-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IrRM7KDU71ibl79tUuB3mj9VbO5Yztfw8Oj+z/IglffgOv5bRXMxQOJMSEl7d1lz 4jb5AheDxOXyL2teVgsJ9w== 0000950137-02-006271.txt : 20021114 0000950137-02-006271.hdr.sgml : 20021114 20021114141036 ACCESSION NUMBER: 0000950137-02-006271 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST INDUSTRIAL LP CENTRAL INDEX KEY: 0001033128 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 363924586 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-21873 FILM NUMBER: 02824076 BUSINESS ADDRESS: STREET 1: 311 S WACKER DR STREET 2: STE 4000 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3123444300 MAIL ADDRESS: STREET 1: 150 N WACKER DR STREET 2: STE 150 CITY: CHICAGO STATE: IL ZIP: 60606 10-Q 1 c72913e10vq.txt QUARTERLY REPORT DATED 9/30/02 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002 / / Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 -------------------------- Commission File Number 333-21873 -------------------------- FIRST INDUSTRIAL, L.P. (Exact Name of Registrant as Specified in its Charter) DELAWARE 36-3924586 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 311 S. WACKER DRIVE, SUITE 4000, CHICAGO, ILLINOIS 60606 (Address of Principal Executive Offices) (312) 344-4300 (Registrant's Telephone Number, Including Area Code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / / FIRST INDUSTRIAL, L.P. FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 2002 INDEX
PAGE ---- PART I: FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001 ................ 2 Consolidated Statements of Operations for the Nine Months Ended September 30, 2002 and September 30, 2001 ........................................................................ 3 Consolidated Statements of Operations for the Three Months Ended September 30, 2002 and September 30, 2001 ........................................................................ 4 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2002 and September 30, 2001 ........................................................................ 5 Notes to Consolidated Financial Statements ................................................ 6-18 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations .............................................................. 19-30 Item 3. Quantitative and Qualitative Disclosures About Market Risk .......................... 30 Item 4. Controls and Procedures ............................................................. 30 PART II: OTHER INFORMATION Item 1. Legal Proceedings ................................................................... 31 Item 2. Changes in Securities ............................................................... 31 Item 3. Defaults Upon Senior Securities ..................................................... 31 Item 4. Submission of Matters to a Vote of Security Holders ................................. 31 Item 5. Other Information ................................................................... 31 Item 6. Exhibits and Report on Form 8-K ..................................................... 31 SIGNATURE ...................................................................................... 32 CERTIFICATIONS ................................................................................. 33-34 EXHIBIT INDEX .................................................................................. 35
1 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS FIRST INDUSTRIAL, L.P. CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS) (UNAUDITED)
September 30, December 31, 2002 2001 ----------- ----------- ASSETS Assets: Investment in Real Estate: Land .......................................................... $ 364,344 $ 368,725 Buildings and Improvements .................................... 1,808,213 1,801,097 Furniture, Fixtures and Equipment ............................. 1,174 1,174 Construction in Progress ...................................... 128,925 140,887 Less: Accumulated Depreciation ................................ (257,542) (229,293) ----------- ----------- Net Investment in Real Estate ......................... 2,045,114 2,082,590 Real Estate Held for Sale, Net of Accumulated Depreciation and Amortization of $4,848 at September 30, 2002 and $3,917 at December 31, 2001 .............................................. 19,372 28,702 Investments in and Advances to Other Real Estate Partnerships .... 400,818 378,350 Restricted Cash .................................................. 12,517 6,394 Tenant Accounts Receivable, Net .................................. 10,716 10,145 Investments in Joint Ventures .................................... 13,208 9,010 Deferred Rent Receivable ......................................... 12,976 12,140 Deferred Financing Costs, Net .................................... 11,850 10,173 Prepaid Expenses and Other Assets, Net ........................... 62,708 43,148 ----------- ----------- Total Assets .......................................... $ 2,589,279 $ 2,580,652 =========== =========== LIABILITIES AND PARTNERS' CAPITAL Liabilities: Mortgage Loans Payable, Net ...................................... $ 55,709 $ 46,731 Senior Unsecured Debt, Net ....................................... 1,211,788 1,048,491 Acquisition Facility Payable ..................................... 110,400 182,500 Accounts Payable and Accrued Expenses ............................ 67,601 68,919 Rents Received in Advance and Security Deposits .................. 22,463 22,890 Distributions Payable ............................................ 31,620 31,196 ----------- ----------- Total Liabilities ..................................... 1,499,581 1,400,727 ----------- ----------- Commitments and Contingencies ....................................... -- -- Partners' Capital: General Partner Preferred Units (100,000 units issued and outstanding at September 30, 2002 and 140,000 units issued and outstanding at December 31, 2001) ............................. 240,657 336,990 General Partner Units (39,641,596 and 38,904,687 units issued and outstanding at September 30, 2002 and December 31, 2001, respectively) ................................................. 695,168 686,544 Unamortized Value of General Partnership Restricted Units ....... (5,572) (6,247) Limited Partners' Units (6,862,000 and 6,972,649 units issued and outstanding at September 30, 2002 and December 31, 2001, respectively) ................................................. 170,183 175,019 Accumulated Other Comprehensive Loss ............................ (10,738) (12,381) ----------- ----------- Total Partners' Capital ............................. 1,089,698 1,179,925 ----------- ----------- Total Liabilities and Partners' Capital ............. $ 2,589,279 $ 2,580,652 =========== ===========
The accompanying notes are an integral part of the financial statements. 2 FIRST INDUSTRIAL, L.P. CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT FOR PER UNIT DATA) (UNAUDITED)
Nine Months Nine Months Ended Ended September 30, 2002 September 30, 2001 ------------------- ------------------- Revenues: Rental Income ...................................................... $ 168,213 $ 177,288 Tenant Recoveries and Other Income ................................. 54,091 57,275 --------- --------- Total Revenues ........................................... 222,304 234,563 --------- --------- Expenses: Real Estate Taxes .................................................. 35,085 36,486 Repairs and Maintenance ............................................ 14,666 12,632 Property Management ................................................ 8,139 7,965 Utilities .......................................................... 5,609 6,101 Insurance .......................................................... 1,641 1,298 Other .............................................................. 5,538 5,286 General and Administrative ......................................... 13,726 13,070 Interest Expense ................................................... 64,304 59,733 Amortization of Deferred Financing Costs ........................... 1,414 1,307 Depreciation and Other Amortization ................................ 46,914 42,120 --------- --------- Total Expenses .......................................... 197,036 185,998 --------- --------- Income from Continuing Operations Before Equity in Income of Other Real Estate Partnerships, Equity in Income of Joint Ventures and Gain on Sale of Real Estate ............................................ 25,268 48,565 Equity in Income of Other Real Estate Partnerships .................... 40,245 38,706 Equity in Income of Joint Ventures .................................... 1,135 751 Gain on Sale of Real Estate ........................................... 5,538 33,743 --------- --------- Income From Continuing Operations ..................................... 72,186 121,765 Income from Discontinued Operations (Including Gain on Sale of Real Estate of $25,591 for the Nine Months Ended September 30, 2002) ... 30,497 5,243 --------- --------- Net Income Before Extraordinary Loss .................................. 102,683 127,008 Extraordinary Loss .................................................... (888) (10,309) --------- --------- Net Income ............................................................ 101,795 116,699 Less: Preferred Unit Distributions ................................... (18,388) (21,693) --------- --------- Net Income Available to Unitholders ................................... $ 83,407 $ 95,006 ========= ========= Income from Continuing Operations Available to Unitholders Per Weighted Average Unit Outstanding: Basic ...................................................... $ 1.16 $ 2.15 ========= ========= Diluted .................................................... $ 1.16 $ 2.14 ========= ========= Net Income Available to Unitholders Before Extraordinary Loss Per Weighted Average Unit Outstanding: Basic ...................................................... $ 1.82 $ 2.26 ========= ========= Diluted .................................................... $ 1.81 $ 2.25 ========= ========= Net Income Available to Unitholders Per Weighted Average Unit Outstanding: Basic ...................................................... $ 1.80 $ 2.04 ========= ========= Diluted .................................................... $ 1.79 $ 2.03 ========= ========= Net Income ............................................................ $ 101,795 $ 116,699 Other Comprehensive Income: Cumulative Transition Adjustment ........................... -- (14,920) Settlement of Interest Rate Protection Agreement ........... 1,772 (191) Mark-to-Market of Interest Rate Swap Agreements ............ (259) -- Write-off of Unamortized Interest Rate Protection Agreement Due to the Early Retirement of Debt ...................... -- 2,156 Amortization of Interest Rate Protection Agreements ........ 130 753 --------- --------- Comprehensive Income .................................................. $ 103,438 $ 104,497 ========= =========
The accompanying notes are an integral part of the financial statements. 3 FIRST INDUSTRIAL, L.P. CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT FOR PER UNIT DATA) (UNAUDITED)
Three Months Three Months Ended Ended September 30, 2002 September 30, 2001 ------------------ ------------------ Revenues: Rental Income ................................................... $ 56,516 $ 55,596 Tenant Recoveries and Other Income .............................. 19,061 17,775 -------- -------- Total Revenues ........................................ 75,577 73,371 -------- -------- Expenses: Real Estate Taxes ............................................... 11,395 11,577 Repairs and Maintenance ......................................... 5,256 3,632 Property Management ............................................. 2,436 2,230 Utilities ....................................................... 1,993 1,613 Insurance ....................................................... 587 292 Other ........................................................... 1,863 1,172 General and Administrative ...................................... 3,759 3,888 Interest Expense ................................................ 23,069 19,337 Amortization of Deferred Financing Costs ........................ 489 442 Depreciation and Other Amortization ............................. 16,072 14,044 -------- -------- Total Expenses........................................ 66,919 58,227 -------- -------- Income from Continuing Operations Before Equity in Income of Other Real Estate Partnerships, Equity in Income of Joint Ventures and Gain on Sale of Real Estate ..................................... 8,658 15,144 Equity in Income of Other Real Estate Partnerships ................. 7,182 14,718 Equity in Income of Joint Ventures ................................. 559 315 Gain on Sale of Real Estate ........................................ 1,327 12,131 -------- -------- Income From Continuing Operations .................................. 17,726 42,308 Income from Discontinued Operations (Including Gain on Sale of Real Estate of $13,314 for the Three Months Ended September 30, 2002) 14,474 2,964 -------- -------- Net Income ......................................................... 32,200 45,272 Less: Preferred Unit Distributions ................................ (5,044) (7,231) -------- -------- Net Income Available to Unitholders ................................ $ 27,156 $ 38,041 ======== ======== Income from Continuing Operations Available to Unitholders Per Weighted Average Unit Outstanding: Basic ................................................... $ .27 $ .75 ======== ======== Diluted ................................................. $ .27 $ .75 ======== ======== Net Income Available to Unitholders Per Weighted Average Unit Outstanding: Basic ................................................... $ .58 $ .81 ======== ======== Diluted ................................................. $ .58 $ .81 ======== ======== Net Income ......................................................... $ 32,200 $ 45,272 Other Comprehensive Income: Mark-to-Market of Interest Rate Swap Agreements ......... (80) -- Amortization of Interest Rate Protection Agreements ..... 5 51 -------- -------- Comprehensive Income ............................................... $ 32,125 $ 45,323 ======== ========
