $41,201, net of a discount of $223 and $255, respectively, which are included as a component of Prepaid Expenses and Other Assets, Net. At June 30, 2013 and December 31, 2012, the fair value of the notes receivable was $42,144 and $44,783, respectively. The fair value of our notes receivable was determined by discounting the future cash flows using current rates at which similar notes with similar remaining maturities would be made to other borrowers. The current market rates we utilized were internally estimated; therefore, we have concluded that our determination of fair value of our notes receivable was primarily based upon Level 3 inputs, as discussed below. Impairment Charges During the three and six months ended June 30, 2013 and 2012, we recorded the following net non-cash impairment charges:
The impairment charges for assets that qualify to be classified as held for sale are calculated as the difference between the carrying value of the properties and the estimated fair value, less costs to sell. The impairment charges for assets held for use are calculated as the difference between the carrying value of the properties and the estimated fair value. The impairment charges recorded during the three and six months ended June 30, 2013 and 2012 were triggered primarily due to marketing certain properties for sale and our assessment of the likelihood and timing of a potential sale transaction. The accounting guidance for the fair value measurement provisions for the impairment of long lived assets 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 for identical assets; 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 fair market values were primarily determined using third party purchase contracts and offers. The following table presents information about our real estate assets that were measured at fair value on a non-recurring basis during the six months ended June 30, 2013 and 2012. The table indicates the fair value hierarchy of the valuation techniques we utilized to determine fair value.
* Excludes industrial properties for which an impairment reversal of $93 was recorded during the six months ended June 30, 2012 since the related assets are recorded at carrying value, which is lower than estimated fair value at June 30, 2012. The following table presents quantitative information about the Level 3 fair value measurements at June 30, 2013 and 2012.
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Indebtedness (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Information Regarding Indebtedness | The following table discloses certain information regarding our indebtedness:
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Senior Unsecured Notes Repurchases | During the six months ended June 30, 2013, we repurchased and retired the following senior unsecured notes prior to maturity:
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Schedule of Maturities of Long-term Debt | The following is a schedule of the stated maturities and scheduled principal payments as of June 30, 2013 of our indebtedness, exclusive of premiums and discounts, for the next five years ending December 31, and thereafter:
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Summary of Indebtedness At Estimated Fair Value | At June 30, 2013 and December 31, 2012, the fair values of our indebtedness were as follows:
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Derivatives - Summary of Impact of Derivatives in Cash Flow Hedging Relationships on Statement of Operations and Statement of OCI (Detail) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Derivative [Line Items] | ||||
Amortization Reclassified from OCI into Income (Loss) | $ 598 | $ 571 | $ 1,183 | $ 1,111 |
Interest Expense [Member]
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Derivative [Line Items] | ||||
Amortization Reclassified from OCI into Income (Loss) | $ (598) | $ (571) | $ (1,183) | $ (1,111) |
Derivatives
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives | 11. Derivatives Our objectives in using interest rate derivatives are to add stability to interest expense or preferred stock dividends and to manage our cash flow volatility and exposure to interest rate movements. To accomplish this objective, we primarily use interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Our Series F Preferred Units are subject to a coupon rate reset. The coupon rate resets every quarter at 2.375% plus the greater of i) the 30 year Treasury CMT Rate, ii) the 10 year Treasury CMT Rate or iii) 3 month LIBOR. For the second quarter of 2013, the new coupon rate was 5.515%. In October 2008, we entered into an interest rate swap agreement with a notional value of $50,000 to mitigate our exposure to floating interest rates related to the forecasted reset rate of the coupon rate of our Series F Preferred Units (the “Series F Agreement”). This