-----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, C+eNvY8VaqvufHKkKqP9Qx+YalAwiEoon6pgDuxMJ/KBVBtwamOGBfKepiqR4HYe gGXn7XnoElgW5w7rLmkwVw== 0000950137-03-002935.txt : 20030514 0000950137-03-002935.hdr.sgml : 20030514 20030514173119 ACCESSION NUMBER: 0000950137-03-002935 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030331 FILED AS OF DATE: 20030514 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: 03700364 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 c76928e10vq.txt QUARTERLY REPORT 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 MARCH 31, 2003 | | 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 | | Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes |X| No | | FIRST INDUSTRIAL, L.P. FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 2003 INDEX
PAGE ---- PART I: FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002 ....... 2 Consolidated Statements of Operations and Comprehensive Income for the Three Months Ended March 31, 2003 and March 31, 2002 ............................... 3 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2003 and March 31, 2002 ...................................................... 4 Notes to Consolidated Financial Statements ................................... 5-15 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ................................................... 16-23 Item 3. Quantitative and Qualitative Disclosures About Market Risk .............. 23 Item 4. Controls and Procedures ................................................. 23 PART II: OTHER INFORMATION Item 1. Legal Proceedings ....................................................... 24 Item 2. Changes in Securities ................................................... 24 Item 3. Defaults Upon Senior Securities ......................................... 24 Item 4. Submission of Matters to a Vote of Security Holders ..................... 24 Item 5. Other Information ....................................................... 24 Item 6. Exhibits and Report on Form 8-K ......................................... 24 SIGNATURE ......................................................................... 26 CERTIFICATIONS .................................................................... 27-28 EXHIBIT INDEX ..................................................................... 29
1 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS FIRST INDUSTRIAL, L.P. CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS) (UNAUDITED)
March 31, December 31, 2003 2002 ---------- ------------ ASSETS Assets: Investment in Real Estate: Land .......................................................... $ 362,149 $ 363,543 Buildings and Improvements .................................... 1,815,521 1,829,922 Furniture, Fixtures and Equipment ............................. 1,174 1,174 Construction in Progress ...................................... 121,244 122,331 Less: Accumulated Depreciation ................................ (270,308) (261,375) ---------- ---------- Net Investment in Real Estate ......................... 2,029,780 2,055,595 Real Estate Held for Sale, Net of Accumulated Depreciation and Amortization of $312 at March 31, 2003 and $2,135 at December 31, 2002 .............................................. 5,339 7,040 Investments in and Advances to Other Real Estate Partnerships .... 362,966 377,776 Cash and Cash Equivalents ........................................ 1,010 -- Restricted Cash .................................................. 63,844 28,350 Tenant Accounts Receivable, Net .................................. 10,767 9,523 Investments in Joint Ventures .................................... 12,461 12,545 Deferred Rent Receivable ......................................... 13,056 12,765 Deferred Financing Costs, Net .................................... 11,012 11,449 Prepaid Expenses and Other Assets, Net ........................... 78,120 70,762 ---------- ---------- Total Assets .......................................... $2,588,355 $2,585,805 ========== ========== LIABILITIES AND PARTNERS' CAPITAL Liabilities: Mortgage Loans Payable, Net ...................................... $ 19,685 $ 19,909 Senior Unsecured Debt, Net ....................................... 1,211,933 1,211,860 Unsecured Line of Credit ......................................... 173,600 170,300 Accounts Payable and Accrued Expenses ............................ 66,354 66,874 Rents Received in Advance and Security Deposits .................. 26,543 25,538 Distributions Payable ............................................ 31,543 31,106 ---------- ---------- Total Liabilities ..................................... 1,529,658 1,525,587 ---------- ---------- Commitments and Contingencies ....................................... -- -- Partners' Capital: General Partner Preferred Units (100,000 units issued and Outstanding at March 31, 2003 and December 31, 2002) .......... 240,697 240,697 General Partner Units (39,243,042 and 38,598,321 units issued and outstanding at March 31, 2003 and December 31, 2002, respectively) ................................................. 683,253 665,647 Unamortized Value of General Partnership Restricted Units ....... (23,411) (4,307) Limited Partners' Units (6,809,177 and 6,811,956 units issued and outstanding at March 31, 2003 and December 31, 2002, respectively) ................................................. 168,516 168,740 Accumulated Other Comprehensive Loss ............................ (10,358) (10,559) ---------- ---------- Total Partners' Capital ............................. 1,058,697 1,060,218 ---------- ---------- Total Liabilities and Partners' Capital ............. $2,588,355 $2,585,805 ========== ==========
The accompanying notes are an integral part of the financial statements. 2 FIRST INDUSTRIAL, L.P. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (DOLLARS IN THOUSANDS, EXCEPT FOR PER UNIT DATA) (UNAUDITED)
Three Months Three Months Ended Ended March 31, 2003 March 31, 2002 -------------- -------------- Revenues: Rental Income ................................................................. $ 53,635 $ 52,496 Tenant Recoveries and Other Income ............................................ 18,701 16,215 ------------- ------------- Total Revenues ...................................................... 72,336 68,711 ------------- ------------- Expenses: Real Estate Taxes ............................................................. 11,558 10,937 Repairs and Maintenance ....................................................... 6,229 3,975 Property Management ........................................................... 3,407 2,716 Utilities ..................................................................... 2,441 1,737 Insurance ..................................................................... 911 454 Other ......................................................................... 1,553 1,585 General and Administrative .................................................... 6,600 5,139 Interest Expense .............................................................. 23,705 19,052 Amortization of Deferred Financing Costs ...................................... 437 445 Depreciation and Other Amortization ........................................... 16,241 14,426 ------------- ------------- Total Expenses ..................................................... 73,082 60,466 ------------- ------------- (Loss) 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 ......................................................... (746) 8,245 Equity in Income of Other Real Estate Partnerships ............................... 17,228 15,395 Equity in Income of Joint Ventures ............................................... 174 222 Gain on Sale of Real Estate ...................................................... 1,311 5,339 ------------- ------------- Income From Continuing Operations ................................................ 17,967 29,201 Income from Discontinued Operations (Including Gain on Sale of Real Estate of $16,476 and $1,723 for the Three Months Ended March 31, 2003 and 2002, respectively) ................................................. 