First Industrial Realty Trust, Inc. · NYSE:FR
First Industrial Realty Trust — Investor Day (November 2017)
107 slides from First Industrial Realty Trust's investor day presentation, Nov 8, 2017
Slide 1: First Industrial Investor Day
= FIRST INDUSTRIAL REALTY-TRUST FR 2020 First Industrial Investor Day November 8, 2017 FR LISTED NYSE
Slide 2: Safe Harbor
Safe Harbor This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. We intend for such forward-looking statements to be covered by the safe harbor provisions for forward-looking sta
Slide 3: Agenda
Agenda ne Real Estate Industry Tenure I First Industrial Today Peter Baccile, President and Chief Executive Officer 31 FR 2020 I. The Balance Sheet and AFFO Update Scott Musil, Chief Financial Officer 26 Ill. The Portfolio Bob Walter, Senior Vice President — Capital Markets and Asset Management 29 I
Slide 4: First Industrial Today
First Industrial Today Peter Baccile, President & Chief Executive Officer
Slide 5: FR 2020: What you should learn today
FR 2020: What you should learn today It’s all driven by the platform! The portfolio transformation is complete Change in perspective from “fixing” to “growing” Opportunity to drive 9% annualized AFFO growth from 2018 - 2020 The cap rate disconnect is not warranted
Slide 6: (1) As of September 30, 2017 and adjusted for all sales, major leasing events
(1) As of September 30, 2017 and adjusted for all sales, major leasing events and developments in process or announced, through earnings call of October 26, 2017.
Slide 7: Our Progress — The FR Timeline
Our Progress — The FR Timeline 2013-15 2011 addition by Subtraction - Drive occupancy/ NOI/Cash flow - Strengthen balance sheet - Initiate select investment Self-Funding Capital Recyclin - Drive occupancy/ NOI/Cash flow - Portfolio refinement - Expanding investment - Reduce debt costs - Reinitiate a
Slide 8: FFO per share growth and guidance
$0.84 $1.55 $0.76 9%+ CAGR $1.45 25%+ CAGR $1.34 $1.16 $1.08 $0.51 $0.41 $0.34 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 (1) Guidance CAGR = Compounded Annual Growth Rate (1) Midpoint of FFO per share guidance per press release dated October 25, 2017.
Slide 9: (1) Data as of October 31, 2017. (2) MSCI Industrial REIT Index includes: DCT,
(2) (2) (1) Data as of October 31, 2017. (2) MSCI Industrial REIT Index includes: DCT, DRE, EGP, FR, MNR, PLD, REXR, STAG and TRNO.
Slide 10: Industrial Landscape
Industrial Landscape Tenant Demand Increased globalization, consumption and urbanization Broad-based demand with E-commerce/omnichannel tailwinds Supply chain reconfiguration benefiting infill locations Environment Constrained financing Increasingly difficult entitlement process and NIMBY Most marke
Slide 11: Source: JLL 2017 Industrial Demand Study.
Source: JLL 2017 Industrial Demand Study.
Slide 12: 9%+ CAGR
9%+ CAGR Source: Forrester, CBRE, Green Street Advisors, U.S. Census.
Slide 13: How Does FR's Portfolio Fit with E-commerce?
How Does FR’s Portfolio Fit with E-commerce? % of FR Portfolio Average Median Household by SF Population Income Overall 10 miles 17% 0.7M $66,949 20 miles 74% 2.1M $68,313 30 miles 94% 3.5M $69,636 Totals/2016 U.S. Average $59,039 Proximity to higher income population centers makes E-commerce a grea
Slide 14: Source: CBRE Econometric Advisors forecast as of 3Q17.
Source: CBRE Econometric Advisors forecast as of 3Q17.
Slide 15: (1) Estimated AFFO as defined per press release dated October 25, 2017 and as
(1) Estimated AFFO as defined per press release dated October 25, 2017 and as defined in the Company’s supplemental report. Excludes one-time items.