Series F Agreement fixes the 30 year Treasury CMT rate at 5.2175%. Accounting guidance for derivatives does not permit hedge accounting treatment related to equity instruments and therefore the mark-to-market gains or losses related to this agreement are recorded in the statement of operations. For the three and six months ended June 30, 2013, gains of $56 and $52, respectively, are recognized as Mark-to-Market Gain (Loss) on Interest Rate Protection Agreements. For the three and six months ended June 30, 2012, losses of $429 and $305, respectively, are recognized as Mark-to-Market Gain (Loss) on Interest Rate Protection Agreements. Quarterly payments are treated as a component of the mark-to-market gains or losses and totaled $267 and $560, for the three and six months ended June 30, 2013, respectively, and $247 and $539 for the three and six months ended June 30, 2012, respectively. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Other Comprehensive Income (“OCI”) and is subsequently reclassified to earnings through interest expense over the life of the derivative or over the life of the debt. In the next 12 months, we expect to amortize approximately $2,326 into net income by increasing interest expense for interest rate protection agreements we settled in previous periods. The following is a summary of the terms of our derivative and its fair value, which is included in Accounts Payable, Accrued Expenses and Other Liabilities on the accompanying consolidated balance sheets:
The following is a summary of the impact of the derivatives in cash flow hedging relationships on the statements of operations and the statements of OCI for the three and six months ended June 30, 2013 and 2012:
Our agreement with our derivative counterparty contains provisions where if we default on any of our indebtedness, then we could also be declared in default on our derivative obligations subject to certain thresholds. The guidance for fair value measurement of financial instruments includes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The following table sets forth our financial liability that is accounted for at fair value on a recurring basis as of June 30, 2013 and December 31, 2012:
The following table presents the quantitative information about the Level 3 fair value measurements at June 30, 2013 and December 31, 2012:
The valuation of the Series F Agreement is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the instrument. This analysis reflects the contractual terms of the agreement including the period to maturity. In adjusting the fair value of the Series F Agreement for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancement. To comply with the provisions of fair value measurement, we calculate a credit valuation adjustment ("CVA") to appropriately reflect both our own nonperformance risk and our counterparty's nonperformance risk in the fair value measurements. The CVA at June 30, 2013 is insignificant. We consider the Series F Agreement to be classified as Level 3 in the fair value hierarchy due to a significant number of unobservable inputs. The Series F Agreement swaps a fixed rate of 5.2175% for floating rate payments based on 30 year Treasury CMT Rate. No market observable prices exist for long dated Treasuries. Therefore, we have classified the Series F Agreement in its entirety as Level 3. The following table presents a reconciliation of our liability classified as Level 3 at June 30, 2013:
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Derivatives - Fair Value Measurements on Recurring Basis (Detail) (Series F Agreement [Member], USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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Fair Value On Recurring Basis [Line Items] | ||
Fair Value of Liabilities | $ (214) | $ (826) |
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1)
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Fair Value On Recurring Basis [Line Items] | ||
Fair Value of Liabilities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2)
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Fair Value On Recurring Basis [Line Items] | ||
Fair Value of Liabilities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Unobservable Inputs (Level 3)
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Fair Value On Recurring Basis [Line Items] | ||
Fair Value of Liabilities | $ (214) | $ (826) |
Investments in and Advances to Other Real Estate Partnerships - Condensed Combined Balance Sheets (Parenthetical) (Detail) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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Schedule Of Condensed Consolidating Balance Sheets [Line Items] | ||
Real Estate and Other Assets Held for Sale, Accumulated Depreciation and Amortization | $ 1,435 | $ 3,050 |