17,189 5,545 ------------- ------------- Net Income ....................................................................... 35,156 34,746 Less: Preferred Unit Distributions .............................................. (5,044) (7,231) ------------- ------------- Net Income Available to Unitholders .............................................. $ 30,112 $ 27,515 ============= ============= Income from Continuing Operations Available to Unitholders Per Weighted Average Unit Outstanding: Basic ................................................................. $ .28 $ .48 ============= ============= Diluted ............................................................... $ .28 $ .48 ============= ============= Net Income Available to Unitholders Per Weighted Average Unit Outstanding: Basic ................................................................. $ .66 $ .60 ============= ============= Diluted ............................................................... $ .66 $ .60 ============= ============= Net Income ....................................................................... $ 35,156 $ 34,746 Other Comprehensive Income: Mark-to-Market of Interest Rate Protection Agreements and Interest Rate Swap Agreements .................................................... 154 3,573 Amortization of Interest Rate Protection Agreements ................... 47 54 ------------- ------------- Comprehensive Income ............................................................. $ 35,357 $ 38,373 ============= =============
The accompanying notes are an integral part of the financial statements. 3 FIRST INDUSTRIAL, L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS) (UNAUDITED)
Three Months Ended Three Months Ended March 31, 2003 March 31, 2002 ------------------ ------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net Income .................................................... $ 35,156 $ 34,746 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation ................................................. 13,925 13,573 Amortization of Deferred Financing Costs ..................... 437 445 Other Amortization ........................................... 3,629 3,246 Provision for Bad Debt ....................................... (600) -- Equity in Income of Joint Ventures ........................... (174) (222) Distributions from Joint Ventures ............................ 174 181 Gain on Sale of Real Estate .................................. (17,787) (7,062) Equity in Income of Other Real Estate Partnerships ........... (17,228) (15,395) Distributions from Investment in Other Real Estate Partnerships ............................................ 17,228 15,395 Increase in Tenant Accounts Receivable and Prepaid Expenses and Other Assets, Net ................................... (12,844) (4,579) Increase in Deferred Rent Receivable ......................... (535) (473) Decrease in Accounts Payable and Accrued Expenses and Rents Received in Advance and Security Deposits .... (4,067) (12,203) ---------- ---------- Net Cash Provided by Operating Activities .............. 17,314 27,652 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of and Additions to Investment in Real Estate ...... (22,166) (25,661) Net Proceeds from Sales of Investment in Real Estate ......... 59,895 56,788 Investments in and Advances to Other Real Estate Partnerships (34,272) (55,428) Distributions from Other Real Estate Partnerships in Excess of Equity in Income ........................................ 49,082 11,374 Contributions to and Investments in Joint Ventures ........... (459) (2,176) Distributions from Joint Ventures ............................ 356 -- Repayment of Mortgage Loans Receivable ....................... 1,689 18 Increase in Restricted Cash .................................. (35,494) (26,014) ---------- ---------- Net Cash Provided by (Used in) Investing Activities ..... 18,631 (41,099) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Unit Contributions ............................................ 727 10,062 Unit Distributions ............................................ (31,106) (31,196) Repurchase of Restricted Units ................................ (1,591) (1,679) Repurchase of General Partner Units............................ (997) -- Preferred Unit Distributions .................................. (5,044) -- Repayments on Mortgage Loans Payable .......................... (224) (364) Proceeds from Unsecured Lines of Credit ....................... 61,900 83,500 Repayments on Unsecured Lines of Credit ....................... (58,600) (46,500) ---------- ---------- Net Cash (Used in) Provided by Financing Activities .... (34,935) 13,823 ---------- ---------- Net Increase in Cash and Cash Equivalents ..................... 1,010 376 Cash and Cash Equivalents, Beginning of Period ................ -- -- ---------- ---------- Cash and Cash Equivalents, End of Period ...................... $ 1,010 $ 376 ========== ==========
The accompanying notes are an integral part of the financial statements. 4 FIRST INDUSTRIAL, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) (UNAUDITED) 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 March 31, 2003. The limited partners of the Operating Partnership own approximately a 14.8% interest in the Operating Partnership at March 31, 2003. 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 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 March 31, 2003, the Consolidated Operating Partnership owned 778 in-service properties containing an aggregate of approximately 48.8 million square feet of gross leasable area ("GLA"). On a combined basis, as of March 31, 2003, the Other Real Estate Partnerships owned 112 in-service properties containing an aggregate of approximately 10.3 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 2002 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, 2002 audited financial statements included in the Operating Partnership's 2002 Form 10-K and present interim disclosures as required by the Securities and Exchange Commission. 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 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) (UNAUDITED) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of March 31, 2003 and December 31, 2002, and the reported amounts of revenues and expenses for each of the three months ended March 31, 2003 and 2002. 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 March 31, 2003 and the results of its operations and its cash flows for each of the three months ended March 31, 2003 and 2002. 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 approximately $1,107 and $1,707 as of March 31, 2003 and December 31, 2002, respectively. Employee Benefit Plans: Prior to January 1, 2003, the Consolidated Operating Partnership accounted for its stock incentive plans under the recognition and measurement principles of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"). Under APB 25, compensation expense is not recognized for options issued in which the strike price is equal to the fair value of the Company's stock on the date of grant. Certain options issued in 2000 were issued with a strike price less than the fair value of the Company's stock on the date of grant. Compensation expense is being recognized for the intrinsic value of these options determined at the date of grant over the vesting period. On January 1, 2003, the Consolidated Operating Partnership adopted the fair value recognition provisions of the Financial Accounting Standards Board's ("FASB") Financial Accounting Standards No. 123, "Accounting for Stock Based Compensation" ("FAS 123"), as amended by Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure". The Consolidated Operating Partnership is applying the fair value recognition provisions of FAS 123 prospectively to all employee option awards granted after December 31, 2002. The Consolidated Operating Partnership has not awarded options to employees or directors of the Company in the first quarter of 2003, therefore no stock-based employee compensation expense is included in net income available to common stockholders related to the fair value recognition provisions of FAS 123. 6 FIRST INDUSTRIAL, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) (UNAUDITED) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED The following table illustrates the pro forma effect on net income and earnings per unit as if the fair value recognition provisions of FAS 123 had been applied to all outstanding and unvested option awards in each period presented:
