10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2006
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from          to

Commission file number 333-21873

First Industrial, L.P.

(Exact Name of Registrant as Specified in its Charter)

Delaware	36-3924586
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

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 þ     No o

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

Large accelerated filer þ      Accelerated filer o      Non-accelerated filer o

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

FIRST INDUSTRIAL, L.P.

Form 10-Q

For the Period Ended June 30, 2006

INDEX

			Page
PART I: FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Consolidated Balance Sheets as of June 30, 2006 and December 31, 2005		3
		Consolidated Statements of Operations for the Six Months Ended June 30, 2006 and June 30, 2005		4
		Consolidated Statements of Comprehensive Income for the Six Months Ended June 30, 2006 and June 30, 2005		5
		Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2006, and June 30, 2005		6
		Notes to Consolidated Financial Statements		7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		37
	Item 4.	Controls and Procedures		37
PART II: OTHER INFORMATION
	Item 1.	Legal Proceedings		37
	Item 1A.	Risk Factors		37
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		39
	Item 3.	Defaults Upon Senior Securities		39
	Item 4.	Submission of Matters to a Vote of Security Holders		39
	Item 5.	Other Information		39
	Item 6.	Exhibits		39
SIGNATURE				41
EXHIBIT INDEX				42
Certification of Principal Executive Officer
Certification of Principal Financial Officer
Certification of Principal Executive Officer and Principal Financial Officer

2

PART I: FINANCIAL INFORMATION

Item 1.   Financial Statements

FIRST INDUSTRIAL, L.P.

CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2006			2005
	(Unaudited)
	(Dollars in thousands, except unit data)
ASSETS
Assets:
Investment in Real Estate:
Land	$	483,802		$	490,359
Buildings and Improvements		2,220,414			2,340,504
Construction in Progress		108,882			66,074
Less: Accumulated Depreciation		(378,415	)		(355,755	)
Net Investment in Real Estate		2,434,683			2,541,182
Real Estate and Other Held for Sale, Net of Accumulated Depreciation and Amortization of $7,587 and $1,622 at June 30, 2006 and December 31, 2005, respectively		73,260			16,840
Investments in and Advances to Other Real Estate Partnerships		354,289			378,864
Cash and Cash Equivalents		—			6,811
Restricted Cash		58,470			14,945
Tenant Accounts Receivable, Net		6,449			7,627
Investments in Joint Ventures		49,368			44,330
Deferred Rent Receivable, Net		22,866			21,520
Deferred Financing Costs, Net		11,605			10,907
Deferred Leasing Intangibles, Net		71,036			70,879
Prepaid Expenses and Other Assets, Net		84,923			116,560
Total Assets	$	3,166,949		$	3,230,465
LIABILITIES AND PARTNERS’ CAPITAL
Liabilities:
Mortgage Loans Payable, Net	$	52,488		$	54,929
Senior Unsecured Debt, Net		1,498,952			1,298,893
Unsecured Lines of Credit		268,000			457,500
Accounts Payable and Accrued Expenses		105,554			116,249
Deferred Leasing Intangibles, Net		15,425			22,169
Rents Received in Advance and Security Deposits		25,372			27,578
Leasing Intangibles Held for Sale, Net of Accumulated Amortization of $90 at June 30, 2006		128			—
Distributions Payable		37,270			39,509
Total Liabilities		2,003,189			2,016,827
Commitments and Contingencies		—			—
Partners’ Capital:
General Partner Preferred Units (21,350 and 21,500 units issued and outstanding at June 30, 2006 and December 31, 2005, respectively) with a liquidation preference of $275,000 and $312,500, respectively		266,303			303,068
General Partner Units (44,793,049 and 44,444,710 units issued and outstanding at June 30, 2006 and December 31, 2005, respectively)		744,597			773,921
Unamortized Value of General Partnership Restricted Units		—			(16,825	)
Limited Partners’ Units (6,691,406 and 6,740,742 units issued and outstanding at June 30, 2006 and December 31, 2005, respectively)		156,608			159,832
Accumulated Other Comprehensive Loss		(3,748	)		(6,358	)
Total Partners’ Capital		1,163,760			1,213,638
Total Liabilities and Partners’ Capital	$	3,166,949		$	3,230,465

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

3

FIRST INDUSTRIAL, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months			Three Months			Six Months			Six Months
	Ended			Ended			Ended			Ended
	June 30,			June 30,			June 30,			June 30,
	2006			2005			2006			2005
	(Unaudited)
	(Dollars in thousands, except unit and per unit data)
Revenues:
Rental Income	$	61,069		$	48,660		$	118,843		$	96,656
Tenant Recoveries and Other Income		27,090			17,447			50,677			36,578
Revenues from Build to Suit Development for Sale		—			—			733			—
Total Revenues		88,159			66,107			170,253			133,234
Expenses:
Property Expenses		29,374			22,927			58,579			46,392
General and Administrative		18,062			11,335			35,445			22,957
Depreciation and Other Amortization		34,349			22,227			65,573			43,258
Expenses from Build to Suit Development for Sale		—			—			666			—
Total Expenses		81,785			56,489			160,263			112,607
Other Income/Expense:
Interest Income		209			420			438			717
Interest Expense		(29,743	)		(25,846	)		(59,220	)		(51,606	)
Amortization of Deferred Financing Costs		(603	)		(509	)		(1,221	)		(1,017	)
Mark-to-Market/Loss on Settlement of Interest Rate Protection Agreement		—			(1,404	)		(170	)		(463	)
Total Other Income/Expense		(30,137	)		(27,339	)		(60,173	)		(52,369	)
Loss from Continuing Operations Before Equity in Income of Other Real Estate Partnerships, Equity in Income (Loss) of Joint Ventures and Income Tax Benefit		(23,763	)		(17,721	)		(50,183	)		(31,742	)
Equity in Income of Other Real Estate Partnerships		17,950			9,786			22,838			16,529
Equity in Income (Loss) of Joint Ventures		7,307			(98	)		7,271			(220	)
Income Tax Benefit		483			2,694			6,476			4,720
Income (Loss) from Continuing Operations		1,977			(5,339	)		(13,598	)		(10,713	)
Income from Discontinued Operations (Including Gain on Sale of Real Estate of $38,777 and $28,426 for the Three Months ended June 30, 2006 and 2005, respectively, $92,416 and $40,139 for the Six Months ended June 30, 2006 and 2005, respectively)		40,790			31,566			96,022			46,390
Provision for Income Taxes Allocable to Discontinued Operations (Including $7,484 and $2,584 for the Three Months ended June 30, 2006 and 2005, respectively, and $21,946 and $5,383 for the Six Months ended June 30, 2006 and 2005, respectively, allocable to Gain on Sale of Real Estate)		(7,845	)		(3,156	)		(23,133	)		(7,071	)
Income Before Gain on Sale of Real Estate		34,922			23,071			59,291			28,606
Gain on Sale of Real Estate		2,493			3,180			4,011			23,851
Provision for Income Taxes Allocable to Gain on Sale of Real Estate		(947	)		(1,446	)		(1,039	)		(8,977	)
Net Income		36,468			24,805			62,263			43,480
Less: Preferred Unit Distributions		(5,029	)		(2,310	)		(10,048	)		(4,620	)
Less: Preferred Unit Redemptions		—			—			(672	)		—
Net Income Available to Unitholders	$	31,439		$	22,495		$	51,543		$	38,860
Basic Earnings Per Unit:
Loss from Continuing Operations	$	(0.03	)	$	(0.12	)	$	(0.42	)	$	(0.01	)
Income From Discontinued Operations	$	0.65		$	0.58		$	1.44		$	0.81
Net Income Available to Unitholders	$	0.62		$	0.46		$	1.02		$	0.80
Weighted Average Units Outstanding		50,706			48,759			50,675			48,963
Diluted Earnings Per Unit:
Loss from Continuing Operations	$	(0.03	)	$	(0.12	)	$	(0.42	)	$	(0.01	)
Income From Discontinued Operations	$	0.65		$	0.58		$	1.44		$	0.81
Net Income Available to Unitholders	$	0.62		$	0.46		$	1.02		$	0.80
Weighted Average Units Outstanding		50,706			48,759			50,675			48,963
Net Income Available to Unitholders Attributable to:
General Partners	$	27,250		$	19,546		$	44,701		$	33,769
Limited Partners		4,189			2,949			6,842			5,091
Net Income Available to Unitholders	$	31,439		$	22,495		$	51,543		$	38,860

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

4

FIRST INDUSTRIAL, L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months			Three Months			Six Months			Six Months
	Ended			Ended			Ended			Ended
	June 30,			June 30,			June 30,			June 30,
	2006			2005			2006			2005
	(Unaudited)
	(Dollars in thousands, except unit and per unit data)
Net Income	$	36,468		$	24,805		$	62,263		$	43,480
Other Comprehensive Income (Loss):
Mark-to-Market of Interest Rate Protection Agreements		3,374			—			4,789			—
Settlement of Interest Rate Protection Agreements		—			—			(1,729	)		—
Amortization of Interest Rate Protection Agreements		(220	)		(273	)		(450	)		(547	)
Comprehensive Income	$	39,622		$	24,532		$	64,873		$	42,933

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

5

FIRST INDUSTRIAL, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months			Six Months
	Ended			Ended
	June 30,			June 30,
	2006			2005
	(Unaudited)
	(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	62,263		$	43,480
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation		53,763			39,530
Amortization of Deferred Financing Costs		1,221			1,017
Other Amortization		17,977			14,112
Provision for Bad Debt		648			860
Equity in (Income) Loss of Joint Ventures		(7,272	)		220
Distributions from Joint Ventures		7,847			—
Gain on Sale of Real Estate		(96,427	)		(63,990	)
Mark to Market of Interest Rate Protection Agreement		(16	)		463
Equity in Income of Other Real Estate Partnerships		(22,838	)		(16,529	)
Distributions from Investment in Other Real Estate Partnerships		22,838			16,529
Decrease in Build to Suit Development for Sale Costs Receivable		16,241			—
Decrease (Increase) in Tenant Accounts Receivable and Prepaid Expenses and Other Assets, Net		4,914			(8,930	)
Increase in Deferred Rent Receivable		(4,296	)		(2,857	)
Decrease in Accounts Payable and Accrued Expenses and Rents Received in Advance and Security Deposits		(3,999	)		(2,877	)
Net Cash Provided by Operating Activities		52,864			21,028
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of and Additions to Investment in Real Estate		(353,088	)		(275,706	)
Net Proceeds from Sales of Investments in Real Estate		433,208			236,149
Investments in and Advances to Other Real Estate Partnerships		(17,998	)		(25,504	)
Distributions from Other Real Estate Partnerships in Excess of Equity in Income		42,573			34,219
Contributions to and Investments in Joint Ventures		(14,093	)		(11,191	)
Distributions from Joint Ventures		8,099			402
Repayment of Mortgage Loans Receivable		11,200			26,265
(Increase) Decrease in Restricted Cash		(43,525	)		25
Net Cash Provided by (Used In)Investing Activities		66,376			(15,341	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Unit Distributions		1,240			6,479
Proceeds from the Issuance of Preferred Units		144,672			—
Redemption of Preferred Units		(182,156	)		—
Repurchase of Restricted Units		(2,660	)		(3,262	)
Unit Distributions		(71,766	)		(68,594	)
Preferred Unit Distributions		(12,574	)		(4,620	)
Repayments on Mortgage Loans Payable		(9,076	)		(902	)
Net Proceeds from Senior Unsecured Debt		199,306			—
Other Costs of Senior Unsecured Debt		(1,729	)		—
Proceeds on Mortgage Loans Payable		—			1,167
Proceeds from Unsecured Lines of Credit		303,500			153,500
Repayments on Unsecured Lines of Credit		(493,000	)		(91,500	)
Cash Book Overdraft		6			—
Debt Issuance Costs		(1,814	)		(116	)
Net Cash Used in Financing Activities		(126,051	)		(7,848	)
Net Decrease in Cash and Cash Equivalents		(6,811	)		(2,161	)
Cash and Cash Equivalents, Beginning of Period		6,811			3,069
Cash and Cash Equivalents, End of Period	$	—		$	908

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

6

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per Unit data)

(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 87.0% ownership interest at June 30, 2006 and June 30, 2005. The limited partners of the Operating Partnership own approximately a 13.0% interest in the Operating Partnership at June 30, 2006 and June 30, 2005. The Company also owns a preferred general partnership interest in the Operating Partnership with an aggregate liquidation priority of $275,000 at June 30, 2006. 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 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. As of June 30, 2006, the Consolidated Operating Partnership owned 852 industrial properties (inclusive of developments in process) containing an aggregate of approximately 68.7 million square feet of gross leasable area (“GLA”). On a combined basis, as of June 30, 2006, the Other Real Estate Partnerships owned 94 industrial properties containing an aggregate of approximately 8.8 million square feet of GLA.