Supplemental Information to Statements of Cash Flows (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Information to Statements of Cash Flows | Supplemental Information to Statements of Cash Flows
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Accumulated Other Comprehensive Loss (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Accumulated Other Comprehensive Loss [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Loss | The following tables summarize the changes in Accumulated Other Comprehensive Loss by component for the six months ended June 30, 2013 and the reclassifications out of Accumulated Other Comprehensive Loss for the three and six months ended June 30, 2013:
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Reclassification out of Accumulated Other Comprehensive Income |
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Investment in Real Estate - Net Non-Cash Impairment Charges (Detail) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Impairment Charges [Line Items] | ||||
Total Net Impairment | $ 1,605 | $ 0 | $ 1,605 | $ 1,101 |
Held for Sale and Sold Operating Properties - Discontinued Operations
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Impairment Charges [Line Items] | ||||
Total Net Impairment | 176 | 0 | 176 | 1,082 |
Held for Use Operating Properties - Continuing Operations
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Impairment Charges [Line Items] | ||||
Total Net Impairment | $ 1,429 | $ 0 | $ 1,429 | $ 19 |
Investments in Joint Ventures - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2013
Property
sqft
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Jun. 30, 2012
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Jun. 30, 2013
Property
sqft
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Jun. 30, 2012
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Dec. 31, 2012
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Schedule of Equity Method Investments [Line Items] | |||||
Number of industrial properties owned | 638 | 638 | |||
Gross leasable area (GLA) of industrial properties owned | 55,300,000 | 55,300,000 | |||
Investment in Joint Venture | $ 1,079 | $ 1,079 | $ 1,012 | ||
Receivables from joint ventures | 20 | 20 | 19 | ||
Fees received from joint ventures | 63 | 68 | 121 | 144 | |
2003 Net Lease Joint Venture
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Schedule of Equity Method Investments [Line Items] | |||||
Number of industrial properties owned | 5 | 5 | |||
Gross leasable area (GLA) of industrial properties owned | 2,700,000 | 2,700,000 | |||
Investment in Joint Venture | $ 1,079 | $ 1,079 | |||
2007 Europe Joint Venture
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Schedule of Equity Method Investments [Line Items] | |||||
Number of industrial properties owned | 0 | 0 | |||
Equity interest | 10.00% | 10.00% |
Accumulated Other Comprehensive Loss (Amounts Reclassified from AOCI) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Reclassification out of Accumulated Other Comprehensive Income [Line Items] | ||||
Amortization of Interest Rate Protection Agreements | $ (17,284) | $ (19,695) | $ (34,932) | $ (40,904) |
Write-off of Unamortized Settlement Amounts of Interest Rate Protection Agreements | (4,222) | (6,223) | (5,372) | (6,222) |
Total | (21,617) | (26,449) | (40,635) | (47,410) |
Interest Rate Protection Agreements | Reclassification out of Accumulated Other Comprehensive Income [Member]
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Reclassification out of Accumulated Other Comprehensive Income [Line Items] | ||||
Amortization of Interest Rate Protection Agreements | 598 | 1,183 | ||
Write-off of Unamortized Settlement Amounts of Interest Rate Protection Agreements | 916 | 1,099 | ||
Total | $ 1,514 | $ 2,282 |
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Dec. 31, 2009
Internal Revenue Service (IRS) [Member]
Settlement with Taxing Authority [Member]
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Jun. 30, 2013
Internal Revenue Service (IRS) [Member]
Settlement with Taxing Authority [Member]
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Dec. 31, 2012
Internal Revenue Service (IRS) [Member]
Settlement with Taxing Authority [Member]
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Jun. 30, 2013
Prior Period Adjustment [Member]
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Summary of Significant Accounting Policies [Line Items] | ||||||||
Depreciation and other amortization | $ 26,179 | $ 26,133 | $ 50,307 | $ 53,539 | $ 1,561 | |||
Period to carry back net operating losses | up to 5 years | |||||||
IRS tax refund | 40,418 | |||||||
Refunds in excess are required to be reviewed by Joint Committee on Taxation | 2,000 | |||||||
Agreed refund adjustment to taxable income | 13,700 | |||||||
Taxes owed | 4,806 | |||||||
Accrued interest | 490 | |||||||
Preferred stock distributions taxable as capital gain | $ 221 | $ 8,238 |