Three Months Ended --------------------------- March 31, March 31, 2003 2002 ---------- ---------- Net Income Available to Unitholders - as reported .................... $ 30,112 $ 27,515 Add: Stock-Based Employee Compensation Expense Included in Net Income Available to Common Stockholders - as reported ............. 54 162 Less: Total Stock-Based Employee Compensation Expense Determined Under the Fair Value Method ................................ (412) (316) ---------- ---------- Net Income Available to Unitholders - pro forma ...................... $ 29,754 $ 27,361 ========== ========== Net Income Available to Unitholders per Unit - as reported - Basic ... $ .66 $ .60 Net Income Available to Unitholders per Unit - pro forma - Basic ..... $ .65 $ .60 Net Income Available to Unitholders per Unit - as reported - Diluted . $ .66 $ .60 Net Income Available to Unitholders per Unit - pro forma - Diluted ... $ .65 $ .59
Discontinued Operations: On January 1, 2002, the Consolidated Operating Partnership adopted the FASB's 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 as well as the results of operations from properties that are classified as held for sale at March 31, 2003 be presented in discontinued operations if both of the following criteria are met: (a) the operations and cash flows of the property have been (or will be) eliminated from the ongoing operations of the Consolidated Operating Partnership as a result of the disposal transaction and (b) the Consolidated Operating Partnership will not have any significant continuing involvement in the operations of the property after the disposal transaction. FAS 144 also requires prior period results of operations for these properties to be restated and presented in discontinued operations in prior consolidated statements of operations. Recent Accounting Pronouncements: In January 2003, the FASB issued Financial Accounting Standards Interpretation No. 46, "Consolidation of Variable Interest Entities - an interpretation of ARB No. 51" ("FIN 46"). FIN 46 addresses consolidation by business enterprises of special purpose entities ("SPEs") to which the usual condition for consolidation described in Accounting Research Bulletin No. 51 does not apply because the SPEs have no voting interests or otherwise are not subject to control through ownership of voting interests. For Variable Interest Entities created before February 1, 2003, the provisions of FIN 46 are effective no later than the beginning of the first interim or annual reporting period that starts after June 15, 2003. For Variable Interest Entities created after January 31, 2003, the provisions of FIN 46 are effective immediately. FIN 46 does not have a material effect on the Consolidated Operating Partnership's consolidated financial position, liquidity, and results of operations. 7 FIRST INDUSTRIAL, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) (UNAUDITED) 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:
March 31, December 31, 2003 2002 --------- ------------ ASSETS Assets: Investment in Real Estate, Net ................. $343,745 $332,552 Other Assets, Net .............................. 40,616 102,784 -------- -------- Total Assets ........................... $384,361 $435,336 ======== ======== LIABILITIES AND PARTNERS' CAPITAL Liabilities: Mortgage Loans Payable ......................... $ 2,583 $ 40,080 Other Liabilities .............................. 15,642 14,126 -------- -------- Total Liabilities ..................... 18,225 54,206 -------- -------- Partners' Capital .............................. 366,136 381,130 -------- -------- Total Liabilities and Partners' Capital $384,361 $435,336 ======== ========
Condensed Combined Statements of Operations:
Three Months Ended ------------------------------ March 31, 2003 March 31, 2002 -------------- -------------- Total Revenues .................................... $ 24,074 $ 12,146 Property Expenses ................................. (4,381) (3,393) Loss on Early Retirement of Mortgage Loan Payable ....................................... (1,466) -- Interest Expense .................................. (121) (732) Amortization of Deferred Financing Costs .......... (1) (17) Depreciation and Other Amortization ............... (2,770) (2,555) Gain on Sale of Real Estate ....................... 1,970 -- Income from Discontinued Operations (Including Gain on Sale of Real Estate of $8,606 for the Three Months Ended March 31, 2002 ..... -- 10,088 -------- -------- Net Income ........................................ $ 17,305 $ 15,537 ======== ========
8 FIRST INDUSTRIAL, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) (UNAUDITED) 4. INVESTMENTS IN JOINT VENTURES During the three months ended March 31, 2003, the Consolidated Operating Partnership, through wholly-owned limited liability companies in which the Operating Partnership is the sole member, recognized, in the aggregate, approximately $71 in asset management fees from the September 1998 Joint Venture and the September 1999 Joint Venture, collectively, and approximately $189 in property management fees from the September 1998 Joint Venture, the September 1999 Joint Venture and the December 2001 Joint Venture, collectively. During the three months ended March 31, 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 $224 in asset management fees from the September 1998 Joint Venture and the September 1999 Joint Venture, collectively, and approximately $243 in property management fees from the September 1998 Joint Venture, the September 1999 Joint Venture and the December 2001 Joint Venture, collectively. During the three months ended March 31, 2003 and 2002, the Consolidated Operating Partnership, through a wholly-owned limited liability company in which the Operating Partnership is the sole member, invested approximately $459 and $2,176, respectively, in the December 2001 Joint Venture. During the three months ended March, 31, 2003, the Consolidated Operating Partnership, through wholly-owned limited liability companies in which the Operating Partnership is the sole member, received distributions of approximately $530 from the September 1998 Joint Venture and the December 2001 Joint Venture, collectively. During the three months ended March 31, 2002, the Consolidated Operating Partnership, through wholly-owned limited liability companies in which the Operating Partnership is the sole member, received distributions of approximately $181 from the September 1998 Joint Venture and the September 1999 Joint Venture, collectively. As of March 31, 2003, the September 1998 Joint Venture owned 47 industrial properties comprising approximately 2.1 million square feet of GLA, the September 1999 Joint Venture owned one industrial property comprising approximately .1 million square feet of GLA and the December 2001 Joint Venture had economic interests in 25 industrial properties comprising approximately 4.4 million square feet of GLA. Twenty-three of the 25 properties purchased by the December 2001 Joint Venture were purchased 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. 9 FIRST INDUSTRIAL, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) (UNAUDITED) 5. MORTGAGE LOANS PAYABLE, NET, SENIOR UNSECURED DEBT, NET AND UNSECURED LINE OF CREDIT The following table discloses information about both of the Consolidated Operating Partnership's outstanding interest rate swap agreements (the "Interest Rate Swap Agreements") at March 31, 2003.