On March 21, 2006, the Operating Partnership, through separate wholly-owned limited liability companies of which it is the sole member, entered into a co-investment arrangement with an institutional investor to invest in industrial properties (the “March 2006 Co-Investment Program”). The Operating Partnership, through separate wholly-owned limited liability companies of which it is the sole member, owns a 15 percent equity interest in and provides property management, leasing, disposition and portfolio management services to the March 2006 Co-Investment Program.

The Operating Partnership or First Industrial Development Services Inc., through separate wholly-owned limited liability companies of which it is the sole member, also owns minority equity interests in, and provides various services to, four other joint ventures which invest in industrial properties (the “September 1998 Joint Venture”, the “May 2003 Joint Venture”, the “March 2005 Joint Venture” and the “September 2005 Joint Venture”; together with the March 2006 Co-Investment Program, the “Joint Ventures”).

The Other Real Estate Partnerships and the Joint Ventures are accounted for under the equity method of accounting. The operating data of the Other Real Estate Partnerships and the Joint Ventures is not consolidated with that of the Consolidated Operating Partnership as presented herein.

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 Consolidated Operating Partnership’s 2005 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, 2005 audited financial statements included in the Consolidated Operating Partnership’s 2005 Form 10-K and present interim disclosures as required by the Securities and Exchange Commission.

7

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (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 June 30, 2006 and December 31, 2005, and the reported amounts of revenues and expenses for each of the three and six months ended June 30, 2006 and June 30, 2005. Actual results could differ from those estimates.

In the opinion of management, the accompanying unaudited interim financial statements reflect all adjustments necessary for a fair presentation of the financial position of the Consolidated Operating Partnership as of June 30, 2006 and December 31, 2005 and the results of its operations and comprehensive income for each of the three and six months ended June 30, 2006 and June 30, 2005, and its cash flows for each of the six months ended June 30, 2006 and June 30, 2005, and all adjustments are of a normal recurring nature.

Stock Incentive Plans:

Effective January 1, 2006 the Consolidated Operating Partnership has adopted Statement of Financial Accounting Standards No. 123R, “Share Based Payment” (FAS 123R), using the modified prospective application method, which requires measurement of compensation cost for all stock-based awards at fair value on date of grant and recognition of compensation over the service period for awards expected to vest. For the years ended December 31, 2003, 2004 and 2005, the Consolidated Operating Partnership accounted for its stock incentive plans under the recognition and measurement principles of Statement of Financial Accounting Standards No. 123, “Accounting for Stock Based Compensation” for all new issuances of stock based compensation. At January 1, 2006 the Consolidated Operating Partnership did not have any unvested option awards and the Consolidated Operating Partnership had accounted for their previously issued restricted stock awards at fair value, accordingly, the adoption of FAS 123R did not require the Consolidated Operating Partnership to recognize a cumulative effect of a change in accounting principle. The Consolidated Operating Partnership did reclassify $16,825 from the Unearned Value of Restricted Stock Grants line item within Partners’ Capital to Additional Paid in Capital during the three months ended March 31, 2006.

For the six months ended June 30, 2006 and 2005, the Company awarded 305,455 and 191,979 restricted stock awards to its employees and directors of the Company having a fair value of $11,614 and $8,055, respectively. The Operating Partnership issued Units to the Company in the same amount. The awards generally vest over three years. For the six months ended June 30, 2006 and 2005, the Consolidated Operating Partnership recognized $4,625 and $4,820 in restricted stock amortization related to restricted stock awards, of which $614 and $646, respectively, was capitalized in connection with development activities. At June 30, 2006, the Consolidated Operating Partnership has $23,078 in unearned compensation related to unvested restricted stock awards. The weighted average period that the unrecognized compensation is expected to be incurred is 1.89 years. The Consolidated Operating Partnership has not awarded options to employees or directors of the Company during the six months ended June 30, 2006 and June 30, 2005, and therefore no stock-based employee compensation expense related to options is included in net income available to common stockholders.

8

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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. The following table illustrates the pro forma effect on net income and earnings per unit as if the fair value recognition provisions of FAS 123R had been applied to all outstanding and unvested option awards for the three and six months ended June 30, 2005:

	Three and Six Months Ended June 30,
	2005			2005
Net Income Available to Unitholders — as reported	$	22,495		$	38,860
Less: Total Stock-Based Employee Compensation Expense Determined Under the Fair Value Method		(19	)		(65	)
Net Income Available to Unitholders — pro forma	$	22,476		$	38,795
Net Income Available to Unitholders per Share — as reported — Basic	$	0.46		$	0.80
Net Income Available to Unitholders per Share — pro forma — Basic	$	0.46		$	0.80
Net Income Available to Unitholders per Share — as reported — Diluted	$	0.46		$	0.79
Net Income Available to Unitholders per Share — pro forma — Diluted	$	0.46		$	0.79

Deferred Leasing Intangibles

Deferred Leasing Intangibles included in the Consolidated Operating Partnership’s total assets consist of the following:

	June 30,			December 31,
	2006			2005
In-Place Leases	$	69,865		$	71,818
Less: Accumulated Amortization		(9,661	)		(5,829	)
	$	60,204		$	65,989
Above Market Leases	$	5,578		$	6,524
Less: Accumulated Amortization		(1,772	)		(1,634	)
	$	3,806		$	4,890
Tenant Relationship	$	7,343		$	—
Less: Accumulated Amortization		(317	)		—
	$	7,026		$	—

Deferred Leasing Intangibles included in the Consolidated Operating Partnership’s total liabilities consist of the following:

	June 30,			December 31,
	2006			2005
Below Market Leases	$	19,722		$	25,058
Less: Accumulated Amortization		(4,297	)		(2,889	)
	$	15,425		$	22,169

9

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The fair value of in-place leases, above market leases, tenant relationships and below market leases recorded due to real estate acquisitions during the six months ended June 30, 2006 was $14,645, $1,090, $7,507 and $(4,196)respectively. The fair value of in-place leases, above market leases and below market leases recorded due to real estate acquisitions during the six months ended June 30, 2005 was $18,241, $3,146 and $(3,530), respectively.

Amortization expense related to deferred leasing intangibles, was $4,794 and $1,773 for the six months ended June 30, 2006 and 2005, respectively.

Recent Accounting Pronouncements

In February 2006, the FASB issued Statement of Financial Standards (“SFAS”) No. 155, Accounting for Certain Hybrid Financial Instruments” which amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This Statement resolves issues addressed in Statement 133 Implementation Issue No. D1, “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets.” This Statement:

a. Permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation;

b. Clarifies which interest-only strips and principal-only strips are not subject to the requirements of Statement 133;

c. Establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation;

d. Clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives; and

e. Amends Statement 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument.

This Statement is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. The Consolidated Operating Partnership does not expect that the implementation of this Statement will have a material effect on the Consolidated Operating Partnership’s consolidated financial position or results of operations.

In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Asset which amends FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (FAS 140), with respect to the accounting for separately recognized servicing assets and servicing liabilities. This statement was issued to simplify the accounting for servicing rights and reduce the volatility that results from the use of different measurements attributes for servicing rights and the related financial instruments used to economically hedge risks associated with those servicing rights. The statement clarifies when to separately account for servicing rights, requires separately recognized servicing rights to be initially measured at fair value, and provides the option to subsequently account for those servicing rights at either fair value or under the amortization method previously required under FAS 140. An entity should adopt this Statement as of the beginning of its first fiscal year that begins after September 15, 2006. The Consolidated Operating Partnership does not expect that the implementation of this Statement will have a material effect on the Consolidated Operating Partnership’s consolidated financial position or results of operations.

In June 2006, the FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with SFAS 109, “Accounting for Income Taxes.” The evaluation of a tax position in accordance with FIN 48 is a two-step process. First, the

10

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Consolidated Operating Partnership determines whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position. Second, a tax position that meets the more-likely-than-not threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent reporting period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent reporting period in which the threshold is no longer met. The Consolidated Operating Partnership is required to apply the guidance of FIN 48 beginning January 1, 2007. The Consolidated Operating Partnership is currently evaluating what impact the application of FIN 48 will have on the consolidated financial statements.

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 combined condensed financial information as derived from the financial statements of the Other Real Estate Partnerships is presented below:

Condensed Combined Balance Sheets:

	June 30,		December 31,
	2006		2005
ASSETS
Assets:
Investment in Real Estate, Net	$	311,038	$	309,013
Other Assets, Net		65,429		87,866
Total Assets	$	376,467	$	396,879
LIABILITIES AND PARTNERS’ CAPITAL
Liabilities:
Mortgage Loans Payable	$	—	$	2,380
Other Liabilities		19,350		12,492
Total Liabilities		19,350		14,872
Partners’ Capital		357,117		382,007
Total Liabilities and Partners’ Capital	$	376,467	$	396,879

11

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Condensed Combined Statements of Operations:

	Three Months			Three Months			Six Months			Six Months
	Ended			Ended			Ended			Ended
	June 30,			June 30,			June 30,			June 30,
	2006			2005			2006			2005
Total Revenues, Including Interest Income	$	12,381		$	9,273		$	25,071		$	18,522
Property Expenses		(3,244	)		(3,077	)		(7,400	)		(6,638	)
Interest Expense		—			(43	)		(11	)		(87	)
Amortization of Deferred Financing Costs		—			(1	)		(2	)		(2	)
Depreciation and Other Amortization		(4,744	)		(2,908	)		(8,870	)		(5,635	)
Income from Continuing Operations		4,393			3,244			8,788			6,160
Income from Discontinued Operations (Including Gain on Sale of Real Estate of $13,176 and $5,264 for the Three Months Ended June 30, 2006 and 2005, respectively, and $13,116 and $7,047 for the Six Months Ended June 30, 2006 and 2005, respectively)		13,734			6,568			14,271			9,640
Gain on Sale of Real Estate		—			52			—			865
Net Income	$	18,127		$	9,864		$	23,059		$	16,665

4.   Investments in Joint Ventures

At June 30, 2006, the September 1998 Joint Venture owned 41 industrial properties comprising approximately 1.3 million square feet of GLA, the May 2003 Joint Venture owned 12 industrial properties comprising approximately 5.4 million square feet of GLA, the March 2005 Joint Venture owned 41 industrial properties comprising approximately 3.6 million square feet of GLA and several land parcels, the September 2005 Joint Venture owned 178 industrial properties comprising approximately 12.2 million square feet of GLA and several land parcels and the March 2006 Joint Venture owned seven industrial properties comprising approximately 3.1 million square feet of GLA (of which the Consolidated Operating Partnership has an equity interest in six industrial properties comprising approximately 2.2 million square feet of GLA).

At June 30, 2006 and December 31, 2005, the Consolidated Operating Partnership has a receivable from the Joint Ventures of $4,810 and $3,354, respectively, which mainly relate to development, leasing, property management and asset management fees due to the Consolidated Operating Partnership from the Joint Ventures, development expenditures made by a wholly owned subsidiary of the Consolidated Operating Partnership who is acting in the capacity of the developer for two development projects for the March 2005 Joint Venture and from borrowings made to the September 1998 Joint Venture.

During the six months ended June 30, 2006 and 2005, the Consolidated Operating Partnership invested the following amounts in its joint ventures as well as received distributions and recognized fees from acquisition, disposition, property management, leasing, development and asset management services in the following amounts:

	For the Six
	Months Ended
	June 30,		June 30,
	2006		2005
Contributions	$	12,198	$	10,385
Distributions	$	15,946	$	402
Fees	$	10,793	$	2,661

12

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

5.   Mortgage Loans Payable, Net, Senior Unsecured Debt, Net and Unsecured Line of Credit

On September 24, 1996, the Consolidated Operating Partnership assumed a mortgage loan in the amount of $2,600 (the “Acquisition Mortgage Loan IV”). The Acquisition Mortgage Loan IV was collateralized by one property in Baltimore, MD. The loan had a maturity date of October 1, 2006, and a fixed interest rate of 8.95%. The Acquisition Mortgage Loan IV was paid off and retired on June 30, 2006.