The accompanying notes are an integral part of the financial statements. 4 FIRST INDUSTRIAL, L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS) (UNAUDITED)
Nine Months Ended Nine Months Ended September 30, 2002 September 30, 2001 ------------------ ------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net Income ................................................... $ 101,795 $ 116,699 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation ................................................ 41,216 37,185 Amortization of Deferred Financing Costs .................... 1,414 1,307 Other Amortization .......................................... 10,802 10,269 Equity in Income of Joint Ventures .......................... (1,135) (751) Distributions from Joint Ventures ........................... 1,135 751 Gain on Sale of Real Estate ................................. (31,129) (33,743) Extraordinary Loss .......................................... 888 10,309 Equity in Income of Other Real Estate Partnerships .......... (40,245) (38,706) Distributions from Investment in Other Real Estate Partnerships ........................................... 40,245 38,706 (Increase) Decrease in Tenant Accounts Receivable and Prepaid Expenses and Other Assets, Net .......................... (16,758) 1,094 Increase in Deferred Rent Receivable ........................ (1,942) (2,315) Decrease in Accounts Payable and Accrued Expenses and Rents Received in Advance and Security Deposits......... (3,472) (18,944) --------- --------- Net Cash Provided by Operating Activities ............. 102,814 121,861 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of and Additions to Investment in Real Estate ..... (193,593) (296,147) Net Proceeds from Sales of Investment in Real Estate ........ 229,739 236,180 Investments in and Advances to Other Real Estate Partnerships ........................................... (90,836) (92,471) Distributions from Other Real Estate Partnerships in Excess of Equity in Income ............................. 68,368 83,870 Contributions to and Investments In Joint Ventures .......... (6,654) -- Distributions from Joint Ventures in Excess of Equity in Income ................................................. 744 340 Repayment of Mortgage Loans Receivable ...................... 5,780 2,987 Increase in Restricted Cash ................................. (6,123) (9,599) --------- --------- Net Cash Provided by (Used in) Investing Activities .... 7,425 (74,840) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Unit Contributions ........................................... 15,895 16,646 Unit Distributions ........................................... (94,256) (91,543) Purchase of General Partner Units ............................ -- (5,141) Repurchase of Restricted Units ............................... (1,796) (1,866) Preferred Unit Distributions ................................. (18,388) (21,693) Repayments on Mortgage Loans Payable ......................... (2,825) (12,826) Proceeds from Senior Unsecured Debt .......................... 247,950 199,390 Other Proceeds from Senior Unsecured Debt .................... 1,772 -- Repayment of Senior Unsecured Debt ........................... (84,930) (100,000) Redemption of Preferred Units ................................ (100,000) -- Proceeds from Acquisition Facilities Payable ................. 359,900 322,300 Repayments on Acquisition Facilities Payable ................. (432,000) (340,300) Cost of Debt Issuance and Prepayment Fees .................... (3,876) (8,942) Book Overdraft ............................................... 2,315 -- --------- --------- Net Cash Used in Financing Activities ................. (110,239) (43,975) --------- --------- Net Increase in Cash and Cash Equivalents .................... -- 3,046 Cash and Cash Equivalents, Beginning of Period ............... -- 3,644 --------- --------- Cash and Cash Equivalents, End of Period ..................... $ -- $ 6,690 ========= =========
The accompanying notes are an integral part of the financial statements. 5 FIRST INDUSTRIAL, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) 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") with an approximate 85.2% ownership interest at September 30, 2002. The limited partners of the Operating Partnership own approximately a 14.8% interest in the Operating Partnership at September 30, 2002. The Company also owns a preferred general partnership interest in the Operating Partnership with an aggregate liquidation priority of $250,000. The Company is a real estate investment trust ("REIT") as defined in the Internal Revenue Code. The Company's operations are conducted primarily through the Operating Partnership. The Operating Partnership is the sole member of several limited liability companies (the "L.L.C.s"), the sole stockholder of First Industrial Development Services, Inc., and holds at least a 99% limited partnership interest in each of eight limited partnerships (together, the "Other Real Estate Partnerships"). The Operating Partnership, through separate wholly-owned limited liability companies in which it is the sole member, also owns minority equity interests in and provides asset and property management services to, three joint ventures which invest in industrial properties (the "September 1998 Joint Venture", the "September 1999 Joint Venture" and the "December 2001 Joint Venture"). 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 Partnerships 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. The consolidated financial statements of the Operating Partnership report the L.L.C.s and First Industrial Development Services, Inc. (the "Consolidated Operating Partnership") on a consolidated basis. The Other Real Estate Partnerships, the September 1998 Joint Venture, the September 1999 Joint Venture and the December 2001 Joint Venture are accounted for under the equity method of accounting. As of September 30, 2002, the Consolidated Operating Partnership owned 791 in-service properties containing an aggregate of approximately 50.3 million square feet of gross leasable area ("GLA"). On a combined basis, as of September 30, 2002, the Other Real Estate Partnerships owned 118 in-service properties containing an aggregate of approximately 11.3 million square feet of GLA. Profits, losses and distributions of the Operating Partnership, the L.L.C.s and the 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 or ownership agreements, as applicable, of the Operating Partnership, the L.L.C.s and the Other Real Estate Partnerships. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited interim financial statements have been prepared in accordance with the accounting policies described in the financial statements and related notes included in the Operating Partnership's 2001 Form 10-K and should be read in conjunction with such financial statements and related notes. The following notes to these interim financial statements highlight significant changes to the notes included in the December 31, 2001 audited financial statements included in the Operating Partnership's 2001 Form 10-K and present interim disclosures as required by the Securities and Exchange Commission. 6 FIRST INDUSTRIAL, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED In order to conform with generally accepted accounting principles, management, in preparation of the Consolidated Operating Partnership's financial statements, is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of September 30, 2002 and December 31, 2001, and the reported amounts of revenues and expenses for each of the nine and three months ended September 30, 2002 and 2001. Actual results could differ from those estimates. In the opinion of management, all adjustments consist of normal recurring adjustments necessary for a fair statement of the financial position of the Consolidated Operating Partnership as of September 30, 2002 and the results of its operations for each of the nine and three months ended September 30, 2002 and 2001 and its cash flows for the nine months ended September 30, 2002 and 2001. Tenant Accounts Receivable, Net: The Consolidated Operating Partnership provides an allowance for doubtful accounts against the portion of tenant accounts receivable which is estimated to be uncollectible. Tenant accounts receivable in the consolidated balance sheets are shown net of an allowance for doubtful accounts of $1,707 as of September 30, 2002 and December 31, 2001. Discontinued Operations: On January 1, 2002, the Consolidated Operating Partnership adopted the Financial Accounting Standards Board's ("FASB") Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long Lived Assets" ("FAS 144"). FAS 144 addresses financial accounting and reporting for the disposal of long lived assets. FAS 144 requires that the results of operations and gains or losses on the sale of properties sold subsequent to December 31, 2001 that were not classified as held for sale at December 31, 2001 as well as the results of operations from properties that were classified as held for sale subsequent to December 31, 2001 be presented in discontinued operations. FAS 144 also requires prior period results of operations for these properties to be restated and presented in discontinued operations in prior consolidated statements of operations. Recent Accounting Pronouncements: On April 30, 2002, the FASB issued Financial Accounting Standards No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections" ("FAS 145"). FAS 145 rescinds both Statement of Financial Accounting Standards No. 4, "Reporting Gains and Losses from Extinguishment of Debt" ("FAS 4"), and the amendment to FAS 4, Statement of Financial Accounting Standards No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements". FAS 145 eliminates the requirement that gains and losses from the extinguishment of debt be aggregated and, if material, classified as an extraordinary item, net of the related income tax effect, unless the criteria in Accounting Principles Board Opinion No. 30, "Reporting the Results of Operations- Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions" are met. FAS 145 is effective for fiscal years beginning after May 15, 2002. The Consolidated Operating Partnership believes that FAS 145 will not have an impact on its consolidated financial position, liquidity and results of operations. Reclassification: Certain 2001 items have been reclassified to conform to the 2002 presentation. 7 FIRST INDUSTRIAL, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) 3. 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 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:
September 30, December 31, 2002 2001 ------------ ----------- ASSETS Assets: Investment in Real Estate, Net ................. $357,156 $355,504 Real Estate Held for Sale, Net ................. 1,993 2,048 Other Assets, Net .............................. 97,788 72,643 -------- -------- Total Assets ........................... $456,937 $430,195 ======== ======== LIABILITIES AND PARTNERS' CAPITAL Liabilities: Mortgage Loans Payable ......................... $ 40,247 $ 40,728 Other Liabilities .............................. 12,388 7,811 -------- -------- Total Liabilities ..................... 52,635 48,539 -------- -------- Partners' Capital .............................. 404,302 381,656 -------- -------- Total Liabilities and Partners' Capital $456,937 $430,195 ======== ========
Condensed Combined Statements of Operations:
Nine Months Ended Three Months Ended ------------------------------ -------------------------------- September 30, September 30, September 30, September 30, 2002 2001 2002 2001 ------------ ------------ ------------ ------------ Total Revenues ................................. $ 42,352 $ 39,882 $ 15,126 $ 14,115 Property Expenses .............................. (11,956) (10,965) (4,451) (3,870) Interest Expense ............................... (2,210) (2,989) (741) (752) Amortization of Deferred Financing Costs ....... (50) (50) (16) (17) Depreciation and Other Amortization ............ (8,680) (7,199) (3,097) (2,549) Gain on Sale of Real Estate .................... -- 14,763 -- 6,677 Income from Discontinued Operations (Including Gain on Sale of Real Estate of $19,437 for the Nine Months Ended September 30, 2002 and $430 for the Three Months ended September 30, 2002) ................. 21,152 6,697 416 1,250 -------- -------- -------- -------- Net Income ..................................... $ 40,608 $ 40,139 $ 7,237 $ 14,854 ======== ======== ======== ========