Notional Amount Effective Date Maturity Date LIBOR Rate ------------------------ --------------------- ---------------------- ------------------ $25,000 October 5, 2001 July 5, 2003 3.0775% $25,000 September 5, 2002 September 5, 2003 1.8840%
The following table discloses certain information regarding the Consolidated Operating Partnership's mortgage loans payable, senior unsecured debt and unsecured line of credit:
INTEREST OUTSTANDING BALANCE AT ACCRUED INTEREST PAYABLE AT RATE AT ----------------------------- --------------------------- ---------- MARCH 31, DECEMBER 31, MARCH 31, DECEMBER 31, MARCH 31, MATURITY 2003 2002 2003 2002 2003 DATE ---------- ------------- ---------- -------------- ---------- ------------- MORTGAGE LOANS PAYABLE, NET Assumed Loans ................ $ 5,876 $ 6,015 $ -- $ -- 9.250% 1/01/13 Acquisition Mortgage Loan IV . 2,195 2,215 17 17 8.950% 10/01/06 Acquisition Mortgage Loan VIII 5,701 5,733 39 39 8.260% 12/01/19 Acquisition Mortgage Loan IX . 5,913 5,946 41 41 8.260% 12/01/19 ---------- ------------- ---------- ------------- Total ........................ $ 19,685 $ 19,909 $ 97 $ 97 ========== ============= ========== ============= 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 ................... 149,978(1) 149,977(1) 4,306 1,457 7.600% 5/15/07 2011 PATS .................... 99,622(1) 99,610(1) 2,786 942 7.375% 5/15/11(2) 2017 Notes ................... 99,859(1) 99,857(1) 2,500 625 7.500% 12/01/17 2027 Notes ................... 15,052(1) 15,052(1) 407 138 7.150% 5/15/27 2028 Notes ................... 199,801(1) 199,799(1) 3,209 7,009 7.600% 7/15/28 2011 Notes ................... 199,517(1) 199,502(1) 656 4,343 7.375% 3/15/11 2012 Notes ................... 198,752(1) 198,717(1) 6,340 2,903 6.875% 4/15/12 2032 Notes ................... 49,352(1) 49,346(1) 1,787 818 7.750% 4/15/32 ---------- ------------- ---------- ------------- Total ........................ $1,211,933 $ 1,211,860 $ 26,737 $ 19,493 ========== ============= ========== ============= UNSECURED LINE OF CREDIT 2002 Unsecured Line of Credit $ 173,600 $ 170,300 $ 343 $ 415 2.555% 9/30/05 ========== ============= ========== =============
(1) At March 31, 2003, 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 $22, $378, $141, $18, $199, $483, $1,248 and $648, respectively. At December 31, 2002, the 2007 Notes, 2011 PATS, 2017 Notes, 2027 Notes, 2028 Notes, 2011 Notes, 2012 Notes and 2032 Notes are net of unamortized discounts of $23, $390 $143, $18, $201, $498, $1,283 and $654, respectively. (2) The 2011 PATS are redeemable at the option of the holder thereof, on May 15, 2004. The following is a schedule of the stated maturities and scheduled principal payments of the mortgage loans, senior unsecured debt and unsecured line of credit for the next five years ending December 31, and thereafter:
Amount ---------- Remainder of 2003 $ 707 2004 1,010 2005 224,704 2006 153,022 2007 151,197 Thereafter 877,715 ---------- Total $1,408,355 ==========
10 FIRST INDUSTRIAL, L.P NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) (UNAUDITED) 5. MORTGAGE LOANS PAYABLE, NET, SENIOR UNSECURED DEBT, NET AND UNSECURED LINE OF CREDIT, CONTINUED 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 $206 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, 2002 ................................. $(10,559) Mark-to-Market of Interest Rate Protection Agreements and Interest Rate Swap Agreements .................... 154 Amortization of Interest Rate Protection Agreements ..... 47 -------- Balance at March 31, 2003 .................................... $(10,358) ========
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. Unit Contributions: During the three months ended March 31, 2003, the Company awarded 692,888 shares of restricted common stock to certain employees and 1,073 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 $20,304 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. 11 FIRST INDUSTRIAL, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) (UNAUDITED) 6. PARTNERS' CAPITAL, CONTINUED During the three months ended March 31, 2003, certain employees exercised 30,766 non-qualified employee stock options. Net proceeds to the Company were approximately $727. The Consolidated Operating Partnership, through the Operating Partnership, issued Units to the Company in the same amount. Distributions: On January 27, 2003, the Operating Partnership paid a fourth quarter 2002 distribution of $.6850 per Unit, totaling approximately $31,106. On March 31, 2003, the Operating Partnership paid first quarter dividends of $53.906 per share ($.53906 per Depositary share), $49.688 per share ($.49688 per Depositary share) and $49.375 per share ($.49375 per Depositary share) on its Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock, respectively, totaling, in the aggregate, approximately $5,044. Purchase of Units: During the three months ended March 31, 2003, the Company repurchased 37,300 shares of its common stock at a weighted average price per share of approximately $26.73. The Operating Partnership purchased general partner Units from the Company in the same amount. 7. ACQUISITION AND DEVELOPMENT OF REAL ESTATE During the three months ended March 31, 2003, the Consolidated Operating Partnership acquired one industrial property comprising approximately .5 million square feet of GLA and several land parcels. The purchase price of these acquisitions totaled approximately $22,050, excluding costs incurred in conjunction with the acquisition of the industrial property and land parcels. The Consolidated Operating Partnership also completed the development of two industrial properties comprising approximately .3 million square feet of GLA at an estimated cost of approximately $10.8 million. 8. SALE OF REAL ESTATE, REAL ESTATE HELD FOR SALE AND DISCONTINUED OPERATIONS During the three months ended March 31, 2003, the Consolidated Operating Partnership sold 21 industrial properties comprising approximately 1.1 million square feet of GLA and several land parcels. One of the 21 sold industrial properties comprising approximately .1 million square feet of GLA was sold to one of the Consolidated Operating Partnership's industrial real estate joint ventures. Gross proceeds from the sales of the 21 industrial properties and several land parcels were approximately $62,145. The gain on sale of real estate was approximately $17,787. Twenty of the 21 sold industrial properties meet the criteria established by FAS 144 to be included in discontinued operations. Therefore, in accordance with FAS 144, the results of operations and gain on sale of real estate for the 20 sold industrial properties that meet the criteria established by FAS 144 are included in discontinued operations. The results of operations and gain on sale of real estate for the one industrial property and several land parcels that do not meet the criteria established by FAS 144 are included in continuing operations. At March 31, 2003, the Consolidated Operating Partnership had two industrial properties comprising approximately .1 million square feet of GLA held for sale. In accordance with FAS 144, the results of operations of the two industrial properties held for sale at March 31, 2003 are included in discontinued operations. There can be no assurance that such industrial properties held for sale will be sold. 12 FIRST INDUSTRIAL, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) (UNAUDITED) 8. SALE OF REAL ESTATE, REAL ESTATE HELD FOR SALE AND DISCONTINUED OPERATIONS, CONTINUED Income from discontinued operations for the three months ended March 31, 2003 reflects the results of operations and gain on sale of real estate of 20 industrial properties that were sold during the three months ended March 31, 2003 as well as the results of operations of two industrial properties held for sale at March 31, 2003. Income from discontinued operations for the three months ended March 31, 2002 reflects the results of operations of 20 industrial properties that were sold during the three months ended March 31, 2003, 69 industrial properties that were sold during the twelve months ended December 31, 2002 and two industrial properties identified as held for sale at March 31, 2003, as well as the gain on sale of real estate from 11 of the 69 sold industrial properties which were sold during the three months ended March 31, 2002. The following table discloses certain information regarding the industrial properties included in discontinued operations by the Consolidated Operating Partnership, at March 31, 2003 and 2002.