Slide 16: Capital Allocation
Capital Allocation What do we ask in every capital allocation discussion? Are we How will this enhancing the asset perform portfolio? across cycles? Are we Are we driving/creating maximizing our value? platform? 16
Slide 17: Strategy for Success: FR 2020
Strategy for Success: FR 2020 rr = es . Pe Maximize the economics on every lease Fu Continue to reduce allocation to low barrier markets ra Emphasize development as long as yields and demand justify ra Maintain balance sheet discipline 17
Slide 18: The Balance Sheet & AFFO Update
The Balance Sheet & AFFO Update Scott Musil, Chief Financial Officer
Slide 19: Progress Made Since Investor Day — Nov 2015
Progress Made Since Investor Day — Nov 2015 |_=™ Investment grade by all three rating agencies; Fa upgraded by Fitch to BBB; outlook upgrade by Moody’s i Lg) Bnsevcesondie tne 207 Ft eon Fi en New Leverage Goal: Maintain leverage level of sub 6x Debt/EBITDA 19
Slide 20: Line of Credit and Term Loan Recast
Line of Credit and Term Loan Recast ° Line of Credit — New4+1 term — Increased size $100M to $725M — Cap Rate reduced from 7% to 6.25% — Reduced spread and facility fee by 5 bps each at current leverage ° Term Loans — Maintain current maturity and size — Reduced spread by 40 to 50 bps at current lev
Slide 21: (1) Historical credit metrics were calculated in accordance with the Company’s December 2011, July
± ± (1) Historical credit metrics were calculated in accordance with the Company’s December 2011, July 2013 and March 2015 line of credit (LOC) terms, with an applicable cap rate of 8.0%, 7.5% and 7.0%, respectively. Moving forward, credit metrics to be calculated based on new October 2017 LOC terms
Slide 22: (1) Weighted average coupon interest rate reflects a decrease of 5 bps for the
(1) Weighted average coupon interest rate reflects a decrease of 5 bps for the LOC, a decrease of 50 bps for the $200M term loan and a decrease of 40 bps for the $260M term loan. These reductions are based upon applicable amended debt agreements dated October 31, 2017. Rates for term loans also incl
Slide 23: (1) LOC maturity is based on the amended agreement dated October 31, 2017, assumes
(1) (2) (2) (1) LOC maturity is based on the amended agreement dated October 31, 2017, assumes exercise of one-year extension option and the interest rate reflects a decrease of 5 bps. (2) The interest rate for the term loans are based on the amended agreements dated October 31, 2017 and reflect a d
Slide 24: (1) Assumes 4.0% rate due to anticipated Private Placement.
(1) Assumes 4.0% rate due to anticipated Private Placement.
Slide 25: (1) Weighted average coupon interest rate reflects a decrease of 5 bps for the
(1) (1) Weighted average coupon interest rate reflects a decrease of 5 bps for the LOC, a decrease of 50 bps for the $200M term loan and a decrease of 40 bps for the $260M term loan. These reductions are based upon amended debt agreements dated October 31, 2017. Rates for term loans also include the
Slide 26: (1) Estimated AFFO as defined per press release dated October 25, 2017 and as
± ± ± ± ± ± ± (1) Estimated AFFO as defined per press release dated October 25, 2017 and as defined in the Company’s supplemental report. Excludes one- time items.
Slide 27: Conclusion
. i Conclusion ra | ® Balance sheet in great shape t ® =©Metrics “fortress-like” Ample capacity to drive growth and boost dividend (a) Upside potential with rating improvements from S&P and Moody's 27
Slide 28: The Portfolio
The Portfolio Bob Walter, SVP-Capital Markets & Asset Management
Slide 29: (1) Consists of Southern California, Northern California, Seattle, Pennsylvania, New Jersey, Baltimore/DC and Florida.
(1) Consists of Southern California, Northern California, Seattle, Pennsylvania, New Jersey, Baltimore/DC and Florida.
Slide 30: ($M) (1) As of 3Q earnings call of October 26, 2017.
($M) (1) As of 3Q earnings call of October 26, 2017.