8 FIRST INDUSTRIAL, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) 4. INVESTMENTS IN JOINT VENTURES During the nine months ended September 30, 2002, the Consolidated Operating Partnership, through wholly-owned limited liability companies in which the Operating Partnership is the sole member, recognized approximately $674 in asset management fees from the September 1998 Joint Venture and the September 1999 Joint Venture, and approximately $817 in property management fees from the September 1998 Joint Venture, the September 1999 Joint Venture and the December 2001 Joint Venture. The Operating Partnership, through a wholly-owned limited liability company in which it is the sole member, invested approximately $6,334 in the December 2001 Joint Venture. The Consolidated Operating Partnership, through wholly-owned limited liability companies in which the Operating Partnership is the sole member, received distributions of approximately $1,879 from the September 1998 Joint Venture, the September 1999 Joint Venture and the December 2001 Joint Venture. As of September 30, 2002, the September 1998 Joint Venture owned 88 industrial properties comprising approximately 4.1 million square feet of GLA, the September 1999 Joint Venture owned two industrial properties comprising approximately .3 million square feet of GLA and the December 2001 Joint Venture had economic interests in 21 industrial properties comprising approximately 3.6 million square feet of GLA. For the properties purchased by the December 2001 Joint Venture from the Consolidated Operating Partnership, the Consolidated Operating Partnership deferred 15% of the gain resulting from these sales, which is equal to the Consolidated Operating Partnership's economic interest in the December 2001 Joint Venture. 5. MORTGAGE LOANS PAYABLE, NET, SENIOR UNSECURED DEBT, NET AND ACQUISITION FACILITY PAYABLE Mortgage Loans Payable, Net: On April 1, 2002, the Consolidated Operating Partnership, through the Operating Partnership, assumed a mortgage loan in the principal amount of $5,814 (the "Acquisition Mortgage Loan VIII"). The Acquisition Mortgage Loan VIII is collateralized by one property in Rancho Dominguez, California, bears interest at a fixed rate of 8.26% and provides for monthly principal and interest payments based on a 22-year amortization schedule. The Acquisition Mortgage Loan VIII matures on December 1, 2019. The Acquisition Mortgage Loan VIII may be prepaid only after November 2004 in exchange for the greater of a 1% prepayment fee or yield maintenance premium. On April 1, 2002, the Consolidated Operating Partnership, through the Operating Partnership, assumed a mortgage loan in the principal amount of $6,030 (the "Acquisition Mortgage Loan IX"). The Acquisition Mortgage Loan IX is collateralized by one property in Rancho Dominguez, California, bears interest at a fixed rate of 8.26% and provides for monthly principal and interest payments based on a 22-year amortization schedule. The Acquisition Mortgage Loan IX matures on December 1, 2019. The Acquisition Mortgage Loan IX may be prepaid only after November 2004 in exchange for the greater of a 1% prepayment fee or yield maintenance premium. On January 31, 1997, the Consolidated Operating Partnership, through the Operating Partnership, assumed a loan in the amount of $705 (the "LB Loan II"). On June 14, 2002, the Consolidated Operating Partnership, through the Operating Partnership, paid off and retired the LB Loan II. On August 31, 1998, the Consolidated Operating Partnership, through the Operating Partnership, assumed a mortgage loan in the amount of approximately $965 (the "Acquisition Mortgage Loan VI"). On July 2, 2002, the Consolidated Operating Partnership, through the Operating Partnership paid off and retired the Acquisition Mortgage Loan VI. 9 FIRST INDUSTRIAL, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) 5. MORTGAGE LOANS PAYABLE, NET, SENIOR UNSECURED DEBT, NET AND ACQUISITION FACILITY PAYABLE, CONTINUED Senior Unsecured Debt: On April 15, 2002, the Consolidated Operating Partnership, through the Operating Partnership, issued $200,000 of senior unsecured debt which matures on April 15, 2012 and bears a coupon interest rate of 6.875% (the "2012 Notes"). The issue price of the 2012 Notes was 99.310%. Interest is paid semi-annually in arrears on April 15 and October 15. The Operating Partnership also entered into interest rate protection agreements which were used to fix the interest rate on the 2012 Notes prior to issuance. The Operating Partnership settled the interest rate protection agreements for approximately $1,772 of proceeds, which is included in other comprehensive income. The debt issue discount and the settlement amount of the interest rate protection agreements are being amortized over the life of the 2012 Notes as an adjustment to interest expense. The 2012 Notes contain certain covenants, including limitations on incurrence of debt and debt service coverage. On April 15, 2002, the Consolidated Operating Partnership, through the Operating Partnership, issued $50,000 of senior unsecured debt which matures on April 15, 2032 and bears a coupon interest rate of 7.75% (the "2032 Notes"). The issue price of the 2032 Notes was 98.660%. Interest is paid semi-annually in arrears on April 15 and October 15. The debt issue discount is being amortized over the life of the 2032 Notes as an adjustment to interest expense. The 2032 Notes contain certain covenants, including limitations on incurrence of debt and debt service coverage. On May 13, 1997, the Consolidated Operating Partnership, through the Operating Partnership, issued $100,000 of senior unsecured debt which matures on May 15, 2027 and bears a coupon interest rate of 7.15% (the" 2027 Notes"). The issue price of the 2027 Notes was 99.854%. The 2027 Notes were redeemable, at the option of the holders thereof, on May 15, 2002. The Operating Partnership received redemption notices from holders representing $84,930 of the 2027 Notes outstanding. On May 15, 2002, the Consolidated Operating Partnership, through the Operating Partnership, paid off and retired $84,930 of the 2027 Notes. Due to the partial pay off of the 2027 Notes, the Consolidated Operating Partnership has recorded an extraordinary loss of approximately $888 comprised of the amount paid above the carrying amount of the 2027 Notes, the write-off of the pro rata unamortized deferred financing fees and legal costs. Acquisition Facility Payable: On September 27, 2002, the Consolidated Operating Partnership, through the Operating Partnership, amended and restated its $300,000 unsecured line of credit (the "2002 Unsecured Acquisition Facility", formerly, the "2000 Unsecured Acquisition Facility"). The 2002 Unsecured Acquisition Facility matures on September 30, 2005 and bears interest at a floating rate of LIBOR plus .70%, or the Prime Rate, at the Consolidated Operating Partnership's election. The net unamortized deferred financing fees related to the 2000 Unsecured Acquisition Facility and any additional deferred financing fees incurred with the 2002 Unsecured Acquisition Facility are being amortized over the life of the 2002 Unsecured Acquisition Facility in accordance with Emerging Issues Task Force Issue 98-14, "Debtor's Accounting for Changes in Line-of-Credit or Revolving-Debt Arrangements". Interest Rate Swap Agreements: In January 2002 and August 2002, the Consolidated Operating Partnership, through the Operating Partnership, entered into two interest rate swap agreements (the "Interest Rate Swap Agreements") which fixed the interest rate on a portion of the Company's 2002 Unsecured Acquisition Facility. The 10 FIRST INDUSTRIAL, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) 5. MORTGAGE LOANS PAYABLE, NET, SENIOR UNSECURED DEBT, NET AND ACQUISITION FACILITY PAYABLE, CONTINUED Consolidated Operating Partnership designated the Interest Rate Swap Agreements as cash flow hedges. The January 2002 interest swap agreement has a notional value of $25,000, is effective from February 4, 2002 through February 4, 2003 and fixed the LIBOR rate at 2.4975%. The August 2002 interest rate swap agreement has a notional value of $25,000, is effective from September 5, 2002 through September 5, 2003 and fixed the LIBOR rate at 1.884%. Any payments or receipts from the Interest Rate Swap Agreements will be treated as a component of interest expense. The Consolidated Operating Partnership anticipates that the Interest Rate Swap Agreements will be highly effective, and, as a result, the change in value will be shown in other comprehensive income. The following table discloses information about all of the Consolidated Operating Partnership's outstanding interest rate swap agreements at September 30, 2002. Notional Amount Effective Date Maturity Date LIBOR Rate - --------------- ---------------- ---------------- ------------- $25,000 October 5, 2001 October 5, 2002 2.5775% $25,000 October 5, 2001 July 5, 2003 3.0775% $25,000 February 4, 2002 February 4, 2003 2.4975% $25,000 September 5, 2002 September 5, 2003 1.884% 11 FIRST INDUSTRIAL, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) 5. MORTGAGE LOANS PAYABLE, NET, SENIOR UNSECURED DEBT, NET AND ACQUISITION FACILITY PAYABLE, CONTINUED The following table discloses certain information regarding the Consolidated Operating Partnership's mortgage loans payable, senior unsecured debt and acquisition facility payable:
INTEREST OUTSTANDING BALANCE AT ACCRUED INTEREST PAYABLE AT RATE AT ------------------------- --------------------------- ------------- SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, MATURITY 2002 2001 2002 2001 2002 DATE ---------- ---------- -------- --------- ------------ -------- MORTGAGE LOANS PAYABLE, NET - --------------------------- CIGNA Loan....................... $ 32,623 $ 33,214 $ 204 $ 207 7.500% 4/01/03 (6) Assumed Loans.................... 6,150 6,538 --- --- 9.250% 1/01/13 LB Loan II...................... --- 705 --- 24 8.000% (1) Acquisition Mortgage Loan III.... 2,959 3,065 22 --- 8.875% 6/01/03 Acquisition Mortgage Loan IV..... 2,235 2,286 16 --- 8.950% 10/01/06 Acquisition Mortgage Loan VI..... --- 923 (2) --- 7 8.875% 11/01/06 (7) Acquisition Mortgage Loan VIII... 5,764 --- 40 --- 8.260% 12/01/19 Acquisition Mortgage Loan IX..... 5,978 --- 41 --- 8.260% 12/01/19 ---------- ---------- -------- --------- Total............................ $ 55,709 46,731 323 238 ========== ========== ======== ========= SENIOR UNSECURED DEBT, NET - -------------------------- 2005 Notes....................... $ 50,000 $ 50,000 $ 1,246 $ 383 6.900% 11/21/05 2006 Notes....................... 150,000 150,000 3,500 875 7.000% 12/01/06 2007 Notes....................... 149,976 (3) 149,972 (3) 4,307 1,457 7.600% 5/15/07 2011 PATS........................ 99,598 (3) 99,563 (3) 2,786 942 7.375% 5/15/11 (4) 2017 Notes....................... 99,855 (3) 99,847 (3) 2,500 625 7.500% 12/01/17 2027 Notes....................... 15,052 (3) 99,877 (3) 407 914 7.150% 5/15/27 (5) 2028 Notes....................... 199,797 (3) 199,791 (3) 3,209 7,009 7.600% 7/15/28 2011 Notes....................... 199,487 (3) 199,441 (3) 655 4,343 7.375% 3/15/11 2012 Notes....................... 198,683 (3) --- 6,340 --- 6.875% 4/15/12 2032 Notes....................... 49,340 (3) --- 1,787 --- 7.750% 4/15/32 ---------- ---------- -------- --------- Total............................ $1,211,788 $1,048,491 $ 26,737 $ 16,548 ========== ========== ======== ========= ACQUISITION FACILITY PAYABLE - ---------------------------- 2000 Unsecured Acquisition Facility...................... $ --- $ 182,500 $ --- $ 571 (8) (8) ========== ========== ======== ========= ACQUISITION FACILITY PAYABLE - ---------------------------- 2002 Unsecured Acquisition Facility...................... $ 110,400 $ --- $ 68 $ --- 4.75% 9/30/05 ========== ========== ======== =========
(1) On June 14, 2002, the Consolidated Operating Partnership, through the Operating Partnership, paid off and retired the LB Loan II. (2) At December 31, 2001, the Acquisition Mortgage Loan VI is net of an unamortized premium of $41. (3) At September 30, 2002, the 2007 Notes, 2011 PATS, 2017 Notes, 2027 Notes, 2028 Notes, 2011 Notes, 2012 Notes and the 2032 Notes are net of unamortized discounts of $24, $402, $145, $18, $203, $513, $1,317 and $660, respectively. At December 31, 2001, the 2007 Notes, 2011 PATS, 2017 Notes, 2027 Notes, 2028 Notes and the 2011 Notes are net of unamortized discounts of $28, $437 $153, $123, $209 and $559, respectively. (4) The 2011 PATS are redeemable at the option of the holder thereof, on May 15, 2004. (5) The 2027 Notes were redeemable at the option of the holders thereof, on May 15, 2002. The Consolidated Operating Partnership, through the Operating Partnership, redeemed $84,930 of the 2027 Notes outstanding on May 15, 2002. (6) The Consolidated Operating Partnership paid off and retired the CIGNA Loan on October 1, 2002. (7) On July 2, 2002 the Consolidated Operating Partnership paid off and retired the Acquisition Mortgage Loan VI. (8) The 2000 Unsecured Acquisition Facility was amended and restated in September 2002. The following is a schedule of the stated maturities and scheduled principal payments of the mortgage loans payable, senior unsecured debt and acquisition facility payable for the next five years ending December 31, and thereafter: Amount ------------- Remainder of 2002 $ 32,904 2003 3,826 2004 1,010 2005 161,503 2006 153,022 Thereafter 1,028,914 ------------- Total $ 1,381,179 ============= 12 FIRST INDUSTRIAL, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) 5. MORTGAGE LOANS PAYABLE, NET, SENIOR UNSECURED DEBT, NET AND ACQUISITION FACILITY PAYABLE, CONTINUED The Consolidated Operating Partnership paid off and retired the CIGNA Loan (defined in Note 12) on October 1, 2002. As a result, the CIGNA Loan is shown as maturing in 2002. Other Comprehensive Income: In conjunction with the prior issuances of senior unsecured debt, the Consolidated Operating Partnership, through the Operating Partnership, entered into interest rate protection agreements to fix the interest rate on anticipated offerings of senior unsecured debt (the "Interest Rate Protection Agreements"). In the next 12 months, the Consolidated Operating Partnership will amortize approximately $197 into net income as an increase to interest expense. The following is a roll forward of the accumulated other comprehensive loss balance relating to the Consolidated Operating Partnership's derivative transactions: Balance at December 31, 2001................................... $ (12,381) Settlement of Interest Rate Protection Agreements......... 