On January 10, 2006, the Consolidated Operating Partnership, through the Operating Partnership, issued $200,000 of senior unsecured debt which matures on January 15, 2016 and bears interest at a rate of 5.75% (the “2016 Notes”). The issue price of the 2016 Notes was 99.653%. Interest is paid semi-annually in arrears on January 15 and July 15. In December 2005, the Consolidated Operating Partnership also entered into interest rate protection agreements which were used to fix the interest rate on the 2016 Notes prior to issuance. The Consolidated Operating Partnership settled the interest rate protection agreements on January 9, 2006 for a payment of approximately $1,729, which is included in other comprehensive income. The debt issue discount and the settlement amount of the interest rate protection agreements will be amortized over the life of the 2016 Notes as an adjustment to interest expense. Including the impact of the offering discount and the settlement amount of the interest rate protection agreements, the Consolidated Operating Partnership’s effective interest rate on the 2016 Notes is 5.91%. The 2016 Notes contain certain covenants, including limitations on incurrence of debt and debt service coverage.

On January 11, 2006, the Consolidated Operating Partnership assumed a mortgage loan in the amount of $1,954 (the “Acquisition Mortgage Loan XIX”). The Acquisition Mortgage Loan XIX is collateralized by one property in Richmond, IN, bears interest at a fixed rate of 7.32% and provides for monthly principal and interest payments based on a 10 year amortization schedule. The Acquisition Mortgage Loan XIX matures on June 1, 2014. In conjunction with the assumption of the Acquisition Mortgage Loan XIX, the Consolidated Operating Partnership recorded a premium in the amount of $116 which will be amortized as an adjustment to interest expense through June 1, 2014. Including the impact of the premium recorded, the Consolidated Operating Partnership’s effective interest rate on the Acquisition Mortgage Loan XIX is 5.82%.

On March 7, 2006, the Consolidated Operating Partnership assumed a mortgage loan in the amount of $4,925 (the “Acquisition Mortgage Loan XX”). The Acquisition Mortgage Loan XX was collateralized by a land parcel in Compton, CA, did not require principal payments prior to maturity on June 5, 2006 and had an 8.0% interest rate. The Acquisition Mortgage Loan XX was paid off and retired on June 5, 2006.

13

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table discloses certain information regarding the Consolidated Operating Partnership’s mortgage loans payable, senior unsecured debt and unsecured line of credit:

	Outstanding						Accrued Interest					Interest
	Balance at						Payable at					Rate at
	June 30,			December 31,			June 30,			December 31,		June 30,			Maturity
	2006			2005			2006			2005		2006			Date
Mortgage Loans Payable, Net
Assumed Loan I	$	2,045		$	2,320		$	—		$	—		9.250	%		09/01/09
Assumed Loan II		1,711			1,805			—			—		9.250	%		01/01/13
Acquisition Mortgage Loan IV		—	(1)		1,936			—			14		N/A	(1)		N/A	(1)
Acquisition Mortgage Loan VIII		5,226			5,308			36			37		8.260	%		12/01/19
Acquisition Mortgage Loan IX		5,420			5,505			37			38		8.260	%		12/01/19
Acquisition Mortgage Loan X		15,469	(2)		15,733	(2)		95			98		8.250	%		12/01/10
Acquisition Mortgage Loan XII		2,471	(2)		2,503	(2)		14			15		7.540	%		01/01/12
Acquisition Mortgage Loan XIV		6,212	(2)		6,392	(2)		34			34		6.940	%		07/01/09
Acquisition Mortgage Loan XV		—	(3)		1,167			—			—		N/A	(4)		N/A	(3)
Acquisition Mortgage Loan XVI		1,926	(2)		1,960	(2)		9			9		5.500	%		09/30/24
Acquisition Mortgage Loan XVII		3,101	(2)		3,209	(2)		18			18		7.375	%		05/01/16
Acquisition Mortgage Loan XVIII		6,914	(2)		7,091	(2)		40			42		7.580	%		03/01/11
Acquisition Mortgage Loan XIX		1,993	(2)		—			11			—		7.320	%		06/01/14
Acquisition Mortgage Loan XX		—	(4)		—			—			—		N/A	(4)		N/A	(4)
Total	$	52,488		$	54,929		$	294		$	305
Senior Unsecured Debt, Net
2006 Notes	$	150,000		$	150,000		$	875		$	875		7.000	%		12/01/06
2007 Notes		149,995	(5)		149,992	(5)		1,456			1,456		7.600	%		05/15/07
2016 Notes		199,338	(5)		—			5,462			—		5.750	%		01/15/16
2017 Notes		99,890	(5)		99,886	(5)		625			625		7.500	%		12/01/17
2027 Notes		15,055	(5)		15,054	(5)		138			138		7.150	%		05/15/27
2028 Notes		199,827	(5)		199,823	(5)		7,009			7,009		7.600	%		07/15/28
2011 Notes		199,715	(5)		199,685	(5)		4,343			4,343		7.375	%		03/15/11
2012 Notes		199,201	(5)		199,132	(5)		2,903			2,903		6.875	%		04/15/12
2032 Notes		49,424	(5)		49,413	(5)		818			818		7.750	%		04/15/32
2009 Notes		124,871	(5)		124,849	(5)		292			292		5.250	%		06/15/09
2014 Notes		111,636	(5)		111,059	(5)		669			669		6.420	%		06/01/14
Total	$	1,498,952		$	1,298,893		$	24,590		$	19,128
Unsecured Lines of Credit
2005 Unsecured Line of Credit I	$	268,000		$	332,500		$	1,581		$	1,833		5.867	%		09/28/08
2005 Unsecured Line of Credit II		—	(6)		125,000			—	(6)		232		N/A	(6)		N/A	(6)
Total	$	268,000		$	457,500		$	1,581		$	2,065

(1) At On June 30, 2006, the Consolidated Operating Partnership paid off and retired the Acquisition Mortgage Loan IV.

14

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(2)	On June 30, 2006, the Acquisition Mortgage Loan X, the Acquisition Mortgage Loan XII, the Acquisition Mortgage Loan XIV, the Acquisition Mortgage Loan XVI, the Acquisition Mortgage Loan XVII, the Acquisition Mortgage Loan XVIII, and the Acquisition Mortgage Loan XIX includes unamortized premiums of $1,718, $209, $372, $22, $234, $613, and $111, respectively. At December 31, 2005, the Acquisition Mortgage Loan V, the Acquisition Mortgage Loan X, the Acquisition Mortgage Loan XII, the Acquisition Mortgage Loan XIV, the Acquisition Mortgage Loan XVI, the Acquisition Mortgage Loan XVII, the Acquisition Mortgage Loan XVIII, includes unamortized premiums of $24, $1,909, $228, $432, $26, $246, and $681, respectively.
(3)	On January 12, 2006, the Consolidated Operating Partnership paid off and retired the Acquisition Mortgage Loan XV.
(4)	On June 5, 2006, the Consolidated Operating Partnership paid off and retired the Acquisition Mortgage Loan XX.
(5)	At June 30, 2006, the 2007 Notes, 2016 Notes, 2017 Notes, 2027 Notes, 2028 Notes, 2011 Notes, 2012 Notes, 2032 Notes, 2009 Notes and the 2014 Notes are net of unamortized discounts of $5, $662, $110, $15, $173, $285, $799, $576, $129 and $13,365 respectively. At December 31, 2005, the 2007 Notes, 2017 Notes, 2027 Notes, 2028 Notes, 2011 Notes, 2012 Notes, 2032 Notes, 2009 Notes and the 2014 Notes are net of unamortized discounts of $8, $114, $16, $177, $315, $868, $587, $151 and $13,941, respectively.
(6)	On January 10, 2006, the Consolidated Operating Partnership, through the Operating Partnership, paid off and retired the 2005 Unsecured Line of Credit II.

The following is a schedule of the stated maturities and scheduled principal payments of the mortgage loans, senior unsecured debt and unsecured line of credit, exclusive of premiums and discounts, for the next five years ending December 31, and thereafter:

	Amount
Remainder of 2006	$	151,035
2007		152,339
2008		270,533
2009		132,411
2010		15,472
Thereafter		1,110,488
Total	$	1,832,278

Derivatives:

In April 2006, the Consolidated Operating Partnership, through the Operating Partnership, entered into four interest rate protection agreements which fixed the interest rate on forecasted offerings of unsecured debt which it designated as cash flow hedges. Two of the interest rate protection agreements each have a notional value of $72,900 and are effective from November 28, 2006 through November 28, 2016. The interest rate protection agreements fixed the LIBOR rate at 5.537%. The third and fourth interest rate protection agreements each have a notional value of $74,750, are effective from May 10, 2007 through May 10, 2012, and fixed the LIBOR rate at 5.420%.

In October 2005, the Consolidated Operating Partnership, through First Industrial Development Services, Inc., entered into an interest rate protection agreement which hedged the change in value of a build to suit development project the Consolidated Operating Partnership was constructing. This interest rate protection agreement had a notional value of $50,000, which was based on the three Month LIBOR rate, had a strike rate of 4.8675%, had an effective date of December 30, 2005 and a termination date of December 30, 2010. Per Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“FAS 133”) fair value and

15

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

cash flow hedge accounting for hedges of non-financial assets and liabilities is limited to hedges of the risk of changes in the market price of the entire hedged item because changes in the price of an ingredient or component of a non-financial item generally do not have a predictable, separately measurable effect on the price of the item. Since the interest rate protection agreement is hedging a component of the change in value of the build to suit development, the interest rate protection agreement does not qualify for hedge accounting and the change in value of the interest rate protection agreement will be recognized immediately in net income as opposed to other comprehensive income. On January 5, 2006, the Consolidated Operating Partnership, through First Industrial Development Services, Inc., settled the interest rate protection agreement for a payment of $186.

In December 2005, the Consolidated Operating Partnership, through the Operating Partnership, entered into three interest rate protection agreements which fixed the interest rate on a forecasted offering of unsecured debt which it designated as cash flow hedges. Two of the interest rate protection agreements each had a notional value of $48,700 and were effective from December 30, 2005 through December 30, 2015. The interest rate protection agreements fixed the LIBOR rate at 5.066% and 5.067%. The third interest rate protection agreement had a notional value of $48,700, was effective from January 19, 2006 through January 19, 2016, and fixed the LIBOR rate at 4.992%. The Consolidated Operating Partnership settled the three interest rate protection agreements on January 9, 2006 for a payment of approximately $1,729, which is included in other comprehensive income. The settlement amount of the interest rate protection agreements will be amortized over the life of the 2016 Notes as an adjustment to interest expense.

In conjunction with certain issuances of senior unsecured debt, the Consolidated Operating Partnership entered into interest rate protection agreements to fix the interest rate on anticipated offerings of senior unsecured debt. In the next 12 months, the Consolidated Operating Partnership will amortize approximately $1,053 into net income by reducing interest expense.

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, $.01 par value, 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.

On January 13, 2006, the Company issued 6,000,000 Depositary Shares, each representing 1/10,000th of a share of the Company’s 7.25%, $.01 par value, Series J Cumulative Redeemable Preferred Stock (the “Series J Preferred Stock”), at an initial offering price of $25.00 per Depositary Share. The net proceeds from the issuance of the Series J Preferred Stock were contributed to the Operating Partnership in exchange for Series J Cumulative Preferred Units (the “Series J Preferred Units”) and are reflected in the Consolidated Operating Partnership’s financial statements as general partner preferred unit contribution. Dividends on the Series J Preferred Stock, represented by the Depositary Shares, are cumulative from the date of initial issuance and are payable quarterly in arrears. However, during any period that both (i) the depositary shares are not listed on the NYSE or AMEX, or quoted on NASDAQ, and (ii) the Company is not subject to the reporting requirements of the Exchange Act, but the preferred shares are outstanding, the Company will increase the dividend on the preferred shares to a rate of 8.25% of the liquidation preference per year. However, if at any time both (i) the depositary shares cease to be listed on the NYSE or the AMEX, or quoted on NASDAQ, and (ii) the Company ceases to be subject to the reporting requirements of the Exchange Act, but the preferred shares are outstanding, then the preferred shares will be redeemable, in whole but not in part at the Company’s option, within 90 days of the date upon which the depositary

16

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

shares cease to be listed and the Company ceases to be subject to such reporting requirements, at a redemption price equivalent to $25.00 per Depositary Share, plus all accrued and unpaid dividends to the date of redemption. With respect to the payment of dividends and amounts upon liquidation, dissolution or winding up, the Series J Preferred Stock ranks senior to payments on the Company’s Common Stock and pari passu with the Company’s Series C Preferred Stock, Series F Preferred Stock and Series G Preferred Stock. The Series J Preferred Stock is not redeemable prior to January 15, 2011. On or after January 15, 2011, the Series J Preferred Stock is redeemable for cash at the option of the Company, in whole or in part, at a redemption price equivalent to $25.00 per Depositary Share, or $150,000 in the aggregate, plus dividends accrued and unpaid to the redemption date. The Series J Preferred Stock has no stated maturity and is not convertible into any other securities of the Company.