THREE MONTHS ENDED MARCH 31, -------------------- 2003 2002 -------- -------- Total Revenues .................... $ 1,642 $ 7,783 Operating Expenses ................ (695) (2,426) Depreciation and Amortization ..... (234) (1,536) Gain on Sale of Real Estate ....... 16,476 1,724 -------- -------- Income from Discontinued Operations $ 17,189 $ 5,545 ======== ========
9. SUPPLEMENTAL INFORMATION TO STATEMENT OF CASH FLOWS Supplemental disclosure of cash flow information:
Three Months Ended ------------------------ March 31, March 31, 2003 2002 ---------- ---------- Interest paid, net of capitalized interest ......................... $ 16,533 $ 14,656 ========== ========== Interest capitalized ............................................... $ 204 $ 2,855 ========== ========== Supplemental schedule of non-cash investing and financing activities: Distribution payable on units ..................................... $ 31,543 $ 31,453 ========== ========== Distribution payable on preferred units ............................ $ -- $ 7,231 ========== ========== Exchange of limited partnership units for general partnership units: Limited partnership units ......................................... $ (72) $ (322) General partnership units ......................................... 72 322 ---------- ---------- $ -- $ -- ========== ========== In conjunction with the property and land acquisitions, the following liabilities were assumed: Purchase of real estate ........................................... $ 22,050 $ 2,789 Deferred Purchase Price ........................................... (10,425) -- Accounts payable and accrued expenses .............................. -- (38) ---------- ---------- Acquisition of real estate ......................................... $ 11,625 $ 2,751 ========== ========== In conjunction with a property sale, the Operating Partnership provided seller financing: Notes Receivable .................................................. $ -- $ 4,500 ========== ==========
13 FIRST INDUSTRIAL, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) (UNAUDITED) 10. EARNINGS PER UNIT ("EPU") The computation of basic and diluted EPU is presented below:
Three Months Ended --------------------------- March 31, March 31, 2003 2002 ------------ ------------ Numerator: Income from Continuing Operations .......................... $ 17,967 $ 29,201 Less: Preferred Distributions .............................. (5,044) (7,231) ------------ ------------ Income from Continuing Operations Available to Unitholders For Basic and Diluted EPU ............................. 12,923 21,970 Discontinued Operations .................................... 17,189 5,545 ------------ ------------ Net Income Available to Unitholders ........................ $ 30,112 $ 27,515 ============ ============ Denominator: Weighted Average Units - Basic ............................. 45,456,361 45,948,158 Effect of Dilutive Securities: Employee and Director Common Stock Options of the Company that Result in the Issuance of General Partner Units .......................................... 57,078 279,647 ------------ ------------ Weighted Average Units Outstanding- Diluted ................ 45,513,439 46,227,805 ============ ============ Basic EPU: Income from Continuing Operations Available to Unitholders . $ .28 $ .48 ============ ============ Discontinued Operations .................................... $ .38 $ .12 ============ ============ Net Income Available to Unitholders ........................ $ .66 $ .60 ============ ============ Diluted EPU: Income from Continuing Operations Available to Unitholders . $ .28 $ .48 ============ ============ Discontinued Operations .................................... $ .38 $ .12 ============ ============ Net Income Available to Unitholders ........................ $ .66 $ .60 ============ ============
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. 14 FIRST INDUSTRIAL, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) (UNAUDITED) 11. COMMITMENTS AND CONTINGENCIES, CONTINUED The Consolidated Operating Partnership has committed to the construction of 30 development projects totaling approximately 2.8 million square feet of GLA for an estimated investment of approximately $157.9 million. Of this amount, approximately $32.8 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 Consolidated Operating Partnership's 2002 Unsecured Line of Credit. The Consolidated Operating Partnership expects to place in service 29 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 April 1, 2003 to May 2, 2003, the Consolidated Operating Partnership acquired 12 industrial properties for an aggregate purchase price of approximately $60,223, excluding costs incurred in conjunction with the acquisition of these industrial properties. The Consolidated Operating Partnership also sold five industrial properties for approximately $17,155 of gross proceeds. On April 21, 2003, the Operating Partnership paid a first quarter 2003 distribution of $.6850 per Unit, totaling approximately $31,543. 15 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 March 31, 2003. The limited partners of the Operating Partnership own, in the aggregate, approximately a 14.8% interest in the Operating Partnership at March 31, 2003. The Company also owns a preferred general partnership interest in the Operating Partnership with an aggregate liquidation priority of $250 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. 16 The general partners of the Other Real Estate Partnerships are separate corporations, each with at least a .01% general partnership interest in the Other Real Estate Partnership for which it acts as a general partner. Each general partner of the Other Real Estate Partnerships is a wholly-owned subsidiary of the Company. 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 March 31, 2003, the Consolidated Operating Partnership owned 778 in-service properties with approximately 48.8 million square feet of gross leasable area ("GLA"), compared to 799 in-service properties with approximately 51.6 million square feet of GLA at March 31, 2002. During the period between April 1, 2002 and March 31, 2003, the Consolidated Operating Partnership acquired 67 properties containing approximately 4.7 million square feet of GLA, completed development of 16 properties totaling approximately 2.7 million square feet of GLA and sold 94 in-service properties totaling approximately 8.0 million square feet of GLA, six out of service properties and several land parcels. The Consolidated Operating Partnership also took 10 properties out of service that are under redevelopment comprising approximately 2.3 million square feet of GLA and placed in-service three properties comprising approximately .3 million square feet of GLA. During the period between January 1, 2003 and March 31, 2003, the Consolidated Operating Partnership contributed two properties comprising approximately .1 million square feet of GLA to First Industrial Harrisburg, L.P. and contributed one property comprising approximately .1 million square feet of GLA to First Industrial Financing, L.P. COMPARISON OF THREE MONTHS ENDED MARCH 31, 2003 TO THREE MONTHS ENDED MARCH 31, 2002 Rental income and tenant recoveries and other income increased by approximately $3.6 million or 5.3% for the three months ended March 31, 2003 as compared to the three months ended March 31, 2002 due to properties acquired or developed subsequent