1,772 Change in Market Value of Interest Rate Swap Agreements... (259) Amortization of Interest Rate Protection Agreements ...... 130 --------- Balance at September 30, 2002.................................. $ (10,738) ========= 6. PARTNERS' CAPITAL The Operating Partnership has issued general partnership units, limited partnership units (together, the "Units") and preferred general partnership units. The general partnership units resulted from capital contributions from the Company. The limited partnership units are issued in conjunction with the acquisition of certain properties. Subject to lock-up periods and certain adjustments, limited partnership units are convertible into common stock, par value $.01, of the Company on a one - for - one basis or cash at the option of the Company. The preferred general partnership units resulted from preferred capital contributions from the Company. The Operating Partnership will be required to make all required distributions on the preferred general partnership units prior to any distribution of cash or assets to the holders of the general and limited partnership units except for distributions required to enable the Company to maintain its qualification as a REIT. General Partner Preferred Units: On May 14, 1997 the Company issued 4,000,000 Depositary Shares, each representing 1/100th of a share of the Company's 8 3/4%, $.01 par value, Series B Cumulative Preferred Stock (the "Series B Preferred Stock"), at an initial offering price of $25.00 per Depositary Share. The net proceeds of $96,292 received from the Series B Preferred Stock were contributed to the Operating Partnership in exchange for 8 3/4% Series B Cumulative Preferred Units (the "Series B Preferred Units"). On or after May 14, 2002, the Series B Preferred Stock became redeemable for cash at the option of the Company, in whole or in part, at a redemption price equivalent to $25.00 per Depositary Share, or $100,000 in the aggregate, plus dividends accrued and unpaid to the redemption date. On April 12, 2002, the Company called for the redemption of all of its outstanding Series B Preferred Stock at the price of $25.00 per share, plus accrued and unpaid dividends. The Company redeemed the Series B Preferred Stock on May 14, 2002 and paid a prorated second quarter dividend of $.26736 per Depositary Share, totaling approximately $1,069. The Series B Cumulative Preferred Units were redeemed on May 14, 2002 as well. 13 FIRST INDUSTRIAL, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) 6. PARTNERS' CAPITAL, CONTINUED Unit Contributions: During the nine months ended September 30, 2002, the Company awarded 90,260 shares of restricted common stock to certain employees and 2,753 shares of restricted common stock to certain Directors. The Operating Partnership issued Units to the Company in the same amount. These shares of restricted common stock had a fair value of approximately $3,203 on the date of grant. The restricted common stock vests over periods from one to ten years. Compensation expense will be charged to earnings over the respective vesting period. During the nine months ended September 30, 2002, the Company issued 940,600 non-qualified employee stock options to certain officers, Directors and employees. These non-qualified employee stock options vest over periods from one to three years, have a strike price of $30.53-$33.15 per share and expire ten years from the date of grant. During the nine months ended September 30, 2002, certain employees exercised 561,418 non-qualified employee stock options. Net proceeds to the Company were approximately $15,895. The Consolidated Operating Partnership, through the Operating Partnership, issued Units to the Company in the same amount. During the nine months ended September 30, 2002, the Operating Partnership issued 18,203 Units having an aggregate market value of approximately $633 in exchange for property. Distributions: On January 22, 2002, the Operating Partnership paid a fourth quarter 2001 distribution of $.6800 per Unit, totaling approximately $31,196. On April 22, 2002, the Operating Partnership paid a first quarter 2002 distribution of $.6800 per Unit, totaling approximately $31,453. On July 22, 2002, the Operating Partnership paid a second quarter 2002 distribution of $.6800 per Unit, totaling approximately $31,607. On April 1, 2002, the Operating Partnership paid first quarter distributions of $54.688 per unit on its Series B Preferred Units, $53.906 per Unit on its Series C Preferred Units, $49.688 per unit on its Series D Preferred Units and $49.375 per unit on its Series E Preferred Units. The preferred unit distributions paid on April 1, 2002, totaled approximately $7,231. On May 14, 2002, the Operating Partnership paid a prorated second quarter distribution of $26.736 per unit, totaling approximately $1,069 on its Series B Preferred Units. On July 1, 2002 and September 30, 2002, the Operating Partnership paid second and third quarter distributions of $53.906 per unit on its Series C Preferred Units, $49.687 per unit on its Series D Preferred Units and $49.375 per unit on its Series E Preferred Units. The preferred unit distributions paid on July 1, 2002 and September 30, 2002 totaled approximately $5.0 million, respectively. 7. ACQUISITION AND DEVELOPMENT OF REAL ESTATE During the nine months ended September 30, 2002, the Consolidated Operating Partnership acquired 30 industrial properties comprising approximately 2.7 million square feet of GLA and one land parcel. The aggregate purchase price for these acquisitions totaled approximately $113,704 excluding costs incurred in conjunction with the acquisition of the properties. Eight of the 30 industrial properties acquired, comprising approximately .2 million square feet of GLA, were acquired from the September 1999 Joint Venture for an aggregate purchase price of approximately $13,000. The Consolidated Operating Partnership also completed the development of 13 industrial properties comprising approximately 2.5 million square feet of GLA at a cost of approximately $92.1 million. 14 FIRST INDUSTRIAL, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) 8. SALES OF REAL ESTATE, REAL ESTATE HELD FOR SALE AND DISCONTINUED OPERATIONS During the nine months ended September 30, 2002, the Consolidated Operating Partnership sold 50 industrial properties comprising approximately 5.2 million square feet of GLA that were not classified as held for sale at December 31, 2001, 12 properties comprising approximately 1.0 million square feet of GLA that were classified as held for sale at December 31, 2001, several land parcels and assigned to a third party the right to purchase certain properties. Gross proceeds from these sales were approximately $267,183. The gain on sale of real estate was approximately $31,129, of which $25,591 is shown in discontinued operations. In accordance with FAS 144, the results of operations and gain on sale of real estate for the 50 sold properties that were not identified as held for sale at December 31, 2001 are included in discontinued operations. At September 30, 2002, the Consolidated Operating Partnership had six industrial properties comprising approximately .6 million square feet of GLA held for sale. One of the six properties comprising approximately .1 million square feet of GLA held for sale at September 30, 2002 was identified as held for sale as of December 31, 2001. In accordance with FAS 144, the results of operations of the properties identified as held for sale during the nine months ended September 30, 2002 are included in discontinued operations. There can be no assurance that such properties held for sale will be sold. The following table discloses certain information regarding the one industrial property identified as held for sale by the Consolidated Operating Partnership, prior to January 1, 2002. NINE MONTHS ENDED THREE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ----------------- ------------------ 2002 2001 2002 2001 ----- ----- ----- ----- Total Revenues $ 631 $ 169 $ 257 $ 27 Operating Expenses (156) (151) (54) (52) ----- ----- ----- ----- Net Income (Loss) $ 475 $ 18 $ 203 $ (25) ===== ===== ===== ===== 15 FIRST INDUSTRIAL, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) 9. SUPPLEMENTAL INFORMATION TO STATEMENT OF CASH FLOWS Supplemental disclosure of cash flow information:
Nine Months Ended ------------------------------ September 30, September 30, 2002 2001 ------------ ------------ Interest paid, net of capitalized interest ............................. $ 54,533 $ 53,435 ========= ========= Interest capitalized ................................................... $ 6,814 $ 6,978 ========= ========= Supplemental schedule of non-cash investing and financing activities: Distribution payable on units .......................................... $ 31,620 $ 30,660 ========= ========= Distribution payable on preferred units ................................ $ --- $ 7,231 ========= ========= Issuance of Units in exchange for property ................................ $ 633 $ 1,491 ========= ========= Exchange of limited partnership units for general partnership units: Limited partnership units ............................................. $ (3,323) $ (7,258) General partnership units ............................................. $ 3,323 $ 7,258 --------- --------- $ --- $ --- ========= ========= In conjunction with the property and land acquisitions, the following liabilities were assumed: Purchase of real estate ............................................. $ 113,704 $ 152,579 Accrued real estate taxes and security deposits ..................... $ (1,002) $ (1,488) Mortgage Debt ....................................................... $ (11,844) $ --- --------- --------- $ 100,858 $ 151,091 ========= ========= In conjunction with certain property sales, the Consolidated Operating Partnership provided seller financing: Notes Receivable ................................................... $ 18,471 -- ========= =========
16 FIRST INDUSTRIAL, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) 10. EARNINGS PER UNIT ("EPU") The computation of basic and diluted EPU is presented below:
Nine Months Ended Three Months Ended ---------------------------------- ------------------------------ September September 30, September 30, September 30, 30, 2002 2001 2002 2001 -------------- ---------------- -------------- ------------ Numerator: Income from Continuing Operations ...................... $ 72,186 $ 121,765 $ 17,726 $ 42,308 Less: Preferred Distributions .......................... (18,388) (21,693) (5,044) (7,231) -------------- ---------------- -------------- ------------ Income from Continuing Operations Available to Unitholders For Basic and Diluted EPU.............. 53,798 100,072 12,682 35,077 Discontinued Operations ................................ 30,497 5,243 14,474 2,964 -------------- ---------------- -------------- ------------ Net Income Available to Unitholders before Extraordinary Loss For Basic and Diluted EPU ..................... 84,295 105,315 27,156 38,041 Extraordinary Loss ..................................... (888) (10,309) -- -- -------------- ---------------- -------------- ------------ Net Income Available to Unitholders .................... $ 83,407 $ 95,006 $ 27,156 $ 38,041 ============== ================ ============== ============ Denominator: Weighted Average Units - Basic ......................... 46,268,057 46,503,069 46,503,733 46,737,886 Effect of Dilutive Securities: Employee and Director Common Stock Options of the Company that Result in the Issuance of General Partnership Units ................................... 296,928 251,838 205,318 232,427 -------------- ---------------- -------------- ------------ Weighted Average Units Outstanding - Diluted ........... 46,564,985 46,754,907 46,709,051 46,970,313 ============== ================ ============== ============ Basic EPU: Income from Continuing Operations Available to Unitholders ......................................... $ 1.16 $ 2.15 $ .27 $ .75 ============== ================ ============== ============ Discontinued Operations ................................ $ .66 $ .11 $ .31 $ .06 ============== ================ ============== ============ Net Income Available to Unitholders Before Extraordinary Loss ................................................ $ 1.82 $ 2.26 $ .58 $ .81 ============== ================ ============== ============ Extraordinary Loss ..................................... $ (.02) $ (.22) $ -- $ -- ============== ================ ============== ============ Net Income Available to Unitholders .................... $ 1.80 $ 2.04 $ .58 $ .81 ============== ================ ============== ============ Diluted EPU: Income from Continuing Operations Available to Unitholders ......................................... $ 1.16 $ 2.14 $ .27 $ .75 ============== ================ ============== ============ Discontinued Operations ................................ $ .65 $ .11 $ .31 $ .06 ============== ================ ============== ============ Net Income Available to Unitholders Before Extraordinary Loss ................................................ $ 1.81 $ 2.25 $ .58 $ .81 ============== ================ ============== ============ Extraordinary Loss ..................................... $ (.02) $ (.22) $ -- $ -- ============== ================ ============== ============ Net Income Available to Unitholders .................... $ 1.79 $ 2.03 $ .58 $ .81 ============== ================ ============== ============