On November 8, 2005 and November 18, 2005, the Company issued 600 and 150 Shares, respectively, of $.01 par value, Series I Flexible Cumulative Redeemable Preferred Stock, (the “Series I Preferred Stock”), in a private placement at an initial offering price of $250,000 per share for an aggregate initial offering price of $187,500. Net of offering costs, the Company received net proceeds of $181,484 from the issuance of Series I Preferred Stock which were contributed to the Operating Partnership in exchange for Series I Cumulative Preferred Units (the “Series I Preferred Units”). The Company redeemed the Series I Preferred Stock on January 13, 2006 for $242,875.00 per share, and paid a prorated first quarter dividend of $470.667 per share, totaling approximately $353. The Operating Partnership redeemed the Series I Cumulative Preferred Units as well. In accordance with EITF D-42, due to the redemption of the Series I Preferred Units, the difference between the redemption cost and the carrying value of the Series I Preferred Units of approximately $672 is reflected as a deduction from net income to arrive at net income available to Unitholders in determining earnings per unit for the six months ended June 30, 2006.

Unit Contributions:

During the six months ended June 30, 2006, certain employees exercised 52,667 non-qualified employee stock options. Net proceeds to the Company were approximately $1,520. The Company contributed the net proceeds to the Consolidated Operating Partnership and the Consolidated Operating Partnership, through the Operating Partnership, issued Units to the Company in the same amount.

During the six months ended June 30, 2006, the Company awarded 303,142 shares of restricted common stock to certain employees and 2,313 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 $11,614 on the date of grant. The restricted common stock generally vests over periods from one to three years. Compensation expense will be charged to earnings over the respective vesting period for the shares expected to vest.

During the six months ended June 30, 2006, the Operating Partnership issued 31,473 Units having an aggregate market value of approximately $1,288 in exchange for property.

17

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Distributions:

The following table summarizes distributions accrued during the six months ended June 30, 2006.

	Six Months Ended
	June 30, 2006
	Distribution		Total
	per Unit		Distribution
Operating Partnership Units	$	1.40	$	72,053
Series C Preferred Units	$	107.82	$	2,156
Series F Preferred Units	$	3,118.00	$	1,559
Series G Preferred Units	$	3,618.00	$	905
Series I Preferred Units	$	470.67	$	353
Series J Preferred Units	$	8,458.33	$	5,075

7.   Acquisition of Real Estate

During the six months ended June 30, 2006, the Consolidated Operating Partnership acquired 47 industrial properties comprising approximately 4.1 million square feet of GLA and several land parcels. The purchase price of these acquisitions totaled approximately $229,124, excluding costs incurred in conjunction with the acquisition of the industrial properties and land parcels.

8.   Sale of Real Estate, Real Estate Held for Sale and Discontinued Operations

During the six months ended June 30, 2006, the Consolidated Operating Partnership sold 54 industrial properties comprising approximately 7.6 million square feet of GLA and several land parcels. Gross proceeds from the sales of the 54 industrial properties and several land parcels were approximately $459,404. The gain on sale of real estate, net of income taxes was approximately $73,442. The 54 sold industrial properties meet the criteria established by FAS 144 to be included in discontinued operations. Therefore, in accordance with FAS 144, the results of operations and gain on sale of real estate, net of income taxes for the 54 sold industrial properties are included in discontinued operations. The results of operations and gain on sale of real estate, net of income taxes for the several land parcels that do not meet the criteria established by FAS 144 are included in continuing operations.

At June 30, 2006, the Consolidated Operating Partnership had 16 industrial properties comprising approximately 2.1 million square feet of GLA held for sale. In accordance with FAS 144, the results of operations of the 16 industrial properties held for sale at June 30, 2006 are included in discontinued operations. There can be no assurance that such industrial properties held for sale will be sold.

Income from discontinued operations for the six months ended June 30, 2006 reflects the results of operations and gain on sale of real estate, net of income taxes of 54 industrial properties that were sold during the six months ended June 30, 2006 as well as the results of operations of 16 industrial properties held for sale at June 30, 2006.

Income from discontinued operations for the six months ended June 30, 2005 reflects the results of operations of 54 industrial properties that were sold during the six months ended June 30, 2006, 73 industrial properties that were sold during the year ended December 31, 2005 and 16 industrial properties identified as held for sale at June 30, 2006.

18

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table discloses certain information regarding the industrial properties included in discontinued operations by the Consolidated Operating Partnership, for the three and six months ended June 30, 2006 and June 30, 2005.

	Three Months			Three Months			Six Months			Six Months
	Ended			Ended			Ended			Ended
	June 30,			June 30,			June 30,			June 30,
	2006			2005			2006			2005
Total Revenues	$	4,020		$	11,194		$	10,491		$	22,173
Operating Expenses		(1,183	)		(4,390	)		(3,350	)		(8,436	)
Interest Expense		—			(172	)		—			(344	)
Depreciation and Amortization		(824	)		(3,492	)		(3,535	)		(7,142	)
Provision for Income Taxes Allocable to Operations		(361	)		(572	)		(1,187	)		(1,688	)
Gain on Sale of Real Estate		38,777			28,426			92,416			40,139
Provision for Income Taxes Allocable to Gain on Sale of Real Estate		(7,484	)		(2,584	)		(21,946	)		(5,383	)
Income from Discontinued Operations	$	32,945		$	28,410		$	72,889		$	39,319

9.   Supplemental Information to Statement of Cash Flows

Supplemental disclosure of cash flow information:

	Six Months			Six Months
	Ended			Ended
	June 30,			June 30,
	2006			2005
Interest paid, net of capitalized interest	$	54,253		$	51,481
Interest capitalized	$	3,165		$	1,482
Supplemental schedule of non-cash investing and financing activities:
Distribution payable on units	$	36,038		$	34,485
Distribution payable on preferred units	$	1,232		$	1,232
Exchange of limited partnership units for general partnership units:
Limited partnership units	$	(1,959	)	$	(1,085	)
General partnership units		1,959			1,085
	$	—		$	—

19

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Six Months			Six Months
	Ended			Ended
	June 30,			June 30,
	2006			2005
In conjunction with the property and land acquisitions, the following liabilities were assumed and units issued:
Accounts payable and accrued expenses	$	(1,082	)	$	(1,630	)
Issuance of Limited Partnership Units	$	(1,288	)	$	(1,507	)
Mortgage Debt	$	(6,995	)	$	(11,545	)
Foreclosed property acquisition and write-off of defaulted note receivable	$	—		$	3,870
Write-off of retired assets	$	8,547		$	19,318
In conjunction with certain property sales, the Operating Partnership provided seller financing:
Notes Receivable	$	11,200		$	21,443

10.   Earnings Per Unit (“EPU”)

The computation of basic and diluted EPU is presented below:

	Three Months			Three Months			Six Months			Six Months
	Ended			Ended			Ended			Ended
	June 30,			June 30,			June 30,			June 30,
	2006			2005			2006			2005
Numerator:
Income (Loss) from Continuing Operations	$	1,977		$	(5,339	)	$	(13,598	)	$	(10,713	)
Gain on Sale of Real Estate, Net of Income Taxes		1,546			1,734			2,972			14,874
Less: Preferred Unit Distributions		(5,029	)		(2,310	)		(10,048	)		(4,620	)
Less: Redemption of Preferred Units		—			—			(672	)		—
Loss from Continuing Operations Available to Unitholders — For Basic and Diluted EPU		(1,506	)		(5,915	)		(21,346	)		(459	)
Income from Discontinued Operations, Net of Income Taxes		32,945			28,410			72,889			39,319
Net Income Available to Unitholders	$	31,439		$	22,495		$	51,543		$	38,860

20

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Three Months			Three Months			Six Months			Six Months
	Ended			Ended			Ended			Ended
	June 30,			June 30,			June 30,			June 30,
	2006			2005			2006			2005
Denominator:
Weighted Average Units — Basic		50,705,548			48,759,271			50,675,187			48,692,754
Effect of Dilutive Securities that Result in the Issuance of General Partner Units:
Employee and Director Common Stock Options		—			—			—			—
Employee and Director Shares of Restricted Stock		—			—			—			—
Weighted Average Units Outstanding — Diluted		50,705,548			48,759,271			50,675,187			48,692,754
Basic EPU:
Loss from Continuing Operations Available to Unitholders	$	(0.03	)	$	(0.12	)	$	(0.42	)	$	(0.01	)
Income from Discontinued Operations, Net of Income Taxes	$	0.65		$	0.58		$	1.44		$	0.81
Net Income Available to Unitholders	$	0.62		$	0.46		$	1.02		$	0.80
Diluted EPU:
Loss from Continuing Operations Available to Unitholders	$	(0.03	)	$	(0.12	)	$	(0.42	)	$	(0.01	)
Income from Discontinued Operations, Net of Income Taxes	$	0.65		$	0.58		$	1.44		$	0.81
Net Income Available to Unitholders	$	0.62		$	0.46		$	1.02		$	0.80

Weighted average units — diluted are the same as weighted average units — basic for the three and six months June 30, 2006 and 2005 as the dilutive effect of stock options and restricted stock was excluded because its inclusion would have been anti-dilutive to the loss from continuing operations available to unitholders. If the Consolidated Operating Partnership had income from continuing operations available to unitholders, the dilutive stock options and restricted stock that would be added to the denominator of weighted average units-basic would have been 156,132 and 245,094, respectively for the three months ended June 30, 2006 and 2005 and 177,803 and 269,598, respectively for the six months ended June 30, 2006 and 2005. Additionally, unvested restricted units aggregating 176,001 and 185,034, respectively for the three and six months ended June 30, 2006 and 2005 are excluded from the denominator because such units are anti-dilutive for the periods presented.

11.   Employee Benefit Plans

The Company maintains three stock incentive plans (the “Stock Incentive Plans”) which are administered by the Compensation Committee of the Board of Directors. There are approximately 10.0 million shares reserved under the Stock Incentive Plans. Only officers, other employees of the Company, its Independent Directors and its affiliates generally are eligible to participate in the Stock Incentive Plans.

The Stock Incentive Plans authorize (i) the grant of stock options that qualify as incentive stock options under Section 422 of the Code, (ii) the grant of stock options that do not so qualify, (iii) restricted stock awards,

21

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(iv) performance share awards and (v) dividend equivalent rights. The exercise price of the stock options is determined by the Compensation Committee. Special provisions apply to awards granted under the Stock Incentive Plans in the event of a change in control in the Company. As of June 30, 2006, stock options and restricted stock covering 1.2 million shares were outstanding and 2.3 million shares were available under the Stock Incentive Plans. At June 30, 2006 all outstanding options are vested.

Stock option transactions for the six months ended June 30, 2006 are summarized as follows:

				Weighted
				Average		Exercise		Aggregate
				Exercise		Price		Intrinsic
	Shares			Price		per Share		Value
Outstanding at December 31, 2005		546,723		$	31.27	$	22.75-$33.15
Exercised		(52,667	)		29.79	$	22.75-$33.15	$	623
Expired or Terminated		(38,967	)		30.88	$	27.25-$33.13
Outstanding at June 30, 2006		455,089		$	31.47	$	25.13-$33.15	$	2,943

The following table summarizes currently outstanding and exercisable options as of June 30, 2006:

	Number		Weighted		Weighted
	Outstanding		Average		Average
	and		Remaining		Exercise
Range of Exercise Price	Exercisable		Contractual Life		Price
$25.13-$30.00		61,070		3.64		28.43
$30.38-$33.15		394,019		4.25		31.94

The Company has granted restricted stock awards to officers, certain other employees, and non-employee members of the Board of Directors of the Company, which allow the holders to each receive a certain amount of shares of the Company’s common stock generally over a one to three-year vesting period and generally based on time and service, of which 773,950 shares were outstanding at June 30, 2006. Upon issuance of the restricted stock awards, the Operating Partnership issues Units to the Company in the same amount.

