First Industrial Realty Trust, Inc. Q2 FY2025 earnings call

• Portfolio performance: Strong cash rental rate growth, solid renewals, but uncertainty around tariffs dampens decision-making. Industrial market vacancy in Tier 1 US markets 6.3% at end of Q2, up 30bps. Net absorption year-to-date 16 million sq ft nationally, 5 million in target markets. New construction starts down, space under construction 204 million sq ft, 42% pre-leased.
• Developments: Camelback 303 joint venture fully leased, 58,000 sq ft leased at First Loop. Two new starts in the quarter, total investment $54 million, target cash yields ~8%.
• Capital markets: Upgraded to BBB+, launched $450 million senior unsecured notes.

In-service occupancy at quarter end was 94.2%. Overall cash rental rate increase for new and renewal leasing is 33%; excluding the large fixed rate renewal in Central PA, it's 38%. Developments: Camelback 303 joint venture in Phoenix (1.8 million sq ft) is 100% leased; 58,000 sq ft leased at First Loop project in Orlando. Two new starts in the quarter: 176,000 sq ft in Northwest Dallas and 226,000 sq ft in Philadelphia, total investment $54 million, target cash yields ~8%. Capital markets: Upgraded to BBB+ by Fitch, launched $450 million senior unsecured notes at 5.25% coupon.

• NAREIT FFO range narrowed to $2.88 to $2.96 per share, midpoint $2.92.
• Average quarter-end in-service occupancy 95% to 96%, reflecting ~1.5 million sq ft development leasing assumed in Q4.
• Cash same-store NOI growth before termination fees 6% to 7%.
• Expect to capitalize about $0.09 per share of interest in 2025.
• G&A expense guidance $40.5 million to $41.5 million.

• Uncertainty around tariffs impacting decision-making.
• Higher interest expense in back half of the year due to funding development pipeline and bond offering.
• Risk of not leasing up all development projects by year-end.

Q: Incremental development starts more attractive today than 3-6 months ago?

A: Need more consistent development lease signings, construction costs down 5-10% in some markets, slight increase in costs now, steel costs have small impact.

Q: Abnormal or non-recurring in Q2 FFO?

A: Higher interest expense in back half due to funding development and bond offering.

Q: New lease announcement and 1.6 million target?

A: Largest component is First Aurora Commerce Center in Denver, active prospects, but hard to peg timing.

Q: Camelback lease and lease-up plan?

A: Plan to maximize value, JV project delivered returns exceeding expectations, land bank with 71 acres left.

Q: Data center monetization opportunity?

A: Big project, takes time, need to look into power, several months to get answers.

Q: Tenant strategies and sizes?

A: Tenants across spectrum, some on pause, some bold, Amazon spending driving some to sign leases.

Q: Reducing price to create leasing demand?

A: Lowering rate doesn't create new demand, affects NPV model.

Q: Unsecured bonds issuance?

A: Rationale based on being serial issuer, public bond market pricing inside private placement, size of offering now benchmark.

Q: Private industrial developers behavior?

A: Concessions drift up where more choices, developers cautious due to debt issues.

Q: '26, '27 expirations and rent spreads?

A: '26 comparable to '25, higher proportion in Dallas and Atlanta; '27 details to follow.

Q: Lease-up timing of 1.6 million sq ft?

A: Traffic decent, risk of not getting done, but pushing to end of year.

Q: Operating expenses and recoveries?

A: Equity-based compensation policy causes margin differences between quarters.

Q: Development leasing and same-store occupancy?

A: Development leasing impacts in-service portfolio occupancy assumptions.

Q: SoCal market evolution?

A: Market rents down 5% from Q1, vacancy up 10bps, deliveries and starts low.

Q: Strongest vs weakest markets?

A: Nashville strong, Florida recently active, certain submarkets of Dallas and Houston good.