11. COMMITMENTS AND CONTINGENCIES In the normal course of business, the Consolidated Operating Partnership is involved in legal actions arising from the ownership of its properties. In management's opinion, the liabilities, if any, that may ultimately result from such legal actions are not expected to have a materially adverse effect on the consolidated financial position, operations or liquidity of the Consolidated Operating Partnership. The Consolidated Operating Partnership has committed to the construction of 30 development projects totaling approximately 3.5 million square feet of GLA for an estimated investment of approximately $176.8 million. Of this amount, approximately $37.5 million remains to be funded. These developments are expected to be funded with proceeds from the sale of select properties, cash flows from operations and borrowings under the Operating Partnership's 2002 Unsecured Acquisition Facility. The 17 FIRST INDUSTRIAL, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) 11. COMMITMENTS AND CONTINGENCIES, CONTINUED Consolidated Operating Partnership expects to place in service 27 of the 30 development projects during the next twelve months. There can be no assurance that the Consolidated Operating Partnership will place these projects in service during the next twelve months or that the actual completion cost will not exceed the estimated completion cost stated above. 12. SUBSEQUENT EVENTS From October 1, 2002 to November 8, 2002, the Consolidated Operating Partnership acquired 27 industrial properties for an aggregate purchase price of approximately $45,994, excluding costs incurred in conjunction with the acquisition of these industrial properties. Eighteen of the 27 industrial properties acquired, were acquired from the September 1998 Joint Venture for an aggregate purchase price of approximately $14,770. The Consolidated Operating Partnership also sold three industrial properties for approximately $10,437 of gross proceeds. From October 1, 2002 to November 8, 2002, the Company repurchased 1,039,100 shares of its common stock at a weighted average price of approximately $27.03 per share. The Operating Partnership repurchased general partnership units from the Company in the same amount. On March 20, 1996, the Consolidated Operating Partnership, through the Operating Partnership and the Indianapolis Partnership, entered into a $36,750 mortgage loan (the "CIGNA Loan"). The Consolidated Operating Partnership paid off and retired the CIGNA Loan on October 1, 2002. On October 21, 2002, the Operating Partnership paid a third quarter 2002 distribution of $.6800 per Unit, totaling approximately $31,620. 18 FIRST INDUSTRIAL, L.P. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of First Industrial, L.P.'s (the "Operating Partnership") financial condition and results of operations should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this Form 10-Q. This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Operating Partnership intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Operating Partnership, are generally identifiable by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project" or similar expressions. The Operating Partnership's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on the operations and future prospects of the Operating Partnership on a consolidated basis include, but are not limited to, changes in: economic conditions generally and the real estate market specifically, legislative/regulatory changes (including changes to laws governing the taxation of real estate investment trusts), availability of financing, interest rate levels, competition, supply and demand for industrial properties in the Operating Partnership's current and proposed market areas, potential environmental liabilities, slippage in development or lease-up schedules, tenant credit risks, higher-than-expected costs and changes in general accounting principles, policies and guidelines applicable to real estate investment trusts. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Further information concerning the Operating Partnership and its business, including additional factors that could materially affect the Operating Partnership's financial results, is included herein and in the Operating Partnership's other filings with the Securities and Exchange Commission. The Operating Partnership was organized as a limited partnership in the state of Delaware on November 23, 1993. The sole general partner of the Operating Partnership is First Industrial Realty Trust, Inc. (the "Company") with an approximate 85.2% ownership interest at September 30, 2002. The limited partners of the Operating Partnership own, in the aggregate, approximately a 14.8% interest in the Operating Partnership at September 30, 2002. The Company also owns a preferred general partnership interest in the Operating Partnership with an aggregate liquidation priority of $250.0 million. The Company is a real estate investment trust ("REIT") as defined in the Internal Revenue Code. The Company's operations are conducted primarily through the Operating Partnership. The Operating Partnership is the sole member of several limited liability companies (the "L.L.C.s") and the sole shareholder of First Industrial Development Services, Inc. and holds at least a 99% limited partnership interest in each of eight limited partnerships (together, the "Other Real Estate Partnerships"). The Operating Partnership, through separate wholly-owned limited liability companies in which it is the sole member, also owns minority equity interests in and provides asset and property management services to three joint ventures which invest in industrial properties (the "September 1998 Joint Venture", the "September 1999 Joint Venture" and the "December 2001 Joint Venture"). The financial statements of the Operating Partnership report the L.L.C.s and First Industrial Development Services, Inc. (the "Consolidated Operating Partnership") on a consolidated basis. The Other Real Estate Partnerships, the September 1998 Joint Venture, the September 1999 Joint Venture and the December 2001 Joint Venture are accounted for under the equity method of accounting. 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 19 partner. Each general partner of the Other Real Estate Partnerships is a wholly-owned subsidiary of the Company. Profits, losses and distributions of the Operating Partnership, the L.L.C.s and the Other Real Estate Partnerships are allocated to the general partner and the limited partners, or members, as applicable, in accordance with the provisions contained within the partnership agreements or operating agreements, as applicable, of the Operating Partnership, the L.L.C.s and the Other Real Estate Partnerships. RESULTS OF OPERATIONS At September 30, 2002, the Consolidated Operating Partnership owned 791 in-service properties with approximately 50.3 million square feet of gross leasable area ("GLA"), compared to 824 in-service properties with approximately 52.5 million square feet of GLA at September 30, 2001. During the period between October 1, 2001 and September 30, 2002, the Consolidated Operating Partnership acquired 40 properties containing approximately 3.9 million square feet of GLA, completed development of 14 properties totaling approximately 2.5 million square feet of GLA and sold 81 in-service properties totaling approximately 7.0 million square feet of GLA, six out of service properties and several land parcels. The Consolidated Operating Partnership also took seven properties out of service that are under redevelopment comprising approximately 1.7 million square feet of GLA, and placed in service one property comprising approximately .1 million square feet of GLA. COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 2002 TO NINE MONTHS ENDED SEPTEMBER 30, 2001 Rental income and tenant recoveries and other income decreased by approximately $12.3 million or 5.2% due primarily to a decrease in same store rental income and tenant recoveries and other income as discussed below, as well as a decrease in rental income and tenant recoveries and other income for the nine months ended September 30, 2002 as compared to the nine months ended September 30, 2001 due to properties sold during the year ended December 31, 2001. This decrease is offset by an increase in rental income and tenant recoveries and other income for the nine months ended September 30, 2002 as compared to the nine months ended September 30, 2001 due to properties acquired subsequent to December 31, 2000. Rental income and tenant recoveries and other income from properties owned prior to January 1, 2001 decreased by approximately $3.2 million or 1.7% due primarily to a decrease in average occupied GLA for the nine months ended September 30, 2002 as compared to the nine months ended September 30, 2001. Property expenses, which include real estate taxes, repairs and maintenance, property management, utilities, insurance and other expenses, increased by approximately $.9 million or 1.3%. This increase is due primarily to an increase in same store property expenses as discussed below, as well as an increase in property expenses for the nine months ended September 30, 2002 as compared to the nine months ended September 30, 2001 due to properties acquired subsequent to December 31, 2000. This increase is offset by a decrease in property expenses for the nine months ended September 30, 2002 as compared to the nine months ended September 30, 2001 due to properties sold during the year ended December 31, 2001. Property expenses from properties owned prior to January 1, 2001 increased by approximately $1.5 million or 2.7% due primarily to an increase in real estate taxes, repairs and maintenance and insurance expense. The increase in real estate taxes is primarily due to an increase in real estate taxes in many of the Company's markets. The increase in repairs and maintenance is due primarily to an increase in maintenance company expenses and related costs. The increase in insurance expense is due primarily to an increase in insurance premiums. General and administrative expense increased by approximately $.7 million due primarily to increases in employee compensation and additional employees for the nine months ended September 30, 2002 as compared to the nine months ended September 30, 2001, offset by the write-off of the Consolidated Operating Partnership's technology investment of approximately $.7 million in the second quarter of 2001. Interest expense increased by approximately $4.6 million for the nine months ended September 30, 2002 compared to the nine months ended September 30, 2001 due primarily to a higher average debt balance outstanding for the nine months ended September 30, 2002 compared to the nine months ended 20 September 30, 2001 as well as a slight decrease in capitalized interest due to a decrease in development activities. The average debt balance outstanding for the nine months ended September 30, 2002 and 2001 was approximately $1,379.9 million and $1,260.2 million, respectively. This was slightly offset by a decrease in the weighted average interest rate on the Consolidated Operating Partnership's outstanding debt for the nine months ended September 30, 2002 (6.8%) as compared to the nine months ended September 30, 2001 (7.1%). Amortization of deferred financing costs increased by approximately $.1 million due primarily to amortization of additional deferred financing costs incurred in conjunction with the issuance of the 2012 Notes (defined below) and the 2032 Notes (defined below). Depreciation and other amortization increased by approximately $4.8 million due primarily to the average book value of assets held for sale for the nine months ended September 30, 2001 exceeding the average book value of assets held for sale for the nine months ended September 30, 2002. Once a property is classified as held for sale, the Consolidated Operating Partnership ceases depreciating and amortizing the property. The increase in depreciation and amortization is also due to additional depreciation and amortization recognized for properties acquired subsequent to December 31, 2000. Equity in income of Other Real Estate Partnerships increased by approximately $1.5 million due primarily to an increase in gain on sale of real estate (whether classified as continuing operations or discontinued operations), offset by a decrease in net operating income (whether classified as continuing operations or discontinued operations) and a preferred distribution made by one of the Other Real Estate Partnerships in 2001. Equity in income of joint ventures increased by approximately $.4 million or 51.1% due primarily to an increase in gain on sale of real estate and the start up of one of the Consolidated Operating Partnership's joint ventures in December 2001. The approximate $5.5 million gain on sale of real estate for the nine months ended September 30, 2002 resulted from the sale of 12 industrial properties that were identified as held for sale at December 31, 2001 and several land parcels. Gross proceeds from these sales were approximately $39.8 million. The approximate $33.7 million gain on sale of real estate for the nine months ended September 30, 2001 resulted from the sale of 99 industrial properties and several land parcels. Gross proceeds from these sales were approximately $249.4 million. Income from discontinued operations of approximately $30.5 million for the nine months ended September 30, 2002 reflects the results of operations and gain on sale of 50 industrial properties that were not held for sale at December 31, 2001 and were sold during the nine months ended September 30, 2002, the gain associated with the assignment of the right to a third party to purchase certain properties, as well as the results of operations of five industrial properties identified as held for sale during the nine months ended September 30, 2002. Gross proceeds from the sales of the 50 industrial properties were approximately $227.4 million, resulting in a gain on sale of real estate