Restricted unit transactions for the six months ended June 30, 2006 are summarized as follows:

				Weighted Average
	Units			Grant Date Fair Value
Outstanding at December 31, 2005		700,023		$	34.23
Issued		305,455		$	38.02
Vested		(209,865	)	$	36.71
Forfeited		(21,663	)	$	34.11
Outstanding at June 30, 2006		773,950		$	35.41

12.   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 development projects totaling approximately 3.7 million square feet of GLA. The estimated total construction costs are approximately $131.5 million. Of this amount, approximately $32.7 million remains to be funded. There can be no assurance the actual completion cost will not exceed the estimated completion cost stated above.

22

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At June 30, 2006, the Consolidated Operating Partnership had 15 letters of credit outstanding in the aggregate amount of $5,057. These letters of credit expire between July, 2006 and June, 2007.

13.   Related Party Transactions

At June 30, 2006 and December 31, 2005, the Consolidated Operating Partnership has a payable balance of $1,840 and $12,166, respectively, to a wholly-owned entity of the Company.

14.   Subsequent Events

From July 1, 2006 to July 28, 2006, the Consolidated Operating Partnership acquired 15 industrial properties and a land parcel for a purchase price of approximately $158,460, excluding costs incurred in conjunction with the acquisition of these industrial properties. The Consolidated Operating Partnership also sold four industrial properties and several land parcels for approximately $19,350 of gross proceeds.

On July 17, 2006, the Company and the Operating Partnership paid a second quarter 2006 dividend/distribution of $.70 per common share/Unit, totaling approximately $36,038.

On July 25, 2006, the Consolidated Operating Partnership, through a wholly-owned limited liability company in which a wholly-owned company of the Operating Partnership is the sole member, entered into a joint venture arrangement with an institutional investor to invest in land and vertical development (the “July 2006 Joint Venture”). The Consolidated Operating Partnership, through a wholly-owned limited liability company in which a wholly-owned company of the Operating Partnership is the sole member, owns a ten percent equity interest in the July 2006 Joint Venture.

23

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 those 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 rates, 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 in Item 1A, “Risk Factors,” and in the Operating Partnership’s other filings with the Securities and Exchange Commission.

GENERAL

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 87.0% ownership interest at June 30, 2006. The limited partners of the Operating Partnership own, in the aggregate, approximately a 13.0% interest in the Operating Partnership at June 30, 2006. The Company also owns a preferred general partnership interest in the Operating Partnership with an aggregate liquidation priority of $275 million at June 30, 2006. 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 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.

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.

As of June 30, 2006, the Consolidated Operating Partnership owned 852 industrial properties (inclusive of developments in process) containing an aggregate of approximately 68.7 million square feet of gross leasable area (“GLA”). On a combined basis, as of June 30, 2006, the Other Real Estate Partnerships owned 94 industrial properties containing an aggregate of approximately 8.8 million square feet of GLA.

On March 21, 2006, the Operating Partnership, through separate wholly-owned limited liability companies of which it is the sole member, entered into a co-investment arrangement with an institutional investor to invest in industrial properties (the “March 2006 Co-Investment Program”). The Operating Partnership, through separate

24

wholly-owned limited liability companies of which it is the sole member, owns a 15 percent equity interest in and provides property management, leasing, disposition and portfolio management services to the March 2006 Co-Investment Program.

The Operating Partnership, through separate wholly-owned limited liability companies of which it is the sole member, also owns minority equity interests in, and provides various services to, four other joint ventures which invest in industrial properties (the “September 1998 Joint Venture”, the “May 2003 Joint Venture”, the “March 2005 Joint Venture” and the “September 2005 Joint Venture”; together with the March 2006 Co-Investment Program, the “Joint Ventures”).

The Other Real Estate Partnerships and the Joint Ventures are accounted for under the equity method of accounting. The operating data of the Other Real Estate Partnerships and the Joint Ventures is not consolidated with that of the Consolidated Operating Partnership as presented herein.

MANAGEMENT’S OVERVIEW

Management believes the Consolidated Operating Partnership’s financial condition and results of operations are, primarily, a function of the Consolidated Operating Partnership’s and its joint ventures’ performance in four key areas: leasing of industrial properties, acquisition and development of additional industrial properties, redeployment of internal capital and access to external capital.

The Consolidated Operating Partnership generates revenue primarily from rental income and tenant recoveries from long-term (generally three to six years) operating leases of its and its joint ventures’ industrial properties. Such revenue is offset by certain property specific operating expenses, such as real estate taxes, repairs and maintenance, property management, utilities and insurance expenses, along with certain other costs and expenses, such as depreciation and amortization costs and general and administrative and interest expenses. The Consolidated Operating Partnership’s revenue growth is dependent, in part, on its ability to (i) increase rental income, through increasing, either or both, occupancy rates and rental rates at the Consolidated Operating Partnership’s and its joint ventures’ properties, (ii) maximize tenant recoveries and (iii) minimize operating and certain other expenses. Revenues generated from rental income and tenant recoveries are a significant source of funds, in addition to income generated from gains/losses on the sale of the Consolidated Operating Partnership’s and its joint ventures’ properties (as discussed below), for the Consolidated Operating Partnership’s distributions. The leasing of property, in general, and occupancy rates, rental rates, operating expenses and certain non-operating expenses, in particular, are impacted, variously, by property specific, market specific, general economic and other conditions, many of which are beyond the control of the Consolidated Operating Partnership. The leasing of property also entails various risks, including the risk of tenant default. If the Consolidated Operating Partnership were unable to maintain or increase occupancy rates and rental rates at the Consolidated Operating Partnership’s and its joint ventures’ properties or to maintain tenant recoveries and operating and certain other expenses consistent with historical levels and proportions, the Consolidated Operating Partnership’s revenue growth would be limited. Further, if a significant number of the Consolidated Operating Partnership’s or its joint ventures’ tenants were unable to pay rent (including tenant recoveries) or if the Consolidated Operating Partnership or its joint ventures were unable to rent their properties on favorable terms, the Consolidated Operating Partnership’s financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, the Consolidated Operating Partnership’s securities would be adversely affected.

The Consolidated Operating Partnership’s revenue growth is also dependent, in part, on its and its joint ventures’ ability to acquire existing, and acquire and develop new, additional industrial properties on favorable terms. The Consolidated Operating Partnership itself, and through its various joint ventures, continually seeks to acquire existing industrial properties on favorable terms, and, when conditions permit, also seeks to acquire and develop new industrial properties on favorable terms. Existing properties, as they are acquired, and acquired and developed properties, as they lease-up, generate revenue from rental income, tenant recoveries and fees, income from which, as discussed above, is a source of funds for the Consolidated Operating Partnership’s distributions. The acquisition and development of properties is impacted, variously, by property specific, market specific, general economic and other conditions, many of which are beyond the control of the Consolidated Operating Partnership. The acquisition and development of properties also entails various risks, including the risk that the Consolidated

25

Operating Partnership’s and its joint ventures’ investments may not perform as expected. For example, acquired existing and acquired and developed new properties may not sustain and/or achieve anticipated occupancy and rental rate levels. With respect to acquired and developed new properties, the Consolidated Operating Partnership may not be able to complete construction on schedule or within budget, resulting in increased debt service expense and construction costs and delays in leasing the properties. Also, the Consolidated Operating Partnership and its joint ventures face significant competition for attractive acquisition and development opportunities from other well-capitalized real estate investors, including both publicly-traded real estate investment trusts and private investors. Further, as discussed below, the Consolidated Operating Partnership and its joint ventures may not be able to finance the acquisition and development opportunities they identify. If the Consolidated Operating Partnership and its joint ventures were unable to acquire and develop sufficient additional properties on favorable terms or if such investments did not perform as expected, the Consolidated Operating Partnership’s revenue growth would be limited and its financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, the Consolidated Operating Partnership’s securities would be adversely affected.

The Consolidated Operating Partnership also generates income from the sale of its and its joint ventures’ properties (including existing buildings, buildings which the Consolidated Operating Partnership or joint ventures have developed or re-developed on a merchant basis and land). The Consolidated Operating Partnership itself, and through its various joint ventures, is continually engaged in, and its income growth is dependent, in part, on systematically redeploying capital from properties and other assets with lower yield potential into properties and other assets with higher yield potential. As part of that process, the Consolidated Operating Partnership and its joint ventures sell, on an ongoing basis, select stabilized properties or land or properties offering lower potential returns relative to their market value. The gain/loss on, and fees from, the sale of such properties are included in the Consolidated Operating Partnership’s income and are a significant source of funds, in addition to revenues generated from rental income and tenant recoveries, for the Consolidated Operating Partnership’s distributions. Also, a significant portion of the Consolidated Operating Partnership’s proceeds from such sales is used to fund the Consolidated Operating Partnership’s acquisition of existing, and the acquisition and development of new, industrial properties. The sale of properties is impacted, variously, by property specific, market specific, general economic and other conditions, many of which are beyond the control of the Consolidated Operating Partnership. The sale of properties also entails various risks, including competition from other sellers and the availability of attractive financing for potential buyers of the Consolidated Operating Partnership’s properties. Further, the Consolidated Operating Partnership’s ability to sell properties is limited by safe harbor rules applying to REITs under the Code which relate to the number of properties that may be disposed of in a year, their tax bases and the cost of improvements made to the properties, along with other tests which enable a REIT to avoid punitive taxation on the sale of assets. If the Consolidated Operating Partnership and its joint ventures were unable to sell a sufficient number of properties on favorable terms, the Consolidated Operating Partnership’s income growth would be limited and its financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, the Consolidated Operating Partnership’s securities would be adversely affected.

Currently, the Consolidated Operating Partnership utilizes a portion of the net sales proceeds from property sales, borrowings under its unsecured lines of credit and proceeds from the issuance, when and as warranted, of additional debt and equity securities to finance future acquisitions and developments, and to fund its equity commitments to its joint ventures. Access to external capital on favorable terms plays a key role in the Consolidated Operating Partnership’s financial condition and results of operations, as it impacts the Consolidated Operating Partnership’s cost of capital and its ability and cost to refinance existing indebtedness as it matures and to fund acquisitions, developments and contributions to its joint ventures or through the issuance, when and as warranted, of additional equity securities. The Consolidated Operating Partnership’s ability to access external capital on favorable terms is dependent on various factors, including general market conditions, interest rates, credit ratings on the Consolidated Operating Partnership’s capital stock and debt, the market’s perception of the Consolidated Operating Partnership’s growth potential, the Consolidated Operating Partnership’s current and potential future earnings and cash distributions and the market price of the Company’s capital stock. If the Consolidated Operating Partnership were unable to access external capital on favorable terms, the Consolidated Operating Partnership’s financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, the Consolidated Operating Partnership’s securities would be adversely affected.

26

RESULTS OF OPERATIONS

Comparison of Six Months Ended June 30, 2006 to Six Months Ended June 30, 2005

The Consolidated Operating Partnership’s net income available to unitholders was $51.5 million and $38.9 million for the six months ended June 30, 2006, and June 30, 2005, respectively. Basic and diluted net income available to unitholders was $1.02 per unit, for the six months ended June 30, 2006, and $0.80 per unit, for the six months ended June 30, 2005.

The tables below summarize the Consolidated Operating Partnership’s revenues, property expenses and depreciation and other amortization by various categories for the six months ended June 30, 2006 and June 30, 2005. Same store properties are in service properties owned prior to January 1, 2005. Acquired properties are properties that were acquired subsequent to December 31, 2004. Sold properties are properties that were sold subsequent to December 31, 2004. Properties that are not in service are properties that are under construction that have not reached stabilized occupancy or were placed in service after December 31, 2004 or acquisitions acquired prior to January 1, 2005 that were not placed in service as of December 31, 2004. These properties are placed in service as they reach stabilized occupancy (generally defined as 90% occupied). Other revenues are derived from the operations of the Consolidated Operating Partnership’s maintenance company, fees earned from the Consolidated Operating Partnership’s joint ventures, fees earned for developing properties for third parties and other miscellaneous revenues. Other expenses are derived from the operations of the Consolidated Operating Partnership’s maintenance company and other miscellaneous regional expenses.