to December 31, 2001, partially offset by a decrease in average occupied GLA for the three months ended March 31, 2003 as compared to the three months ended March 31, 2002. Rental income and tenant recoveries and other income from in-service properties owned prior to January 1, 2002 decreased by approximately $2.1 million or 3.2% due primarily to a decrease in average occupied GLA for the three months ended March 31, 2003 as compared to the three months ended March 31, 2002. Property expenses, which include real estate taxes, repairs and maintenance, property management, utilities, insurance and other expenses increased by approximately $4.7 million or 21.9% for the three months ended March 31, 2003 as compared to the three months ended March 31, 2002. This increase is due primarily to an increase in same store property expenses as discussed below and an increase in property expenses due to properties acquired subsequent to December 31, 2001. Property expenses from in-service properties owned prior to January 1, 2002 increased by approximately $2.4 million or 12.7% due primarily to an increase in repairs and maintenance expense, utilities expense and insurance expense. The increase in repairs and maintenance is due primarily to an increase in maintenance and related expenses to prepare the Consolidated Operating Partnership's properties to re-lease as well as an increase in snow removal and related expenses in certain of the Consolidated Operating Partnership's markets. The increase in utilities expense is due to an increase in gas and electricity expenses. The increase in insurance is due primarily to an increase in insurance premiums. General and administrative expense increased by approximately $1.5 million due primarily to an increase in employees and employee compensation. 17 Interest expense increased by approximately $4.7 million for the three months ended March 31, 2003 compared to the three months ended March 31, 2002 due primarily to a higher average debt balance outstanding for the three months ended March 31, 2003 compared to the three months ended March 31, 2002 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 March 31, 2003 and 2002 was approximately $1,430.4 million and $1,307.5 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 March 31, 2003 (6.65%) as compared to the three months ended March 31, 2002 (6.67%). Amortization of deferred financing costs remained relatively unchanged. Depreciation and other amortization increased by approximately $1.8 million due primarily to additional depreciation and amortization recognized for properties acquired subsequent to December 31, 2001. Equity in income of Other Real Estate Partnerships increased by approximately $1.8 million due primarily to an approximate $10.7 million lease termination fee received from a tenant during the three months ended March 31, 2003, partially offset by a decrease in gain on sale of real estate for the three months ended March 31, 2003 as compared to the three months ended March 31, 2002. Equity in income of joint ventures decreased by approximately $.1 million due primarily to the Consolidated Operating Partnership recognizing its proportionate share of the loss on sale of real estate of one of the Consolidated Operating Partnership's joint ventures as well as its proportionate share of the decrease in net income in two of the Consolidated Operating Partnership's joint ventures due to properties sold subsequent to December 31, 2001, partially offset by the Consolidated Operating Partnership recognizing its proportionate share in the increase in net income of one of the Consolidated Operating Partnership's joint ventures due to properties acquired subsequent to December 31, 2001. The $1.3 million gain on sale of real estate for the three months ended March 31, 2003 resulted from the sale of one industrial property and several land parcels that do not meet the criteria established by the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long Lived Assets" ("FAS 144") for inclusion in discontinued operations. Gross proceeds from these sales were approximately $8.6 million. The $5.3 million gain on sale of real estate for the three months ended March 31, 2002 resulted from the sale of six industrial properties and several land parcels that do not meet the criteria established by FAS 144 for inclusion in discontinued operations. Gross proceeds from these sales were approximately $40.4 million. Income from discontinued operations of approximately $17.2 million for the three months ended March 31, 2003 reflects the results of operations and gain on sale of real estate of 20 industrial properties that were sold during the three months ended March 31, 2003 as well as the results of operations of two industrial properties held for sale at March 31, 2003. Gross proceeds from the sales of the 20 industrial properties were approximately $53.6 million, resulting in a gain on sale of real estate of approximately $16.5 million. Income from discontinued operations of approximately $5.5 million for the three months ended March 31, 2002 reflects the results of operations of 20 industrial properties that were sold during the three months ended March 31, 2003, 69 industrial properties that were sold during the twelve months ended December 31, 2002 and two industrial properties identified as held for sale at March 31, 2003, as well as the gain on sale of real estate from 11 of the 69 sold industrial properties which were sold during the three months ended March 31, 2002. Gross proceeds from the sales of the 11 industrial properties were approximately $27.4 million, resulting in a gain on sale of real estate of approximately $1.7 million. 18 LIQUIDITY AND CAPITAL RESOURCES At March 31, 2003, the Consolidated Operating Partnership's cash and cash equivalents was approximately $1.0 million and restricted cash was approximately $63.8 million. Restricted cash is comprised of gross proceeds from the sales of certain industrial properties. These sales proceeds will be disbursed as the Consolidated Operating Partnership exchanges industrial properties under Section 1031 of the Internal Revenue Code. THREE MONTHS ENDED MARCH 31, 2003 Net cash provided by operating activities of approximately $17.3 million for the three months ended March 31, 2003 was comprised primarily of net income of approximately $35.1 million, partially offset by adjustments for non-cash items of approximately $.9 million and the net change in operating assets and liabilities of approximately $16.9 million. The adjustments for the non-cash items of approximately $.9 million are primarily comprised of the gain on sale of real estate of approximately $17.8 million, a decrease of the bad debt provision of approximately $.6 million and the effect of the straight-lining of rental income of approximately $.5 million, partially offset by depreciation and amortization of approximately $18.0 million Net cash provided by investing activities of approximately $18.6 million for the three months ended March 31, 2003 was comprised primarily of the net proceeds from sales of investment in real estate, distributions from the Other Real Estate Partnerships, distributions from two of the Consolidated Operating Partnership's industrial real estate joint ventures and the repayment of mortgage loans receivable, partially 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 one of the Consolidated Operating Partnership's