of approximately $25.6 million. Income from discontinued operations of approximately $5.2 million for the nine months ended September 30, 2001 reflects the results of operations of the 50 industrial properties that were not held for sale at December 31, 2001 and were sold during the nine months ended September 30, 2002 as well as the results of operations of five industrial properties identified as held for sale during the nine months ended September 30, 2002. The approximate $.9 million extraordinary loss for the nine months ended September 30, 2002 is due to the early retirement of senior unsecured debt and various mortgage loans. The extraordinary loss is comprised of the amount paid above the carrying amount of the senior unsecured debt, the write-off of pro rata unamortized deferred financing fees and legal costs. The approximate $10.3 million extraordinary loss for the nine months ended September 30, 2001 is due to the early retirement of senior unsecured debt and various mortgage loans. The extraordinary loss is comprised of the amount paid above the carrying amount of the senior unsecured debt, the write-off of unamortized deferred financing fees, the write-off of the unamortized portion of an interest rate protection agreement which was used to fix the interest rate on the senior unsecured debt prior to 21 issuance, the settlement of an interest rate protection agreement used to fix the retirement price of the senior unsecured debt, prepayment fees, legal costs and other expenses. COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 2002 TO THREE MONTHS ENDED SEPTEMBER 30, 2001 Rental income and tenant recoveries and other income increased by approximately $2.2 million or 3.0% due primarily to an increase in same store rental income and tenant recoveries and other income as discussed below, as well as an increase in rental income and tenant recoveries and other income for the three months ended September 30, 2002 as compared to the three months ended September 30, 2001 due to properties acquired subsequent to June 30, 2001. This increase is offset by a decrease in rental income and tenant recoveries and other income for the three months ended September 30, 2002 as compared to the three months ended September 30, 2001 due to properties sold during the six months ended December 31, 2001. Rental income and tenant recoveries and other income from properties owned prior to July 1, 2001, increased by approximately $.8 million or 1.2% due primarily to an increase in tenant recoveries due to an increase in property expenses (as discussed below) for the three months ended September 30, 2002 as compared to the three months ended September 30, 2001, offset by a decrease in average occupied GLA for the three months ended September 30, 2002 as compared to the three months ended September 30, 2001. Property expenses, which include real estate taxes, repairs and maintenance, property management, utilities, insurance and other expenses increased by approximately $3.0 million or 14.7%. This increase is due primarily to an increase in same store property expenses as discussed below, as well as an increase in property expenses for the three months ended September 30, 2002 as compared to the three months ended September 30, 2001 due to properties acquired subsequent to June 30, 2001. This increase is offset by a decrease in property expenses for the three months ended September 30, 2002 as compared to the three months ended September 30, 2001 due to properties sold during the six months ended December 31, 2001. Property expenses from properties owned prior to July 1, 2001 increased by approximately $1.9 million or 10.8% due primarily to an increase in real estate taxes, repairs and maintenance and insurance expense. The increase in real estate taxes is primarily due to an increase in real estate taxes in many of the Consolidated Operating Partnership's markets. The increase in repairs and maintenance is due primarily to an increase in maintenance company expenses and related costs. The increase in insurance is due primarily to an increase in insurance premiums. General and administrative expense remained relatively unchanged. Interest expense increased by approximately $3.7 million for the three months ended September 30, 2002 compared to the three months ended September 30, 2001 due primarily to a higher average debt balance outstanding for the three months ended September 30, 2002 compared to the three months ended September 30, 2001 as well as a decrease in capitalized interest due to a decrease in development activities. The average debt balance outstanding for the three months ended September 30, 2002 and 2001 was approximately $1,434.2 million and $1,242.1 million, respectively. This was slightly offset by a decrease in the weighted average interest rate on the Consolidated Operating Partnership's outstanding debt for the three months ended September 30, 2002 (6.9%) as compared to the three months ended September 30, 2001 (7.1%). Amortization of deferred financing costs remained relatively unchanged. Depreciation and other amortization increased by approximately $2.0 million due primarily to the average book value of assets held for sale for the three months ended September 30, 2001 exceeding the average book value of assets held for sale for the three months ended September 30, 2002. Once a property is classified as held for sale, the Consolidated Operating Partnership ceases depreciating and amortizing the property. The increase in depreciation and amortization is also due to additional depreciation and amortization recognized for properties acquired subsequent to June 30, 2001. Equity in income of Other Real Estate Partnerships decreased by approximately $7.5 million due primarily to a decrease in gain on sale of real estate. Equity in income of joint ventures increased by approximately $.2 million or 77.5% due primarily to the start up of one of the Consolidated Operating Partnership's joint ventures in December 2001. The approximate $1.3 million gain on sale of real estate for the three months ended September 30, 2002 resulted from the sale of three industrial properties that were identified as held for sale at December 31, 2001 and several land parcels. Gross proceeds from these sales were approximately $20.3 million. 22 The approximate $12.1 million gain on sale of real estate for the three months ended September 30, 2001 resulted from the sale of 37 industrial properties and several land parcels. Gross proceeds from these sales were approximately $78.2 million. Income from discontinued operations of approximately $14.5 million for the three months ended September 30, 2002 reflects the results of operations and gain on sale of 19 industrial properties that were not held for sale at December 31, 2001 and were sold during the three months ended September 30, 2002, the gain associated with the assignment of the right to a third party to purchase certain properties, as well as the results of operations of five industrial properties identified as held for sale during the three months ended September 30, 2002. Gross proceeds from the sales of the 19 industrial properties were approximately $106.7 million, resulting in a gain on sale of real estate of approximately $13.3 million. Income from discontinued operations of approximately $3.0 million for the three months ended September 30, 2001 reflects the results of operations of the 19 industrial properties that were not held for sale at December 31, 2001 and were sold during the three months ended September 30, 2002 as well as the results of operations of five industrial properties identified as held for sale during the three months ended September 30, 2002. LIQUIDITY AND CAPITAL RESOURCES On September 30, 2002, the Consolidated Operating Partnership's restricted cash totaled approximately $12.5 million. Restricted cash was comprised of gross proceeds from the sales of certain properties. These sale proceeds will be disbursed as the Consolidated Operating Partnership exchanges properties under Section 1031 of the Internal Revenue Code. NINE MONTHS ENDED SEPTEMBER 30, 2002 Net cash provided by operating activities of approximately $102.8 million for the nine months ended September 30, 2002 was comprised primarily of net income of approximately $101.8 million and adjustments for non-cash items of approximately $21.2 million, offset by the net change in operating assets and liabilities of approximately $20.2 million. The adjustments for the non-cash items of approximately $21.2 million are primarily comprised of depreciation and amortization of approximately $53.3 million and an extraordinary loss of approximately $.9 million from the early retirement of debt, offset by the gain on sale of real estate of approximately $31.1 million and the effect of the straight-lining of rental income of approximately $1.9 million. Net cash provided by investing activities of approximately $7.4 million for the nine months ended September 30, 2002 was comprised primarily of the net proceeds from the sale of real estate, distributions from the Other Real Estate Partnerships, distributions from the Consolidated Operating Partnership's industrial real estate joint ventures and the repayment of mortgage loans receivable, offset by the acquisition of real estate, development of real estate, capital expenditures related to the expansion and improvement of existing real estate, an increase in restricted cash from sales proceeds deposited with an intermediary for Section 1031 exchange purposes, investments in and advances to the Other Real Estate Partnerships and contributions to and investments in the December 2001 Joint Venture. Net cash used in financing activities of approximately $110.2 million for the nine months ended September 30, 2002 was comprised primarily of the redemption of its Series B Preferred Units (defined below), the partial pay off of the 2027 Notes (defined below), general partnership and limited partnership units ("Unit") distributions and preferred general partnership unit distributions, repayments on mortgage loans payable, repurchase of restricted units due to the repurchase of restricted stock from employees of the Company to pay for withholding taxes on the vesting of restricted stock and net repayments under the Operating Partnership's unsecured line of credit, offset by the net proceeds from the issuance of senior unsecured debt, Unit contributions and a book overdraft. 23 NINE MONTHS ENDED SEPTEMBER 30, 2001 Net cash provided by operating activities of approximately $121.9 million for the nine months ended September 30, 2001 was comprised primarily of net income of approximately $116.7 million and adjustments for non-cash items of approximately $23.0 million, offset by the net change in operating assets and liabilities of approximately $17.8 million. The adjustments for the non-cash items of approximately $23.0 million are primarily comprised of depreciation and amortization of approximately $48.7 million and an extraordinary loss of approximately $10.3 million from the early retirement of debt, offset by the gain on sale of real estate of approximately $33.7 million and the effect of the straight-lining of rental income of approximately $2.3 million. Net cash used in investing activities of approximately $74.8 million for the nine months ended September 30, 2001 was comprised primarily of the acquisition of real estate, development of real estate, capital expenditures related to the expansion and improvement of existing real estate, an increase in restricted cash from sales proceeds deposited with an intermediary for Section 1031 exchange purposes and investments in and advances to the Other Real Estate Partnerships, offset by the net proceeds from the sale of real estate, distributions from investment in Other Real Estate Partnerships, distributions from the Operating Partnership's industrial real estate joint ventures and the repayment of mortgage loans receivable. Net cash used in financing activities of approximately $44.0 million for the nine months ended September 30, 2001 was comprised primarily of Unit and preferred general partnership unit distributions, the repurchase of restricted units due to the repurchase of restricted stock from employees of the Company to pay for withholding taxes on the vesting of restricted stock, repayments of senior unsecured debt, repayments on mortgage loans payable, prepayment fees incurred in repayment of senior unsecured debt, prepayment fees incurred in the early retirement of two mortgage loans and the net repayments under the Operating Partnership's unsecured line of credit, offset by Unit contributions and the net proceeds from the issuance of senior unsecured debt. INVESTMENT IN REAL ESTATE AND DEVELOPMENT OF REAL ESTATE During the nine months ended September 30, 2002, the Consolidated Operating Partnership acquired 30 industrial properties comprising approximately 2.7 million square feet of GLA, and one land parcel. The aggregate purchase price for these acquisitions totaled approximately $113.7 million, excluding costs incurred in conjunction with the acquisition of the property. Eight of the 30 industrial properties acquired, comprising approximately .2 million square feet of GLA, were acquired from the September 1999 Joint Venture for an aggregate purchase price of approximately $13.0 million. The Consolidated Operating Partnership also completed the development of 13 industrial properties comprising approximately 2.5 million square feet of GLA at a cost of approximately $92.1 million. The Consolidated Operating Partnership has committed to the construction of 30 development projects totaling approximately 3.5 million square feet of GLA for an estimated investment of approximately $176.8 million. Of this amount, approximately $37.5 million remains to be