Indebtedness - Senior Unsecured Notes Repurchases (Detail) (USD $)
In Thousands, unless otherwise specified |
6 Months Ended |
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Jun. 30, 2013
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Unsecured Senior Notes [Line Items] | |
Principal Amount Repurchased | $ 29,019 |
Purchase Price | 32,588 |
2017 II Notes
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Unsecured Senior Notes [Line Items] | |
Principal Amount Repurchased | 5,000 |
Purchase Price | 5,300 |
2028 Notes
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Unsecured Senior Notes [Line Items] | |
Principal Amount Repurchased | 23,019 |
Purchase Price | 26,125 |
2032 Notes
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Unsecured Senior Notes [Line Items] | |
Principal Amount Repurchased | 1,000 |
Purchase Price | $ 1,163 |
Partners' Capital (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Dividend Distributions | The following table summarizes distributions accrued during the six months ended June 30, 2013:
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CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS CAPITAL (USD $)
In Thousands, unless otherwise specified |
Total
|
General Partner Preferred Units
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General Partner Units
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Limited Partner Units
|
Accumulated Other Comprehensive Loss
|
---|---|---|---|---|---|
Balance at Dec. 31, 2012 | $ 1,155,151 | $ 217,971 | $ 859,727 | $ 84,282 | $ (6,829) |
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||
Issuance of General Partner Units, Net of Issuance Costs | 173,820 | 173,820 | |||
Redemption of Preferred Units | (96,479) | (96,479) | |||
Stock Based Compensation Activity | 1,222 | 1,222 | |||
Conversion of Limited Partner Units to General Partner Units | 0 | 804 | (804) | ||
Common Unit Distributions | (19,286) | (18,494) | (792) | ||
Preferred Unit Distributions | (9,660) | (9,660) | |||
Net Income | 10,265 | 9,660 | 580 | 25 | |
Other Comprehensive Income | 2,238 | 2,238 | |||
Balance at Jun. 30, 2013 | $ 1,217,271 | $ 121,492 | $ 1,017,659 | $ 82,711 | $ (4,591) |
Organization and Formation of Partnership
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6 Months Ended |
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Jun. 30, 2013
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Formation of Partnership | 1. Organization and Formation of Partnership First Industrial, L.P. (the “Operating Partnership”) was organized as a limited partnership in the state of Delaware on November 23, 1993. The sole general partner is First Industrial Realty Trust, Inc. (the “Company”) which owns common units in the Operating Partnership (“Units”) representing an approximate 96.0% common ownership interest at June 30, 2013. The Company also owns a preferred general partnership interest in the Operating Partnership represented by preferred Units (“Preferred Units”) with an aggregate liquidation priority of $125,000 at June 30, 2013. The Company is a real estate investment trust (“REIT”) as defined in the Internal Revenue Code of 1986 (the “Code”). The Company’s operations are conducted primarily through the Operating Partnership. The limited partners of the Operating Partnership owned, in the aggregate, approximately a 4.0% interest in the Operating Partnership at June 30, 2013. Operations are also conducted through other partnerships and limited liability companies (“LLCs”) of which the Operating Partnership is the sole member, and taxable REIT subsidiaries (together with the Operating Partnership, other partnerships and the L.L.C.s, the “Consolidated Operating Partnership”), the operating data of which is consolidated with that of the Operating Partnership as presented herein. Unless the context otherwise requires, the terms “we,” “us,” and “our” refer to First Industrial, L.P. and its controlled subsidiaries. We also hold at least a 99% limited partnership interest in each of eight limited partnerships (together, the “Other Real Estate Partnerships”). We also own noncontrolling equity interests in, and provide various services to, two joint ventures (the “2003 Net Lease Joint Venture” and the “2007 Europe Joint Venture” collectively, the “Joint Ventures”). See Note 5 for more information on the Joint Ventures. The general partners of the Other Real Estate Partnerships are separate corporations, each with at least a .01% general partnership interest in the Other Real Estate Partnership for which it acts as a general partner. Each general partner of the Other Real Estate Partnerships is a wholly-owned subsidiary of the Company. As of June 30, 2013, we owned 638 industrial properties located in 24 states, containing an aggregate of approximately 55.3 million square feet of gross leasable area (“GLA”). On a combined