The Consolidated Operating Partnership’s future financial condition and results of operations, including rental revenues, may be impacted by the future acquisition and sale of properties. The Consolidated Operating Partnership’s future revenues and expenses may vary materially from historical rates.

	Six Months			Six Months
	Ended			Ended
	June 30,			June 30,
	2006			2005			$ Change			% Change
REVENUES ($ in 000’s)
Same Store Properties	$	116,073		$	119,033		$	(2,960	)		(2.5	)%
Acquired Properties		31,747			1,812			29,935			1,652.0	%
Sold Properties		7,865			20,098			(12,233	)		(60.9	)%
Properties Not In Service		9,926			7,259			2,667			36.7	%
Other		15,133			7,205			7,928			110.0	%
		180,744			155,407			25,337			16.3	%
Discontinued Operations		(10,491	)		(22,173	)		11,682			(52.7	)%
Total Revenues	$	170,253		$	133,234		$	37,019			27.8	%

The occupancy rates of the Consolidated Operating Partnership’s same store properties at June 30, 2006 and 2005 were 89.5% and 90.8% respectively. Revenues from same store properties decreased by $3.0 million due to a decrease in same store property occupancy rates. Revenues from acquired properties increased $29.9 million due to the 196 industrial properties acquired subsequent to December 31, 2004 totaling approximately 22.5 million square feet of GLA. Revenues from sold properties decreased $12.2 million due to the 136 industrial properties sold subsequent to December 31, 2004 totaling approximately 18.2 million square feet of GLA partially offset by the revenues from the build to suit development for sale. Revenues from properties not in service increased by $2.7 million due to an increase in properties placed in service during 2006 and 2005. Other revenues increased by approximately $7.9 million due primarily to an increase in joint venture fees partially offset by a decrease in assignment fees.

27

	Six Months			Six Months
	Ended			Ended
	June 30,			June 30,
	2006			2005			$ Change			% Change
PROPERTY EXPENSES ($ in 000’s)
Same Store Properties	$	39,682		$	38,732		$	950			2.5	%
Acquired Properties		8,255			588			7,667			1,303.9	%
Sold Properties		2,559			7,334			(4,775	)		(65.1	)%
Properties Not In Service		4,530			4,184			346			8.3	%
Other		7,569			3,990			3,579			89.7	%
	$	62,595		$	54,828		$	7,767			14.2	%
Discontinued Operations		(3,350	)		(8,436	)		5,086			(60.3	)%
Total Property Expenses	$	59,245		$	46,392		$	12,853			27.7	%

Property expenses include real estate taxes, repairs and maintenance, property management, utilities, insurance, other property related expenses and expenses from build to suit development for sale. Property expenses from same store properties remained relatively unchanged. Property expenses from acquired properties increased by $7.7 million due to properties acquired subsequent to December 31, 2004. Property expenses from sold properties decreased by $4.8 million due to properties sold subsequent to December 31, 2004 partially offset by the expenses from the build to suit development for sale. Property expenses from properties not in service remained relatively unchanged. Other expense increased $3.6 million due primarily to increases in employee compensation.

General and administrative expense increased by approximately $12.5 million, or 54.4%, due primarily to increases in employee compensation related to compensation for additional employees as well as an increase in incentive compensation.

	Six Months			Six Months
	Ended			Ended
	June 30,			June 30,
	2006			2005			$ Change			% Change
DEPRECIATION and OTHER AMORTIZATION ($ in 000’s)
Same Store Properties	$	38,206		$	37,773		$	433			1.1	%
Acquired Properties		19,237			1,061			18,176			1,713.1	%
Sold Properties		2,260			6,586			(4,326	)		(65.7	)%
Properties Not In Service and Other		8,541			4,324			4,217			97.5	%
Corporate Furniture, Fixtures and Equipment		864			656			208			31.7	%
	$	69,108		$	50,400		$	18,708			37.1	%
Discontinued Operations		(3,535	)		(7,142	)		3,607			(50.5	)%
Total Depreciation and Other Amortization	$	65,573		$	43,258		$	22,315			51.6	%

Depreciation and other amortization for same store properties remained relatively unchanged. Depreciation and other amortization from acquired properties increased by $18.1 million due to properties acquired subsequent to December 31, 2004. Depreciation and other amortization from sold properties decreased by $4.3 million due to properties sold subsequent to December 31, 2004. Depreciation and other amortization for properties not in service and other increased by $4.2 million due primarily to accelerated depreciation on one property in Columbus, OH which was razed during the six months ended June 30, 2006.

Interest income remained relatively unchanged.

Interest expense increased by approximately $7.6 million primarily due to an increase in the weighted average debt balance outstanding for the six months ended June 30, 2006 ($1,853.4 million), as compared to the six months ended June 30, 2005 ($1,603.6 million), as well as an increase in the weighted average interest rate for the six

28

months ended June 30, 2006 (6.79%), as compared to the six months ended June 30, 2005 (6.72%) partially offset by an increase in capitalized interest for the six months ended June 30, 2006 as compared to the six months ended June 30, 2005, due to an increase in development activities.

Amortization of deferred financing costs increased by $0.2 million, or 20.0% due primarily to financing fees incurred associated with the amendment and restatement of the Consolidated Operating Partnership’s 2005 Unsecured Line of Credit I in August 2005 and the issuance of $200 million of senior unsecured debt (the “2016 Notes”) in January 2006.

In October 2005, the Consolidated Operating Partnership, through First Industrial Development Services, Inc., entered into an interest rate protection agreement which hedged the change in value of a build to suit development project the Consolidated Operating Partnership was constructing. On January 5, 2006, the Consolidated Operating Partnership, through First Industrial Development Services, Inc., settled the interest rate protection agreement for a payment of $0.2 million.

The Consolidated Operating Partnership recognized a $0.5 million loss during the six months ended June 30, 2005 on its mark-to-market of an interest rate protection agreement that was entered into in January 2005 in order to hedge the change in value of a build to suit development project the Consolidated Operating Partnership through First Industrial Development Services, Inc., was constructing.

Income tax benefit increased by $1.8 million due primarily to an increase in general and administrative and depreciation expense incurred during the six months ended June 30, 2006 compared to the six months ended June 30, 2005 within the Consolidated Operating Partnership’s taxable REIT subsidiary associated with additional investment activity. The increase in expense is partially offset by an increase in income related to the Consolidated Operating Partnership’s economic share of the gains and the earn outs on property sales from the March 2005 Joint Venture and the September 2005 Joint Venture and fees earned from the Joint Ventures recognized during the six months ended June 30, 2006, compared to the six months ended June 30, 2005 associated with additional activity in the Joint Ventures, in which the Consolidated Operating Partnership’s taxable REIT subsidiary has equity interests in.

Equity in income of Other Real Estate Partnerships increased by $6.3 million primarily due to an increase in gain on sale of real estate for the Other Real Estate Partnerships.

Equity in income of joint ventures increased by $7.5 million primarily due to the Consolidated Operating Partnership’s economic share of the gains and earn outs on property sales from the March 2005 Joint Venture and the September 2005 Joint Venture during the six months ended June 30, 2006.

The $3.0 million gain on sale of real estate, net of income taxes for the six months ended June 30, 2006 resulted from the sale of several land parcels that do not meet the criteria established by FAS 144 for inclusion in discontinued operations. The $14.9 million gain on sale of real estate, net of income taxes for the six months ended June 30, 2005 resulted from the sale of eight industrial properties and several land parcels that do not meet the criteria established by FAS 144 for inclusion in discontinued operations.

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The following table summarizes certain information regarding the industrial properties included in discontinued operations by the Consolidated Operating Partnership, for the six months ended June 30, 2006 and June 30, 2005.

	Six Months			Six Months
	Ended			Ended
	June 30,			June 30,
	2006			2005
	($ in 000’s)
Total Revenues	$	10,491		$	22,173
Operating Expenses		(3,350	)		(8,436	)
Interest Expense		—			(344	)
Depreciation and Amortization		(3,535	)		(7,142	)
Provision for Income Taxes Allocable to Operations		(1,187	)		(1,688	)
Gain on Sale of Real Estate		92,416			40,139
Provision for Income Taxes Allocable to Gain on Sale		(21,946	)		(5,383	)
Income from Discontinued Operations	$	72,889		$	39,319

Income from discontinued operations, net of income taxes, for the six months ended June 30, 2006 reflects the results of operations and gain on sale of real estate, net of income taxes, relating to 54 industrial properties that were sold during the six months ended June 30, 2006 and the results of operations from 16 properties identified as held for sale at June 30, 2006.

Income from discontinued operations, net of income taxes, for the six months ended June 30, 2005 reflects the results of operations relating to 54 industrial properties that were sold during the six months ended June 30, 2006, 73 industrial properties that were sold during the year ended December 31, 2005 and 16 industrial properties identified as held for sale at June 30, 2006.

Comparison of Three Months Ended June 30, 2006 to Three Months Ended June 30, 2005

The Consolidated Operating Partnership’s net income available to unitholders was $31.4 million and $22.5 million for the three months ended June 30, 2006, and June 30, 2005, respectively. Basic and diluted net income available to unitholders was $0.62 per unit, for the three months ended June 30, 2006, and $0.46 per unit, for the three months ended June 30, 2005.

The tables below summarize the Consolidated Operating Partnership’s revenues, property expenses and depreciation and other amortization by various categories for the three months ended June 30, 2006 and June 30, 2005. Same store properties are in service properties owned prior to April 1, 2005. Acquired properties are properties that were acquired subsequent to March 31, 2005. Sold properties are properties that were sold subsequent to March 31, 2005. Properties that are not in service are properties that are under construction that have not reached stabilized occupancy or were placed in service after December 31, 2004 or acquisitions acquired prior to April 1, 2005 that were not placed in service as of March 1, 2005. These properties are placed in service as they reach stabilized occupancy (generally defined as 90% occupied). Other revenues are derived from the operations of the Consolidated Operating Partnership’s maintenance company, fees earned from the Consolidated Operating Partnership’s joint ventures, fees earned for developing properties for third parties and other miscellaneous revenues. Other expenses are derived from the operations of the Consolidated Operating Partnership’s maintenance company and other miscellaneous regional expenses.

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The Consolidated Operating Partnership’s future financial condition and results of operations, including rental revenues, may be impacted by the future acquisition and sale of properties. The Consolidated Operating Partnership’s future revenues and expenses may vary materially from historical rates.

	Three Months			Three Months
	Ended			Ended
	June 30,			June 30,
	2006			2005			$ Change			% Change
REVENUES ($ in 000’s)
Same Store Properties	$	61,855		$	61,517		$	338			0.5	%
Acquired Properties		16,401			332			16,069			4,840.1	%
Sold Properties		2,350			9,752			(7,402	)		(75.9	)%
Properties Not In Service		2,577			2,219			358			16.1	%
Other		8,996			3,481			5,515			158.4	%
		92,179			77,301			14,878			19.2	%
Discontinued Operations		(4,020	)		(11,194	)		7,174			(64.1	)%
Total Revenues	$	88,159		$	66,107		$	22,052			33.4	%

The occupancy rates of the Consolidated Operating Partnership’s same store properties at June 30, 2006 and 2005 were 89.8% and 90.5% respectively. Revenues from same store properties remain relatively unchanged. Revenues from acquired properties increased $16.1 million due to the 177 industrial properties acquired subsequent to March 31, 2005 totaling approximately 19.9 million square feet of GLA. Revenues from sold properties decreased $7.4 million due to the 119 industrial properties sold subsequent to March 31, 2005 totaling approximately 15.2 million square feet of GLA. Revenues from properties not in service increased by $0.4 million due to an increase in properties placed in service during 2006 and 2005. Other revenues increased by approximately $5.5 million due primarily to an increase in joint venture fees partially offset by a decrease in assignment fees.