funded. These developments are expected to be funded with proceeds from the sale of select properties, cash flows from operations and borrowings under the Operating Partnership's 2002 Unsecured Acquisition Facility (defined below). The Consolidated Operating Partnership expects to place in service 27 of the 30 development projects during the next twelve months. There can be no assurance that the Consolidated Operating Partnership will place these projects in service during the next twelve months or that the actual completion cost will not exceed the estimated completion cost stated above. SALE OF REAL ESTATE, REAL ESTATE HELD FOR SALE AND DISCONTINUED OPERATIONS During the nine months ended September 30, 2002, the Consolidated Operating Partnership sold 50 industrial properties comprising approximately 5.2 million square feet of GLA that were not classified as held for sale at December 31, 2001, 12 properties comprising 1.0 million square feet of GLA that were classified as held for sale at December 31, 2001, several land parcels and assigned to a third party the right to purchase certain properties. Gross proceeds from these sales 24 were approximately $267.2 million. In accordance with FAS 144, the results of operations and gain on sale of real estate for the 50 sold properties that were not identified as held for sale at December 31, 2001 are included in discontinued operations. At September 30, 2002, the Consolidated Operating Partnership had six industrial properties comprising approximately .6 million square feet of GLA held for sale. One of the six properties comprising approximately .1 million square feet of GLA that were held for sale as of September 30, 2002 was identified as held for sale at December 31, 2001. Income from operations for this one industrial property held for sale for the nine months ended September 30, 2002 and 2001 is approximately $.5 million and $.02 million, respectively. Income from operations for this one industrial property held for sale for the three months ended September 30, 2002 and 2001 is approximately $.2 million and $(.03) million, respectively. Net carrying value of the six industrial properties held for sale at September 30, 2002 is approximately $19.4 million. In accordance with FAS 144, the results of operations of the five industrial properties identified as held for sale during the nine months ended September 30, 2002 are included in discontinued operations. There can be no assurance that such properties held for sale will be sold. INVESTMENTS IN JOINT VENTURES During the nine months ended September 30, 2002, the Consolidated Operating Partnership, through wholly-owned limited liability companies in which the Operating Partnership is the sole member, recognized, in the aggregate, approximately $1.5 million in asset management and property management fees from the September 1998 Joint Venture, the September 1999 Joint Venture and the December 2001 Joint Venture. The Operating Partnership, through a wholly-owned limited liability company in which it is the sole member, invested approximately $6.3 million in the December 2001 Joint Venture. The Consolidated Operating Partnership, through wholly-owned limited liability companies in which the Operating Partnership is the sole member, received distributions of approximately $1.9 million from the September 1998 Joint Venture and the September 1999 Joint Venture. As of September 30, 2002, the September 1998 Joint Venture owned 88 industrial properties comprising approximately 4.1 million square feet of GLA, the September 1999 Joint Venture owned two industrial properties comprising approximately .3 million square feet of GLA and the December 2001 Joint Venture had economic interests in 21 industrial properties comprising approximately 3.6 million square feet of GLA. For the properties purchased by the December 2001 Joint Venture from the Consolidated Operating Partnership, the Consolidated Operating Partnership deferred 15% of the gain resulting from these sales, which is equal to the Consolidated Operating Partnership's economic interest in the December 2001 Joint Venture. MORTGAGE LOANS PAYABLE On April 1, 2002, the Consolidated Operating Partnership, through the Operating Partnership, assumed a mortgage loan in the principal amount of approximately $5.8 million (the "Acquisition Mortgage Loan VIII"). The Acquisition Mortgage Loan VIII is collateralized by one property in Rancho Dominguez, California, bears interest at a fixed rate of 8.26% and provides for monthly principal and interest payments based on a 22-year amortization schedule. The Acquisition Mortgage Loan VIII matures on December 1, 2019. The Acquisition Mortgage Loan VIII may be prepaid only after November 2004 in exchange for the greater of a 1% prepayment fee or yield maintenance premium. On April 1, 2002, the Consolidated Operating Partnership, through the Operating Partnership, assumed a mortgage loan in the principal amount of approximately $6.0 million (the "Acquisition Mortgage Loan IX"). The Acquisition Mortgage Loan IX is collateralized by one property in Rancho Dominguez, California, bears interest at a fixed rate of 8.26% and provides for monthly principal and interest payments based on a 22-year amortization schedule. The Acquisition Mortgage Loan IX matures on December 1, 2019. The Acquisition Mortgage Loan IX may be prepaid only after November 2004 in exchange for the greater of a 1% prepayment fee or yield maintenance premium. 25 On January 31, 1997, the Consolidated Operating Partnership, through the Operating Partnership, assumed a loan in the amount of approximately $.7 million (the "LB Loan II"). On June 14, 2002, the Consolidated Operating Partnership, through the Operating Partnership, paid off and retired the LB Loan II. On August 31, 1998, the Consolidated Operating Partnership, through the Operating Partnership, assumed a mortgage loan in the amount of approximately $1.0 million (the "Acquisition Mortgage Loan VI"). On July 2, 2002, the Consolidated Operating Partnership, through the Operating Partnership paid off and retired the Acquisition Mortgage Loan VI. SENIOR UNSECURED DEBT On April 15, 2002, the Operating Partnership issued $200 million of senior unsecured debt which matures on April 15, 2012 and bears a coupon interest rate of 6.875% (the "2012 Notes"). The issue price of the 2012 Notes was 99.310%. Interest is paid semi-annually in arrears on April 15 and October 15. The Operating Partnership also entered into interest rate protection agreements which were used to fix the interest rate on the 2012 Notes prior to issuance. The Operating Partnership settled the interest rate protection agreements for approximately $1.8 million of proceeds, which is included in other comprehensive income. The debt issue discount and the settlement amount of the interest rate protection agreements are being amortized over the life of the 2012 Notes as an adjustment to interest expense. The 2012 Notes contain certain covenants, including limitations on incurrence of debt and debt service coverage. On April 15, 2002, the Operating Partnership issued $50 million of senior unsecured debt which matures on April 15, 2032 and bears a coupon interest rate of 7.75% (the "2032 Notes"). The issue price of the 2032 Notes was 98.660%. Interest is paid semi-annually in arrears on April 15 and October 15. The debt issue discount is being amortized over the life of the 2032 Notes as an adjustment to interest expense. The 2032 Notes contain certain covenants, including limitations on incurrence of debt and debt service coverage. On May 13, 1997, the Consolidated Operating Partnership, through the Operating Partnership, issued $100 million of senior unsecured debt which matures on May 15, 2027 and bears a coupon interest rate of 7.15% (the" 2027 Notes"). The issue price of the 2027 Notes was 99.854%. The 2027 Notes were redeemable, at the option of the holders thereof, on May 15, 2002. The Operating Partnership received redemption notices from holders representing approximately $84.9 million of the 2027 Notes outstanding. On May 15, 2002, the Consolidated Operating Partnership, through the Operating Partnership, paid off and retired approximately $84.9 million of the 2027 Notes. Due to the partial pay off of the 2027 Notes, the Consolidated Operating Partnership has recorded an extraordinary loss of approximately $.9 million comprised of the amount paid above the carrying amount of the 2027 Notes, the write-off of the pro rata unamortized deferred financing fees and legal costs. ACQUISITION FACILITY PAYABLE On September 27, 2002, the Consolidated Operating Partnership, through the Operating Partnership, amended and restated its $300 million unsecured line of credit (the "2002 Unsecured Acquisition Facility", formerly, the "2000 Unsecured Acquisition Facility"). The 2002 Unsecured Acquisition Facility matures on September 30, 2005 and bears interest at a floating rate of LIBOR plus .70%, or the Prime Rate, at the Consolidated Operating Partnership's election. The net unamortized deferred financing fees related to the 2000 Unsecured Acquisition Facility and any additional deferred financing fees incurred with the 2002 Unsecured Acquisition Facility are being amortized over the life of the 2002 Unsecured Acquisition Facility in accordance with Emerging Issues Task Force Issue 98-14, "Debtor's Accounting for Changes in Line-of-Credit or Revolving-Debt Arrangements". 26 INTEREST RATE SWAP AGREEMENTS In January 2002 and August 2002, the Consolidated Operating Partnership, through the Operating Partnership, entered into two interest rate swap agreements (the "Interest Rate Swap Agreements") which fixed the interest rate on a portion of the Company's 2002 Unsecured Acquisition Facility. The Consolidated Operating Partnership designated the Interest Rate Swap Agreements as cash flow hedges. The January 2002 interest swap agreement has a notional value of $25 million, is effective from February 4, 2002 through February 4, 2003 and fixed the LIBOR rate at 2.4975%. The August 2002 interest rate swap agreement has a notional value of $25 million, is effective from September 5, 2002 through September 5, 2003 and fixed the LIBOR rate at 1.884%. Any payments or receipts from the Interest Rate Swap Agreements will be treated as a component of interest expense. The Consolidated Operating Partnership anticipates that the Interest Rate Swap Agreements will be highly effective, and as a result, the change in value will be shown in other comprehensive income. GENERAL PARTNER PREFERRED UNITS On May 14, 1997 the Company issued 4,000,000 Depositary Shares, each representing 1/100th of a share of the Company's 8 3/4%, $.01 par value, Series B Cumulative Preferred Stock (the "Series B Preferred Stock"), at an initial offering price of $25.00 per Depositary Share. The net proceeds of approximately $96.3 million received from the Series B Preferred Stock were contributed to the Operating Partnership in exchange for 8 3/4% Series B Cumulative Preferred Units (the "Series B Preferred Units"). On or after May 14, 2002, the Series B Preferred Stock became redeemable for cash at the option of the Company, in whole or in part, at a redemption price equivalent to $25.00 per Depositary Share, or $100 million in the aggregate, plus dividends accrued and unpaid to the redemption date. On April 12, 2002, the Company called for the redemption of all of its outstanding Series B Preferred Stock at the price of $25.00 per share, plus accrued and unpaid dividends. The Company redeemed the Series B Preferred Stock on May 14, 2002 and paid a prorated second quarter dividend of $.26736 per Depositary Share, totaling approximately $1.1 million. The Series B Cumulative Preferred Units were redeemed on May 14, 2002 as well. MARKET RISK The following discussion about the Consolidated Operating Partnership's risk-management activities includes "forward-looking statements" that involve risk and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. This analysis presents the hypothetical gain or loss in earnings, cash flows or fair value of the financial instruments and derivative instruments which are held by the Consolidated Operating Partnership at September 30, 2002 that are sensitive to changes in the interest rates. While this analysis may have some use as a benchmark, it should not be viewed as a forecast. In the normal course of business, the Consolidated Operating Partnership also faces risks that are either non-financial or non-quantifiable. Such risks principally include credit risk and legal risk and are not represented in the following analysis. At September 30, 2002, $1,367.5 million (approximately 99.3% of total debt at September 30, 2002) of the Consolidated Operating Partnership's debt was fixed rate debt (included in the fixed rate debt is $100 million of borrowings under the Consolidated Operating Partnership's 2002 Unsecured Acquisition Facility which the Consolidated Operating Partnership fixed the interest rate via interest rate swap agreements) and $10.4 million (approximately .7% of total debt at September 30, 2002) was variable rate debt. The Consolidated Operating Partnership also had outstanding a written put option (the "Written Option"), which was issued in conjunction with the initial offering of one tranche of senior unsecured debt. Currently, the Consolidated Operating Partnership does not enter into financial instruments for trading or other speculative purposes. For fixed rate debt, changes in interest rates generally affect the fair value of the debt, but not earnings or cash flows of the Consolidated Operating Partnership. Conversely, for variable rate debt, 27 changes in the interest rate generally do not impact the fair value of the debt, but would affect the Consolidated Operating Partnership's future earnings and cash flows. The interest