basis, as of June 30, 2013, the Other Real Estate Partnerships owned 66 industrial properties containing an aggregate of approximately 7.6 million square feet of GLA. Profits, losses and distributions of us, the LLCs and Other Real Estate Partnerships are allocated to the general partner and the limited partners or the members, as applicable, in accordance with the provisions contained within the partnership agreements, operating agreements or other ownership agreements, as applicable. The Other Real Estate Partnerships and the Joint Ventures are accounted for under the equity method of accounting. Accordingly, the operating data of the Other Real Estate Partnerships and the Joint Ventures are not consolidated with that of the Consolidated Operating Partnership as presented herein. |
Investments in and Advances to Other Real Estate Partnerships
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Jun. 30, 2013
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Investments in and Advances to Other Real Estate Partnerships | 4. Investments in and Advances to Other Real Estate Partnerships The investments in and advances to Other Real Estate Partnerships reflects the Operating Partnership’s limited partnership equity interests in the entities referred to in Note 1 to these consolidated financial statements. Summarized condensed financial information as derived from the financial statements of the Other Real Estate Partnerships is presented below: Condensed Combined Balance Sheets
_________________ (1) This amount represents the aggregate difference between the Operating Partnership's historical cost basis and the basis reflected at the Other Real Estate Partnerships' level. Basis differentials relate to the elimination of a note receivable and related accrued interest between a Other Real Estate Partnership and wholly owned subsidiaries of the Operating Partnership. Condensed Combined Statements of Operations
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Summary of Significant Accounting Policies
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6 Months Ended |
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Jun. 30, 2013
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Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the accounting policies described in the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2012 (“2012 Form 10-K”) and should be read in conjunction with such consolidated financial statements and related notes. The 2012 year end consolidated balance sheet data included in this Form 10-Q filing was derived from the audited consolidated financial statements in our 2012 Form 10-K, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). The following notes to these interim consolidated financial statements highlight significant changes to the notes included in the December 31, 2012 audited consolidated financial statements included in our 2012 Form 10-K and present interim disclosures as required by the Securities and Exchange Commission. In order to conform with GAAP, in preparation of our consolidated financial statements we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of June 30, 2013 and December 31, 2012, and the reported amounts of revenues and expenses for the three and six months ended June 30, 2013 and 2012. Actual results could differ from those estimates. In our opinion, the accompanying unaudited interim consolidated financial statements reflect all adjustments necessary for a fair statement of our financial position as of June 30, 2013 and December 31, 2012, and the results of our operations and comprehensive income for each of the three and six months ended June 30, 2013 and 2012, and our cash flows for each of the six months ended June 30, 2013 and 2012, and all adjustments are of a normal recurring nature. Reclassifications Certain reclassifications have been made to the 2012 financial statements to conform to the 2013 presentation. Additionally, the results of operations for the six months ended June 30, 2013 include an adjustment of $1,561 to decrease depreciation and amortization expense which should have been recorded during previous periods. Management evaluated the impact of the adjustment and does not believe it is material to the results of the anticipated full year, current period or any previous period. IRS Tax Refund On August 24, 2009, we received a private letter ruling from the IRS granting favorable loss treatment under Sections 331 and 336 of the Code on the tax liquidation of one of our former taxable REIT subsidiaries. On November 6, 2009, legislation was signed that allowed businesses with net operating losses for 2008 or 2009 to carry back those losses for up to five years. As a result, we received a refund from the IRS of $40,418 in the fourth quarter of 2009 (the “Refund”) in connection with this tax liquidation. The IRS examination