	Three Months			Three Months
	Ended			Ended
	June 30,			June 30,
	2006			2005			$ Change			% Change
PROPERTY EXPENSES ($ in 000’s)
Same Store Properties	$	20,022		$	19,432		$	590			3.0	%
Acquired Properties		4,400			105			4,295			4,090.5	%
Sold Properties		649			3,513			(2,864	)		(81.5	)%
Properties Not In Service		1,436			1,898			(462	)		(24.3	)%
Other		4,050			2,369			1,681			71.0	%
		30,557			27,317			3,240			11.9	%
Discontinued Operations		(1,183	)		(4,390	)		3,207			(73.1	)%
Total Property Expenses	$	29,374		$	22,927		$	6,447			28.1	%

Property expenses include real estate taxes, repairs and maintenance, property management, utilities, insurance, and other property related expenses. Property expenses from same store properties remained relatively unchanged. Property expenses from acquired properties increased by $4.3 million due to properties acquired subsequent to March 31, 2005. Property expenses from sold properties decreased by $2.9 million due to properties sold subsequent to March 31, 2005. Property expenses from properties not in service decreased by $0.5 million due primarily to a decrease in bad debt expense. Other expense increased $1.7 million due primarily to increases in employee compensation.

General and administrative expense increased by approximately $6.7 million, or 59.3%, due primarily to increases in employee compensation related to compensation for additional employees as well as an increase in incentive compensation.

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	Three Months			Three Months
	Ended			Ended
	June 30,			June 30,
	2006			2005			$ Change			% Change
DEPRECIATION and OTHER AMORTIZATION ($ in 000’s)
Same Store Properties	$	20,559		$	20,620		$	(61	)		(0.3	)%
Acquired Properties		9,905			266			9,639			3,623.7	%
Sold Properties		192			3,108			(2,916	)		(93.8	)%
Properties Not In Service and Other		4,070			1,388			2,682			193.2	%
Corporate Furniture, Fixtures and Equipment		447			337			110			32.6	%
	$	35,173		$	25,719		$	9,454			36.8	%
Discontinued Operations		(824	)		(3,492	)		2,668			(76.4	)%
Total Depreciation and Other Amortization	$	34,349		$	22,227		$	12,122			54.5	%

Depreciation and other amortization for same store properties remained relatively unchanged. Depreciation and other amortization from acquired properties increased by $9.6 million due to properties acquired subsequent to March 31, 2005. Depreciation and other amortization from sold properties decreased by $2.9 million due to properties sold subsequent to March 31, 2005. Depreciation and other amortization for properties not in service and other increased by $2.7 million due primarily to accelerated depreciation on one property in Columbus, OH which was razed during the three months ended June 30, 2006.

Interest income decreased by approximately $0.2 million due primarily to a decrease in the average mortgage loans receivable outstanding during the three months ended June 30, 2006, as compared to the three months ended June 30, 2005.

Interest expense increased by approximately $3.9 million primarily due to an increase in the weighted average debt balance outstanding for the three months ended June 30, 2006 ($1,863.2 million), as compared to the three months ended June 30, 2005 ($1,616.2 million), as well as an increase in the weighted average interest rate for the three months ended June 30, 2006 (6.79%) as compared to the three months ended June 30, 2005 (6.69%), partially offset by an increase in capitalized interest for the three months ended June 30, 2006 as compared to the three months ended June 30, 2005, due to an increase in development activities.

Amortization of deferred financing costs increased by $0.1 million due primarily to financing fees incurred associated with the amendment and restatement of the Consolidated Operating Partnership’s 2005 Unsecured Line of Credit I in August 2005 and the issuance of the 2016 Notes in January 2006.

During the three months ended June 30, 2005 the Consolidated Operating Partnership recognized $1.4 million loss on its mark-to-market of an interest rate protection agreement that the Consolidated Operating Partnership entered into in January 2005 in order to hedge the change in value of a build to suit development project.

Equity in income of Other Real Estate Partnerships increased by $8.2 million primarily due to an increase in gain on sale of real estate for the Other Real Estate Partnerships.

Equity in income of joint ventures increased by $7.4 million primarily due to the Consolidated Operating Partnership’s economic share of the gains and earn outs on property sales from the March 2005 Joint Venture and the September 2005 Joint Venture during the three months ended June 30, 2006.

Income tax benefit decreased by $2.2 million due primarily to an increase in income related to the Consolidated Operating Partnership’s economic share of the gains and earn outs on property sales from the March 2005 Joint Venture and the September 2005 Joint Venture and fees earned from the Joint Ventures recognized in the three months ended June 30, 2006 compared to the three months ended June 30, 2005 associated with additional activity in the Joint Ventures, in which the Consolidated Operating Partnership’s taxable REIT subsidiary has equity interests in.

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The following table summarizes certain information regarding the industrial properties included in discontinued operations by the Consolidated Operating Partnership, for the three months ended June 30, 2006 and June 30, 2005.

	Three Months			Three Months
	Ended			Ended
	June 30,			June 30,
	2006			2005
	($ in 000’s)
Total Revenues	$	4,020		$	11,194
Operating Expenses		(1,183	)		(4,390	)
Interest Expense		—			(172	)
Depreciation and Amortization		(824	)		(3,492	)
Provision for Income Taxes Allocable to Operations		(361	)		(572	)
Gain on Sale of Real Estate		38,777			28,426
Provision for Income Taxes Allocable to Gain on Sale		(7,484	)		(2,584	)
Income from Discontinued Operations	$	32,945		$	28,410

Income from discontinued operations, net of income taxes, for the three months ended June 30, 2006 reflects the results of operations and gain on sale of real estate, net of income taxes, relating to 30 industrial properties that were sold during the three months ended June 30, 2006 and the results of operations from 16 properties identified as held for sale at June 30, 2006.

Income from discontinued operations, net of income taxes, for the three months ended June 30, 2005 reflects the results of operations relating to 30 industrial properties that were sold during the three months ended June 30, 2006, 73 industrial properties that were sold during the year ended December 31, 2005 and 16 industrial properties identified as held for sale at June 30, 2006.

The $1.5 million gain on sale of real estate, net of income taxes for the three months ended June 30, 2006 resulted from the sale of several land parcels that do not meet the criteria established by FAS 144 for inclusion in discontinued operations. The $1.7 million gain on sale of real estate, net of income taxes for the three months ended June 30, 2005 resulted from the sale of one industrial properties and several land parcels that do not meet the criteria established by FAS 144 for inclusion in discontinued operations.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2006, the Consolidated Operating Partnership’s restricted cash was approximately $58.5 million. Restricted cash is primarily 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.

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’s 7.0% Notes, in the aggregate principal amount of $150 million, are due on December 1, 2006 (the “2006 Notes”) and the Consolidated Operating Partnership’s 7.6% Notes, in the aggregate of $150 million, are due on May 15, 2007 (the “2007 Notes”). The Consolidated Operating Partnership expects to satisfy the payment obligations on the 2006 Notes and the 2007 Notes with the issuance of additional debt. With the exception of the 2006 Notes and the 2007 Notes, 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 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 and investment 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 June 30, 2006 and July 28, 2006, $300.0 million of debt securities was registered and unissued under the Securities Act of 1933, as amended. The Consolidated

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Operating Partnership also may finance the development or acquisition of additional properties through borrowings under the 2005 Unsecured Line of Credit I. At June 30, 2006, borrowings under the 2005 Unsecured Line of Credit bore interest at a weighted average interest rate of 5.867%. As of July 28, 2006 the Consolidated Operating Partnership, through the Operating Partnership, had approximately $52.9 million available for additional borrowings under the 2005 Unsecured Line of Credit I.

Six Months Ended June 30, 2006

Net cash provided by operating activities of approximately $52.9 million for the six months ended June 30, 2006 was comprised primarily of net income of approximately $62.3 million, net distributions from the Consolidated Operating Partnership’s industrial real estate joint ventures of $.6 million and a net change in operating assets and liabilities of approximately $17.2 million offset by adjustments for non-cash items of approximately $27.2 million. Adjustments for non-cash items of approximately $27.2 million are primarily comprised of the gain on sale of real estate of approximately $96.4 million and the effect of the straight-lining of rental income of approximately $4.3 million, offset by depreciation and amortization of approximately $72.9 million and the provision for bad debt of $0.6 million.

Net cash provided by investing activities of approximately $66.4 million for the six months ended June 30, 2006 was comprised primarily by the net proceeds from sales of investment in real estate, repayments of mortgage loan receivables, distributions from the Other Real Estate Partnerships and distributions from the Consolidated Operating Partnership’s industrial real estate joint ventures partially offset by an increase in restricted cash that was held by an intermediary for Section 1031 exchange purposes the acquisition of real estate, development of real estate, capital expenditures related to the expansion and improvement of existing real estate, investments in and advances to the Other Real Estate Partnerships, and contributions to and investments in the Consolidated Operating Partnership’s industrial real estate joint ventures.

During the six months ended June 30, 2006, the Consolidated Operating Partnership sold 54 industrial properties comprising approximately 7.6 million square feet of GLA and several land parcels. Net proceeds from the sales of the 54 industrial properties and several land parcels were approximately $433.2 million.

During the six months ended June 30, 2006, the Consolidated Operating Partnership acquired 47 industrial properties comprising approximately 4.1 million square feet of GLA and several land parcels. The purchase price for these acquisitions totaled approximately $229.1 million, excluding costs incurred in conjunction with the acquisition of the industrial properties and land parcels.

The Consolidated Operating Partnership, through a wholly-owned limited liability company in which the Operating Partnership is the sole member, invested approximately $14.1 million and received distributions of approximately $15.9 million from the Operating Partnership’s industrial real estate joint ventures. As of June 30, 2006, the Operating Partnership’s industrial real estate joint ventures owned 279 industrial properties comprising approximately 25.6 million square feet of GLA.

Net cash used in financing activities of approximately $126.1 million for the six months ended June 30, 2006 was derived primarily of the redemption of preferred units, general partnership and limited partnership units (“Unit”) and preferred general partnership unit distributions, net repayments under the Consolidated Operating Partnership’s Unsecured Line of Credit, the repurchase of restricted units and repayments on mortgage loans payable, partially offset by the net proceeds from the issuance of preferred units and senior unsecured debt and net proceeds from the exercise of stock options.

On November 8, 2005 and November 18, 2005, the Company issued 600 and 150 Shares, respectively, of $.01 par value, Series I Flexible Cumulative Redeemable Preferred Stock, (the “Series I Preferred Stock”), in a private placement at an initial offering price of $250,000 per share for an aggregate initial offering price of $187.5 million. Net of offering costs, the Company received net proceeds of $181.5 million from the issuance of Series I Preferred Stock which were contributed to the Operating Partnership in exchange for Series I Cumulative Preferred Units (the “Series I Preferred Units”). The Company redeemed the Series I Preferred Stock on January 13, 2006 for $242,875.00 per share, and paid a prorated first quarter dividend of $470.667 per share, totaling approximately $.4 million. The Operating Partnership redeemed the Series I Cumulative Preferred Units as well.

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In accordance with EITF D-42, due to the redemption of the Series I Preferred Units, the difference between the redemption cost and the carrying value of the Series I Preferred Units of approximately $.7 million is reflected as a deduction from net income to arrive at net income available to Unitholders in determining earnings per unit for the six months ended June 30, 2006.

During the six months ended June 30, 2006, the Company awarded 303,142 shares of restricted common stock to certain employees and 2,313 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 $11.6 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 for the shares expected to vest.

On January 10, 2006, the Consolidated Operating Partnership, through the Operating Partnership, issued the 2016 Notes. Net of offering costs, the Consolidated Operating Partnership received net proceeds of $197.5 million from the issuance of 2016 Notes. In December 2005, the Consolidated Operating Partnership also entered into interest rate protection agreements which were used to fix the interest rate on the 2016 Notes prior to issuance. The Consolidated Operating Partnership settled the interest rate protection agreements on January 9, 2006 for a payment of approximately $1.7 million, which is included in other comprehensive income.

On January 13, 2006, the Company issued 6,000,000 Depositary Shares, each representing 1/10,000th of a share of the Company’s 7.25%, $.01 par value, Series J Cumulative Redeemable Preferred Stock (the “Series J Preferred Stock”), at an initial offering price of $25.00 per Depositary Share. The net proceeds from the issuance of the Series J Preferred Stock were contributed to the Operating Partnership in exchange for Series J Cumulative Preferred Units (the “Series J Preferred Units”) and are reflected in the Consolidated Operating Partnership’s financial statements as general partner preferred unit contribution. Net of offering costs, the Company received net proceeds of $144.7 million from the issuance of Series J Preferred Stock.