rate risk and changes in fair market value of fixed rate debt generally do not have a significant impact on the Consolidated Operating Partnership until the Consolidated Operating Partnership is required to refinance such debt. See Note 5 to the consolidated financial statements for a discussion of the maturity dates of the Consolidated Operating Partnership's various fixed rate debt. Based upon the amount of variable rate debt outstanding at September 30, 2002, a 10% increase or decrease in the interest rate on the Consolidated Operating Partnership's variable rate debt would decrease or increase, respectively, future net income and cash flows by approximately $.1 million per year. A 10% increase in interest rates would decrease the fair value of the fixed rate debt at September 30, 2002 by approximately $52.3 million to $1,454.7 million. A 10% decrease in interest rates would increase the fair value of the fixed rate debt at September 30, 2002 by approximately $56.8 million to $1,563.8 million. A 10% increase in interest rates would decrease the fair value of the Written Option at September 30, 2002 by approximately $2.4 million to $13.8 million. A 10% decrease in interest rates would increase the fair value of the Written Option at September 30, 2002 by approximately $2.7 million to $18.9 million. GENERAL PARTNERSHIP AND LIMITED PARTNERSHIP UNIT CONTRIBUTIONS, EMPLOYEE STOCK OPTIONS AND RESTRICTED STOCK The Operating Partnership has issued Units. The general partnership units resulted from capital contributions from the Company. The limited partnership units are issued in conjunction with the acquisition of certain properties. Unit Contributions: During the nine months ended September 30, 2002, the Company awarded 90,260 shares of restricted common stock to certain employees and 2,753 shares of restricted common stock to certain Directors. The Operating Partnership issued Units to the Company in the same amount. These shares of restricted common stock had a fair value of approximately $3.2 million on the date of grant. The restricted common stock vests over periods from one to ten years. Compensation expense will be charged to earnings over the respective vesting periods. During the nine months ended September 30, 2002, the Company issued 940,600 non-qualified employee stock options to certain officers, Directors and employees. These non-qualified employee stock options vest over periods from one to three years, have a strike price of $30.53-$33.15 per share and expire ten years from the date of grant. During the nine months ended September 30, 2002, certain employees exercised 561,418 non-qualified employee stock options. Net proceeds to the Company were approximately $15.9 million. The Consolidated Operating Partnership, through the Operating Partnership, issued Units to the Company in the same amount. During the nine months ended September 30, 2002, the Operating Partnership issued 18,203 Units having an aggregate market value of approximately $.6 million in exchange for property. Distributions: On January 22, 2002, the Operating Partnership paid a fourth quarter 2001 distribution of $.6800 per Unit, totaling approximately $31.2 million. On April 22, 2002, the Operating Partnership paid a first quarter 2002 distribution of $.6800 per Unit, totaling approximately $31.5 million. On July 22, the Operating Partnership paid a second quarter distribution of $.6800 per Unit, totaling approximately $31.6 million. 28 On April 1, 2002, the Operating Partnership paid first quarter distributions of $54.688 per unit on its Series B Preferred Units, $53.906 per Unit on its Series C Preferred Units, $49.688 per unit on its Series D Preferred Units and $49.375 per unit on its Series E Preferred Units. The preferred unit distributions paid on April 1, 2002, totaled approximately $7.2 million. On May 14, 2002, the Operating Partnership paid a prorated second quarter distribution of $26.736 per unit, totaling approximately $1.1 million on its Series B Preferred Units. On July 1, 2002 and September 30, 2002, the Operating Partnership paid second and third quarter distributions of $53.906 per unit on its Series C Preferred Units, $49.687 per unit on its Series D Preferred Units and $49.375 per unit on its Series E Preferred Units. The preferred unit distributions paid on July 1, 2002 and September 30, 2002 each totaled approximately $5.0 million. SUBSEQUENT EVENTS From October 1, 2002 to November 8, 2002, the Consolidated Operating Partnership acquired 27 industrial properties for an aggregate purchase price of approximately $46.0 million, excluding costs incurred in conjunction with the acquisition of these industrial properties. Eighteen of the 27 industrial properties acquired, were acquired from the September 1998 Joint Venture for an aggregate purchase price of approximately $14.8 million. The Consolidated Operating Partnership also sold three industrial properties for approximately $10.4 million of gross proceeds. From October 1, 2002 to November 8, 2002, the Company repurchased 1,039,100 shares of its common stock at a weighted average price of approximately $27.03 per share. The Operating Partnership repurchased general partnership units from the Company in the same amount. On March 20, 1996 the Consolidated Operating Partnership, through the Operating Partnership and Indianapolis Partnership, entered into a $36.8 million mortgage loan (the "CIGNA Loan"). The Company paid off and retired the CIGNA Loan on October 1, 2002. On October 21, 2002, the Operating Partnership paid a third quarter 2002 distribution of $.6800 per Unit, totaling approximately $31.6 million. SHORT-TERM AND LONG-TERM LIQUIDITY NEEDS The Consolidated Operating Partnership has considered its short-term (one year or less) liquidity needs and the adequacy of its estimated cash flow from operations and other expected liquidity sources to meet these needs. The Consolidated Operating Partnership believes that its principle short-term liquidity needs are to fund normal recurring expenses, debt service requirements and the minimum distribution required by the Company to maintain the Company's REIT qualification under the Internal Revenue Code. The Consolidated Operating Partnership anticipates that these needs will be met with cash flows provided by operating activities. The Consolidated Operating Partnership expects to meet long-term (greater than one year) liquidity requirements such as property acquisitions, developments, scheduled debt maturities, major renovations, expansions and other nonrecurring capital improvements through the disposition of select assets, the issuance of long-term unsecured indebtedness and the issuance of additional Units and preferred units. As of September 30, 2002 and November 8, 2002, approximately $250.0 million of debt securities was registered and unissued under the Securities Act of 1933, as amended. The Consolidated Operating Partnership may also finance the development or acquisition of additional properties through borrowings under the 2002 Unsecured Acquisition Facility. At September 30, 2002, borrowings under the 2002 Unsecured Acquisition Facility bore interest at a weighted average interest rate of 4.75%. The 2002 Unsecured Acquisition Facility bears interest at a floating rate of LIBOR plus .70%, or the Prime Rate, at the Operating Partnership's election. As of November 8, 2002, the Consolidated Operating Partnership, through the Operating Partnership, had approximately $98.3 million available in additional borrowings under the 2002 Unsecured Acquisition Facility. 29 OTHER On April 30, 2002, the FASB issued Financial Accounting Standards No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections" ("FAS 145"). FAS 145 rescinds both Statement of Financial Accounting Standards No. 4, "Reporting Gains and Losses from Extinguishment of Debt" ("FAS 4"), and the amendment to FAS 4, Statement of Financial Accounting Standards No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements". FAS 145 eliminates the requirement that gains and losses from the extinguishment of debt be aggregated and, if material, classified as an extraordinary item, net of the related income tax effect, unless the criteria in Accounting Principles Board Opinion No. 30, "Reporting the Results of Operations- Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions" are met. FAS 145 is effective for transactions occurring subsequent to May 15, 2002. The Consolidated Operating Partnership believes that FAS 145 will not have an impact on its consolidated financial position, liquidity and results of operations. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Response to this item is included in Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations" above. ITEM 4. CONTROLS AND PROCEDURES The Company's principal executive officer and principal financial officer, after evaluating the effectiveness of the Operating Partnership's disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c) as of a date within 90 days before the filing date of this report, have concluded that as of such date the Operating Partnership's disclosure controls and procedures were effective. There have been no significant changes (including corrective actions with regard to significant deficiencies or material weaknesses) in the Operating Partnership's internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation referenced in the paragraph above. 30 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES During the nine months ended September 30, 2002, the Operating Partnership issued an aggregate of 18,203 Units having an aggregate market value of approximately $.6 million in exchange for property. The above Units were issued in a private placement in reliance on Section 4(2) of the Securities Act of 1933, as amended, including Regulation D promulgated thereunder, to individuals or entities holding real property or interests therein. No underwriters were used in connection with such issuances. Subject to lock-up periods and certain adjustments, Units are generally convertible into common stock, par value $.01, of the Company on a one-for-one basis. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION Not applicable. ITEM 6. EXHIBITS AND REPORT ON FORM 8-K (a) Exhibits: Exhibit Number Description - -------------- -------------------------------------------------------------- 4.1 Second Amended and Restated Unsecured Revolving Credit Agreement, dated as of September 27, 2002, among the Operating Partnership, the Company, Bank One, NA, and certain other banks (incorporated by reference to Exhibit 10.1 of the Company's Form 10-Q for the quarter ended September 30, 2002, File No. 1-13102). 99.1* Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 8-K: Report on Form 8-K filed and dated August 14, 2002, providing the certification for the quarterly period ended June 30, 2002 of the Operating Partnership by the chief executive officer and chief financial officer of the Company, which is the general partner of the Operating Partnership, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. - --------- * Filed herewith 31 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. FIRST INDUSTRIAL, L.P. BY: FIRST INDUSTRIAL REALTY TRUST, INC. ITS SOLE GENERAL PARTNER Date: November 13, 2002 By: /s/ Scott A. Musil ------------------------------------ Scott A. Musil Senior Vice President- Controller (Chief Accounting Officer) 32 CERTIFICATION OF CHIEF EXECUTIVE OFFICER OF FIRST INDUSTRIAL REALTY TRUST, INC., FIRST INDUSTRIAL, L.P.'S GENERAL PARTNER, PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Michael W. Brennan, certify that: 1. I have reviewed this quarterly report on Form 10-Q of First Industrial, L.P.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 13, 2002 /s/ Michael W. Brennan ---------------------------------- Michael W. Brennan President and Chief Executive Officer First Industrial Realty Trust, Inc. 33 CERTIFICATION OF CHIEF FINANCIAL OFFICER OF FIRST INDUSTRIAL REALTY TRUST, INC., FIRST INDUSTRIAL, L.P.'S GENERAL PARTNER, PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Michael J. Havala, certify that: 1. I have reviewed this quarterly report on Form 10-Q of First Industrial, L.P.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 13, 2002 /s/ Michael J. Havala ---------------------------------- Michael J. Havala Chief Financial Officer First Industrial Realty Trust, Inc. 34 EXHIBIT INDEX Exhibit Number Description - -------------- -------------------------------------------------------------- 4.1 Second Amended and Restated Unsecured Revolving Credit Agreement, dated as of September 27, 2002, among the Operating Partnership, the Company, Bank One, NA, and certain other banks (incorporated by reference to Exhibit 10.1 of the Company's Form 10-Q for the quarter ended September 30, 2002, File No. 1-13102). 99.1* Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. - ---------- *Filed herewith 35 EX-99.1 3 c72913exv99w1.txt CERTIFICATION EXHIBIT 99.1 CERTIFICATION Accompanying Form 10-Q Report of First Industrial, L.P. Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chapter 63, Title 18 U.S.C.ss.1350(a) and (b)) Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chapter 63, Title 18 U.S.C. ss.1350(a) and (b)), each of the undersigned hereby certifies, to his knowledge, that the Quarterly Report on Form 10-Q for the period ended September 30, 2002 of First Industrial, L.P. (the "Company") fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: November 13, 2002 /s/ Michael W. Brennan ---------------------------------- Michael W. Brennan Chief Executive Officer First Industrial Realty Trust, Inc. Dated: November 13, 2002 /s/ Michael J. Havala ---------------------------------- Michael J. Havala Chief Financial Officer First Industrial Realty Trust, Inc. -----END PRIVACY-ENHANCED MESSAGE-----