industrial real estate joint ventures. Net cash used in financing activities of approximately $34.9 million for the three months ended March 31, 2003 was comprised primarily of general partnership and limited partnership units ("Unit") and preferred general partnership unit distributions, the repurchase of restricted units, the repurchase of general partner units and repayments on mortgage loans payable, partially offset by Unit contributions and net borrowings under the Consolidated Operating Partnership's $300 million unsecured line of credit (the "2002 Unsecured Line of Credit"). THREE MONTHS ENDED MARCH 31, 2002 Net cash provided by operating activities of approximately $27.7 million for the three months ended March 31, 2002 was comprised primarily of net income of approximately $34.8 million and adjustments for non-cash items of approximately $9.7 million, partially offset by the net change in operating assets and liabilities of approximately $16.8 million. The adjustments for the non-cash items of approximately $9.7 million are primarily comprised of depreciation and amortization of approximately $17.2 million, partially offset by the gain on sale of real estate of approximately $7.0 million and the effect of the straight-lining of rental income of approximately $.5 million. Net cash used in investing activities of approximately $41.1 million for the three months ended March 31, 2002 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, investments in and advances to the Other Real Estate Partnerships and contributions to and investments in one of the Consolidated Operating Partnership's industrial real estate joint ventures, partially offset by the net proceeds from sales of investment in real estate, distributions from the Other Real Estate Partnerships and the repayment of mortgage loans receivable. 19 Net cash provided by financing activities of approximately $13.8 million for the three months ended March 31, 2002 was comprised primarily of Unit contributions and net borrowings under the Consolidated Operating Partnership's 2000 Unsecured Acquisition Facility, partially offset by Unit distributions, the repurchase of restricted units and repayments on mortgage loans payable. INVESTMENT IN REAL ESTATE AND DEVELOPMENT OF REAL ESTATE During the three months ended March 31, 2003, the Consolidated Operating Partnership acquired one industrial property comprising approximately .5 million square feet of GLA and several land parcels. The purchase price for these acquisitions totaled approximately $22.1 million, excluding costs incurred in conjunction with the acquisition of the industrial property and land parcels. The Consolidated Operating Partnership also completed the development of two industrial properties comprising approximately .3 million square feet of GLA at a cost of approximately $10.8 million. The Consolidated Operating Partnership has committed to the construction of 30 development projects totaling approximately 2.8 million square feet of GLA for an estimated investment of approximately $157.9 million. Of this amount, approximately $32.8 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 Consolidated Operating Partnership's 2002 Unsecured Line of Credit. The Consolidated Operating Partnership expects to place in service 29 of the 30 developments 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 three months ended March 31, 2003, the Consolidated Operating Partnership sold 21 industrial properties comprising approximately 1.1 million square feet of GLA and several land parcels. One of the 21 sold industrial properties comprising approximately .1 million square feet of GLA was sold to one of the Consolidated Operating Partnership's industrial real estate joint ventures. Gross proceeds from the sales of the 21 industrial properties and several land parcels were approximately $62.1 million. Twenty of the 21 sold industrial properties meet the criteria established by FAS 144 to be included in discontinued operations. Therefore, in accordance with FAS 144, the results of operations and gain on sale of real estate for the 20 sold industrial properties that meet the criteria established by FAS 144 are included in discontinued operations. The results of operations and gain on sale of real estate for the one industrial property and several land parcels that do not meet the criteria established by FAS 144 are included in continuing operations. At March 31, 2003, the Consolidated Operating Partnership had two industrial properties comprising approximately .1 million square feet of GLA held for sale. In accordance with FAS 144, the results of operations of the two industrial properties held for sale at March 31, 2003 are included in discontinued operations. There can be no assurance that such properties held for sale will be sold. Income from discontinued operations of approximately $17.2 million for the three months ended March 31, 2003 reflects the results of operations and gain on sale of real estate of 20 industrial properties that were sold during the three months ended March 31, 2003 as well as the results of operations of two industrial properties held for sale at March 31, 2003. Income from discontinued operations of approximately $5.5 million for the three months ended March 31, 2002 reflects the results of operations of 20 industrial properties that were sold during the three months ended March 31, 2003, 69 industrial properties that were sold during the twelve months ended December 31, 2002 and two industrial properties identified as held for sale at March 31, 2003, as well as the gain on sale of real estate from 11 of the 69 sold industrial properties which were sold during the three months ended March 31, 2002. Net carrying value of the two industrial properties held for sale at March 31, 2003 is approximately $5.3 million. 20 INVESTMENTS IN JOINT VENTURES During the three months ended March 31, 2003, the Consolidated Operating Partnership, through wholly-owned limited liability companies in which the Operating Partnership is the sole member, recognized, in the aggregate, approximately $.3 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, collectively. The Consolidated Operating Partnership, through a wholly-owned limited liability company in which the Operating Partnership is the sole member, invested approximately $.5 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 $.5 million from the September 1998 Joint Venture and the December 2001 Joint Venture, collectively. As of March 31, 2003, the September 1998 Joint Venture owned 47 industrial properties comprising approximately 2.1 million square feet of GLA, the September 1999 Joint Venture owned one industrial property comprising approximately .1 million square feet of GLA and the December 2001 Joint Venture had economic interests in 25 industrial properties comprising approximately 4.4 million square feet of GLA. Twenty-three of the 25 properties purchased by the December 2001 Joint Venture were purchased 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 Partnerships economic interest in the December 2001 Joint Venture. 