team, which is required by statute to review all refund claims in excess of $2,000 on behalf of the Joint Committee on Taxation, indicated to us that it disagreed with certain of the property valuations we obtained from an independent valuation expert in support of our fair value of the liquidated taxable REIT subsidiary and our claim for the Refund. During the year ended December 31, 2012, we reached an agreement with the regional office of the IRS on a proposed adjustment to the Refund. The total agreed-upon adjustment to taxable income was $13,700, which equates to $4,806 of taxes owed. We were also required to pay accrued interest of $490. During the year ended December 31, 2012, the Operating Partnership recorded the charge for the agreed-upon adjustment and the related estimated accrued interest which was reflected as a component of income tax expense. During 2013, the settlement amount was approved by the Joint Committee on Taxation. As a result of the Joint Committee on Taxation's approval, during 2013, we entered into closing agreements with the IRS that determined the timing of the settlement on the tax characterization of the limited partners of the Operating Partnership and the stockholders of the Company. Pursuant to these closing agreements, $8,238 of the preferred stock distributions for the year ended December 31, 2012 are taxable as capital gain. During the three months ended June 30, 2013, we paid the agreed upon taxes and related accrued interest. Recent Accounting Pronouncements In February 2013, the FASB issued Accounting Standards Update No. 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” (“ASU 2013-02”). ASU 2013-02 requires that public companies present, either in a single note or parenthetically on the face of the financial statements, the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source and the income statement line items affected by the reclassification. ASU 2013-02 is effective for annual periods beginning after December 15, 2012, and is to be applied prospectively. The adoption of this guidance did not have a material impact on our consolidated financial statements. |
Earnings Per Unit ("EPU") (Tables)
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Jun. 30, 2013
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Computation of Basic and Diluted EPU | The computation of basic and diluted EPU is presented below:
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Non-Participating Securities | Units corresponding to the following awards of the Company were anti-dilutive and could be dilutive in future periods:
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Investments in and Advances to Other Real Estate Partnerships - Condensed Combined Balance Sheets (Detail) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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Assets: | ||||||
Net Investment in Real Estate | $ 2,134,146 | $ 2,124,526 | ||||
Real Estate and Other Assets Held for Sale, Net of Accumulated Depreciation and Amortization of $0 and $0 | 2,085 | 6,765 | ||||
Total Assets | 2,515,215 | 2,503,882 | ||||
Liabilities: | ||||||
Mortgage Loans Payable | 631,880 | 656,329 | ||||
Partners’ Capital | 1,217,271 | 1,155,151 | ||||
Total Liabilities and Partners’ Capital | 2,515,215 | 2,503,882 | ||||
Carrying Value of the Operating Partnership's Investments in Other Real Estate Partnerships | 189,886 | 178,104 | ||||
Other Real Estate Partnerships
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Assets: | ||||||
Net Investment in Real Estate | 269,077 | 264,284 | ||||
Note Receivable | 128,444 | 142,982 | ||||
Other Assets, Net | 33,047 | 34,476 | ||||
Total Assets | 430,568 | 441,742 | ||||
Liabilities: | ||||||
Mortgage Loans Payable | 98,541 | 107,287 | ||||
Other Liabilities, Net | 12,577 | 11,570 | ||||
Partners’ Capital | 319,450 | 322,885 | ||||
Total Liabilities and Partners’ Capital | 430,568 | 441,742 | ||||
Operating Partnership's Share of Equity | 318,202 | 321,663 | ||||
Basis Differentials (1) | (128,316) | [1] | (143,559) | [1] | ||
Carrying Value of the Operating Partnership's Investments in Other Real Estate Partnerships | $ 189,886 | $ 178,104 | ||||
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Derivatives - Summary of Derivatives and Fair Values (Detail) (Series F Agreement [Member], USD $)
In Thousands, unless otherwise specified |
6 Months Ended | |
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Jun. 30, 2013
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Dec. 31, 2012
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Series F Agreement [Member]
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Derivative [Line Items] | ||
Notional Amount | $ 50,000 | |
Strike | 5.2175% | |
Trade Date | Oct. 01, 2008 | |
Maturity Date | Oct. 01, 2013 | |
Fair Value of Derivative Liabilities | $ (214) | $ (826) |