During the six months ended June 30, 2006, certain employees exercised 52,667 non-qualified employee stock options. Net proceeds to the Company were approximately $1.5 million. The Consolidated Operating Partnership, through the Operating Partnership, issued Units to the Company in the same amount.

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 June 30, 2006 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 June 30, 2006, approximately $1,551.4 million (approximately 85.3% of total debt at June 30, 2006) of the Consolidated Operating Partnership’s debt was fixed rate debt and approximately $268.0 million (approximately 14.7% of total debt at June 30, 2006) was variable rate debt.

In April 2006, the Consolidated Operating Partnership entered into $295.3 million of cash flow hedges through forward-starting interest rate swaps to hedge interest rates on $300.0 million of forecasted debt offerings in 2006 and 2007. At June 30, 2006, the estimated fair value of the $295.3 million swaps was approximately $3.4 million in an asset position as the effective rates of the swaps were lower than current interest rates at June 30, 2006. The Consolidated Operating Partnership does not utilize derivative financial instruments for trading or other speculative purposes.

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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.

Recent Accounting Pronouncements

In February 2006, the FASB issued Statement of Financial Standards (“SFAS”) No. 155, Accounting for Certain Hybrid Financial Instruments” which amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This Statement resolves issues addressed in Statement 133 Implementation Issue No. D1. “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets.” This Statement:

a. Permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation;

b. Clarifies which interest-only strips and principal-only strips are not subject to the requirements of Statement 133;

c. Establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation;

d. Clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives; and

e. Amends Statement 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument.

This Statement is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. The Consolidated Operating Partnership does not expect that the implementation of this Statement will have a material effect on the Consolidated Operating Partnership’s consolidated financial position or results of operations.

In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Asset which amends FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (FAS 140), with respect to the accounting for separately recognized servicing assets and servicing liabilities. This statement was issued to simplify the accounting for servicing rights and reduce the volatility that results from the use of different measurements attributes for servicing rights and the related financial instruments used to economically hedge risks associated with those servicing rights. The statement clarifies when to separately account for servicing rights, requires separately recognized servicing rights to be initially measured at fair value, and provides the option to subsequently account for those servicing rights at either fair value or under the amortization method previously required under FAS 140. An entity should adopt this Statement as of the beginning of its first fiscal year that begins after September 15, 2006. The Consolidated Operating Partnership does not expect that the implementation of this Statement will have a material effect on the Consolidated Operating Partnership’s consolidated financial position or results of operations.

In June 2006, the FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with SFAS 109, “Accounting for Income Taxes.” The evaluation of a tax position in accordance with FIN 48 is a two-step process. First, the Consolidated Operating Partnership determines whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position. Second, a tax position that meets the more-likely-than-not threshold is measured to determine the amount of benefit to recognize in the financial

36

statements. The tax position is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent reporting period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent reporting period in which the threshold is no longer met. The Consolidated Operating Partnership is required to apply the guidance of FIN 48 beginning January 1, 2007. The Consolidated Operating Partnership is currently evaluating what impact the application of FIN 48 will have on the consolidated financial statements.

Subsequent Events

From July 1, 2006 to July 28, 2006, the Consolidated Operating Partnership acquired 15 industrial properties and a land parcel for a purchase price of approximately $158.5 million, excluding costs incurred in conjunction with the acquisition of these industrial properties. The Consolidated Operating Partnership also sold four industrial properties and several land parcels for approximately $19.4 million of gross proceeds.

On July 17, 2006, the Company and the Operating Partnership paid a second quarter 2006 dividend/distribution of $.70 per common share/Unit, totaling approximately $36.0 million.

On July 25, 2006, the Consolidated Operating Partnership, through a wholly-owned limited liability company in which a wholly-owned company of the Operating Partnership is the sole member, entered into a joint venture arrangement with an institutional investor to invest in land and vertical development (the “July 2006 Joint Venture”). The Consolidated Operating Partnership, through a wholly-owned limited liability company in which a wholly-owned company of the Operating Partnership is the sole member, owns a ten percent equity interest in the July 2006 Joint Venture.

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-15(e) and 15d-15(e)) as of the end of the period covered by this report, based on the evaluation of these controls and procedures required by Exchange Act Rules 13a-15(b) or 15d-15(b), have concluded that as of the end of such period the Operating Partnership’s disclosure controls and procedures were effective.

There has been no change in the Consolidated Operating Partnership’s internal control over financial reporting that occurred during the fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.   Legal Proceedings

None.

Item 1A.   Risk Factors

The Consolidated Operating Partnership may be unable to acquire sufficient properties on advantageous terms or acquisitions may not perform as the Consolidated Operating Partnership expects.

The Consolidated Operating Partnership and its joint ventures have acquired properties and, as part of its business, the Consolidated Operating Partnership currently anticipates continuing to acquire, for itself and its joint

37

ventures, a growing number of properties, subject to operating considerations and market conditions. Properties that the Consolidated Operating Partnership acquires for itself generate income/loss during the holding period and gains/losses upon sale. Properties that the Consolidated Operating Partnership acquires on behalf of its joint ventures generate fee and other income, in addition to income/loss during the holding period and gains/losses upon sale. The acquisition of properties entails various risks, including the risks that the Consolidated Operating Partnership’s investments may not perform as expected and that the Consolidated Operating Partnership’s cost estimates for bringing an acquired property up to market standards may prove inaccurate. Further, the Consolidated Operating Partnership faces significant competition for attractive investment opportunities from other well-capitalized real estate investors, including both publicly-traded real estate investment trusts and private investors. This competition increases as investments in real estate become attractive relative to other forms of investment. As a result of competition, the Consolidated Operating Partnership may be unable to acquire additional properties as it desires or the purchase price may be elevated. In addition, the Consolidated Operating Partnership expects to finance future acquisitions through a combination of borrowings under the 2005 Unsecured Line of Credit I, proceeds from equity or debt offerings by the Consolidated Operating Partnership, proceeds from property sales and equity and debt provided by its joint venture partners, which may not be available and which could adversely affect the Consolidated Operating Partnership’s cash flow. If the Consolidated Operating Partnership were unable to acquire a growing number of properties on advantageous terms, or if such investments did not perform as expected, the Consolidated Operating Partnership’s financial condition, results of operations, cash flow and ability to pay dividends on, and the market value of, the Consolidated Operating Partnership’s securities could be adversely affected.

The Consolidated Operating Partnership may be unable to complete sufficient development and re-development projects on advantageous terms.

As part of its business, the Consolidated Operating Partnership, for itself and on behalf of its joint ventures, develops new and re-develops existing properties. In addition, the Consolidated Operating Partnership has sold development and re-development properties to third parties and currently anticipates continuing to sell, for itself and its joint ventures, a growing number of development and re-development properties to third parties, subject to operating considerations and market conditions. The real estate development and re-development business involves significant risks that could adversely affect the Consolidated Operating Partnership’s financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of the Consolidated Operating Partnership’s securities, which include:

•  the Consolidated Operating Partnership may not be able to obtain financing for development projects on favorable terms and complete construction on schedule or within budget, resulting in increased debt service expense and construction costs and delays in leasing the properties and generating cash flow;

•  the Consolidated Operating Partnership may not be able to obtain, or may experience delays in obtaining, all necessary zoning, land-use, building, occupancy and other governmental permits and authorizations;

•  the properties may perform below anticipated levels, producing cash flow below budgeted amounts and limiting the Consolidated Operating Partnership’s ability to sell such properties to third parties.

The Consolidated Operating Partnership may be unable to sell sufficient properties on advantageous terms.

The Consolidated Operating Partnership and its joint ventures have sold properties to third parties and, as part of its business, the Consolidated Operating Partnership currently anticipates continuing to sell, for itself and its joint ventures, a growing number of properties to third parties, subject to operating considerations and market conditions. The Consolidated Operating Partnership’s ability to sell a growing number of properties on advantageous terms depends on factors beyond the Consolidated Operating Partnership’s control, including competition from other sellers, the availability of attractive financing for potential buyers of the Consolidated Operating Partnership’s properties and the overall demand for industrial real estate. If the Consolidated Operating Partnership is unable to sell a growing number of properties on favorable terms or adequately redeploy the proceeds of property sales in

38

accordance with the Consolidated Operating Partnership’s business strategy, which calls for, among other things, a sufficient pipeline of saleable properties, then the Consolidated Operating Partnership’s financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, the Consolidated Operating Partnership’s securities could be adversely affected.

The Consolidated Operating Partnership has also sold properties to its joint ventures and, as part of its business, the Consolidated Operating Partnership currently anticipates continuing to sell properties to its joint ventures, subject to operating considerations and market conditions. If the Consolidated Operating Partnership does not have sufficient properties available that meet the investment criteria of current or future joint ventures, or if the joint ventures have reduced or no access to capital on favorable terms, then such sales could be delayed or prevented, adversely affecting the Consolidated Operating Partnership’s financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, the Consolidated Operating Partnership’s securities.

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds

On January 20, 2006, the Operating Partnership issued 21,650 Units having an aggregate market value of approximately $.9 million in exchange for property. On March 31, 2006, the Operating Partnership issued 9,823 Units having an aggregate market value of approximately $.4 million in exchange for an interest in property.

All of the above Units were issued in private placements 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 convertible into common stock, $.01 par value, of the Company on a one-for-one basis or cash at the option of the Company.

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

(a) Exhibits:

Exhibit
Number			Description
	31	.1*	Certification of the Principal Executive Officer of First Industrial Realty Trust, Inc., registrant’s sole general partner, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
	31	.2*	Certification of the Principal Financial Officer of First Industrial Realty Trust, Inc., registrant’s sole general partner, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
	32	.1**	Certification of the Principal Executive Officer and the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes — Oxley Act of 2002.

*	Filed herewith
**	Furnished herewith

39

The Company maintains a website at www.firstindustrial.com. Copies of the Company’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 with or furnished to the SEC. In addition, the Company’s Corporate Governance Guidelines, Code of Business Conduct and Ethics, Audit Committee Charter, Compensation Committee Charter, Nominating/Corporate Governance Committee Charter, along with supplemental financial and operating information prepared by the Company, are all available without charge on the Company’s website or upon request to the Company. Amendments to, or waivers from, the Company’s Code of Business Conduct and Ethics that apply to the Company’s executive officers or directors shall be posted to the Company’s website at www.firstindustrial.com. Please direct requests as follows:

First Industrial Realty Trust, Inc.
311 S. Wacker, Suite 4000
Chicago, IL 60606
Attention: Investor Relations

40

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

By:  /s/  Scott A. Musil

Scott A. Musil

Chief Accounting Officer

(Principal Accounting Officer)

Date: August 9, 2006

41

EXHIBIT INDEX

Exhibit
Number			Description
	31	.1*	Certification of Principal Executive Officer of First Industrial Realty Trust, Inc., registrant’s sole general partner, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
	31	.2*	Certification of Principal Financial Officer of First Industrial Realty Trust, Inc., registrant’s sole general partner, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
	32	.1**	Certification of the Principal Executive Officer and the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*	Filed herewith
**	Furnished herewith

42

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL 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 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/  Michael W. Brennan

Michael W. Brennan

President and Chief Executive Officer

First Industrial Realty Trust, Inc.

Date: August 9, 2006

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL 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 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/  Michael J. Havala

Michael J. Havala

Chief Financial Officer

First Industrial Realty Trust, Inc.

Date: August 9, 2006

EX-32.1

Exhibit 32.1

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. §1350(a) and (b))

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chapter 63, Title 18 U.S.C. §1350(a) and (b), each of the undersigned hereby certifies, to his knowledge, that the Quarterly Report on Form 10-Q for the three months ended June 30, 2006 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.

/s/  Michael W. Brennan

Michael W. Brennan

Chief Executive Officer

(Principal Executive Officer)

First Industrial Realty Trust, Inc.

Dated: August 9, 2006

/s/  Michael J. Havala

Michael J. Havala

Chief Financial Officer

(Principal Financial Officer)

First Industrial Realty Trust, Inc.

Dated: August 9, 2006

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. The information contained in this written statement shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference to such filing.