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 March 31, 2003 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 March 31, 2003, approximately $1,281.6 million (approximately 91.2% of total debt at March 31, 2003) of the Consolidated Operating Partnership's debt was fixed rate debt (included in the fixed rate debt is $50.0 million of borrowings under the Consolidated Operating Partnership's 2002 Unsecured Line of Credit for which the Consolidated Operating Partnership fixed the interest rate via the interest rate swap agreements) and approximately $123.6 million (approximately 8.8% of total debt at March 31, 2003) 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, 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. 21 Based upon the amount of variable rate debt outstanding at March 31, 2003, 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 $.3 million per year. A 10% increase in interest rates would decrease the fair value of the fixed rate debt at March 31, 2003 by approximately $50.1 million to $1,361.0 million. A 10% decrease in interest rates would increase the fair value of the fixed rate debt at March 31, 2003 by approximately $54.5 million to $1,465.6 million. A 10% increase in interest rates would decrease the fair value of the Written Option at March 31, 2003 by approximately $2.6 million to $14.6 million. A 10% decrease in interest rates would increase the fair value of the Written Option at March 31, 2003 by approximately $2.8 million to $20.0 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 three months ended March 31, 2003, the Company awarded 692,888 shares of restricted common stock to certain employees and 1,073 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 $20.3 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 three months ended March 31, 2003, certain employees exercised 30,766 non-qualified employee stock options. Net proceeds to the Company were approximately $.7 million. The Consolidated Operating Partnership, through the Operating Partnership, issued Units to the Company in the same amount. Distributions: On January 27, 2003, the Operating Partnership paid a fourth quarter 2002 distribution of $.6850 per Unit, totaling approximately $31.1 million. On March 31, 2003, the Operating Partnership paid first quarter dividends of $53.906 per share ($.53906 per Depositary share), $49.688 per share ($.49688 per Depositary share) and $49.375 per share ($.49375 per Depositary share) on its Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock, respectively, totaling, in the aggregate, approximately $5.0 million. Purchase of Units: During the three months ended March 31, 2003, the Company repurchased 37,300 shares of its common stock at a weighted average price per share of approximately $26.73. The Operating Partnership purchased general partnership Units from the Company in the same amount. SUBSEQUENT EVENTS From April 1, 2003 to May 2, 2003, the Consolidated Operating Partnership acquired 12 industrial properties for an aggregate purchase price of approximately $60.2 million, excluding costs incurred in conjunction with the acquisition of these industrial properties. The Consolidated Operating Partnership also sold five industrial properties for approximately $17.2 million of gross proceeds. 22 On April 21, 2003, the Operating Partnership paid a first quarter 2003 distribution of $.6850 per Unit, totaling approximately $31.5 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 principal 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, long-term unsecured indebtedness and the issuance of additional Units and preferred units. As of March 31, 2003 and May 2, 2003, $250.0 million of debt securities was registered and unissued under the Securities Act of 1933, as amended. The Consolidated Operating Partnership also may finance the development or acquisition of additional properties through borrowings under the 2002 Unsecured Line of Credit. At March 31, 2003, borrowings under the 2002 Unsecured Line of Credit bore interest at a weighted average interest rate of 2.555%. The 2002 Unsecured Line of Credit bears interest at a floating rate of LIBOR plus ..70% or the Prime Rate, at the Company's election. As of May 2, 2003, the Consolidated Operating Partnership, through the Operating Partnership, had approximately $61.8 million available for additional borrowings under the 2002 Unsecured Line of Credit. OTHER In January 2003, the FASB issued Financial Accounting Standards Interpretation No. 46, "Consolidation of Variable Interest Entities - an interpretation of ARB No. 51" ("FIN 46"). FIN 46 addresses consolidation by business enterprises of special purpose entities ("SPEs") to which the usual condition for consolidation described in Accounting Research Bulletin No. 51 does not apply because the SPEs have no voting interests or otherwise are not subject to control through ownership of voting interests. For Variable Interest Entities created before February 1, 2003, the provisions of FIN 46 are effective no later than the beginning of the first interim or annual reporting period that starts after June 15, 2003. For Variable Interest Entities created after January 31, 2003, the provisions of FIN 46 are effective immediately. FIN 46 does not have a material effect on the Consolidated Operating Partnership's 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. 23 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES None. 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 ------ ----------- 99.1* Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K: None. *Filed herewith 24 The Company maintains a website at www.firstindustrial.com. Copies of the Company's and the Operating Partnership's annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to such reports are available without charge on the Company's website as soon as reasonably practicable after such reports are filed or furnished with the SEC. In addition, the Company has prepared supplemental financial and operating information which is available without charge on the Company's website or upon request to the Company. Please direct requests as follows: First Industrial Realty Trust, Inc. 311 S. Wacker, Suite 4000 Chicago, IL 60606 Attention: Investor Relations 25 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: May 14, 2003 By: /s/ Scott A. Musil --------------------------------------- Scott A. Musil Senior Vice President- Controller (Chief Accounting Officer) 26 CERTIFICATION OF CHIEF EXECUTIVE OFFICER 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: May 14, 2003 /s/ Michael W. Brennan ---------------------- Michael W. Brennan President and Chief Executive Officer 27 CERTIFICATION OF CHIEF FINANCIAL OFFICER 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: May 14, 2003 /s/ Michael J. Havala --------------------- Michael J .Havala Chief Financial Officer 28 EXHIBIT INDEX
Exhibit No. Description - ----------- ----------- 99.1* Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*Filed herewith 29 EX-99.1 3 c76928exv99w1.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. Section 1350(a) and (b)) Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chapter 63, Title 18 U.S.C. Section 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 March 31, 2003 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: May 14, 2003 /s/ Michael W. Brennan ---------------------- Michael W. Brennan Chief Executive Officer Dated: May 14, 2003 /s/ Michael J. Havala --------------------- Michael J. Havala Chief Financial Officer A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906 HAS BEEN PROVIDED TO THE COMPANY AND WILL BE RETAINED BY THE COMPANY AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST. -----END PRIVACY-ENHANCED MESSAGE-----