Slide 31: (1) As of September 30, 2017 and adjusted for all sales, major leasing events
(1) As of September 30, 2017 and adjusted for all sales, major leasing events and developments in process or announced, through earnings call of October 26, 2017. (2) Consists of Southern California, Northern California, Seattle, Pennsylvania, New Jersey, Baltimore/DC and Florida.
Slide 32: The TI/LC/CapEx Opportunity
The TI/LC/CapEx Opportunity Progress and Update ($M) 60 55 50 45 40 35 30 $52 $43 $38 a 2013 Actual 2015 Actual 2017 Projected 2018 - 2020 Forecasted Opportunity in 2018 - 2020 Annual Average for additional savings due to portfolio refinement 32
Slide 33: (1) In-service portfolio as reported in the Company’s 10-Qs and Supplemental Reports.
(1) In-service portfolio as reported in the Company’s 10-Qs and Supplemental Reports. (2) As of September 30, 2017 and adjusted for all sales, major leasing events and developments in process or announced, through earnings call of October 26, 2017. (3) As of December 31, 2016 10-Ks. (4) Wall Street
Slide 34: (1) Entire owned and managed portfolio. (2) Industrial only.
■ (1) ■ (2) ■ (2) ■ ■ ■ (1) Entire owned and managed portfolio. (2) Industrial only.
Slide 35: Conclusion
Conclusion Pa The portfolio transformation is complete Disposition proceeds reinvested with minimal dilution and with a significant Coastal orientation Portfolio transformation driving incremental savings in TI/LC/CapEx = Fa Key metrics demonstrate FR’s portfolio quality versus peers 35
Slide 36: Operational Excellence
Operational Excellence Peter Schultz, EVP
Slide 37: YTD17 3Q17 (1) Period End.
'13 '14 '15 '16 YTD17 '13 '14 '15 '16 YTD17 '13 '14 '15 16 3Q17 (1) Period End. (2) Period Average as of October 31, 2017. (3) End of year population of properties. Excludes one-time restoration fee in 2014 and lease termination fees.
Slide 38: (1) Based on leases executed through October 31, 2017. (2) Approximately 30% of the
(1) (2) (1) Based on leases executed through October 31, 2017. (2) Approximately 30% of the 2018 scheduled expirations have been renewed as of October 31, 2017.
Slide 39: (1) Based on leases executed through October 31, 2017. (2) Approximately 30% of the
(1) (2) (1) Based on leases executed through October 31, 2017. (2) Approximately 30% of the 2018 scheduled expirations have been renewed as of October 31, 2017.
Slide 40: Lease Expiration Vintage
Lease Expiration Vintage As of September 30, 2017 Net Rent 20.0% 5 15.0% ~ 10.0% + 5.0% + 15.0% 14.1% 2018 2019 2020 (0) % Net Rent Signed Prior to 2014 J % Net Rent Signed 2014-2015 [J _% Net Rent Signed 2016+ Well-balanced lease expiration schedule providing significant opportunity to push rents f
Slide 41: Existing Rental Rate Bumps
Existing Rental Rate Bumps ee * 96% of long-term leases (> 1-year) have bumps averaging 2.7% annualized ¢ Annual bump run-rate is approximately $6.3 - $6.5M for 2018-2020 ¢ The bumps result in contractual annual NOI growth of 2.1%+ ona same store basis from 2018-2020 41
Slide 42: Best-in-Class Customer Service
Best-in-Class Customer Service 4.59 out of 5 Outperformed Overall satisfaction in 2017 vs. 4.52 in 2016 The Kingsley Index of 4.12 Market leading customer service supports higher retention, occupancy and cash flow growth 42
Slide 43: Conclusion
. moe Conclusion [J = 9 . . . . ma Platform will continue to drive exceptional operational performance = ° . maa Excellent environment to drive strong cash rental rate growth Built-in rental rate bumps are a continuing key cash flow driver Customer service is KING - higher retention, occupancy and c
Slide 44: Property Acquisitions
6150 Sycamore Canyon Blvd - Riverside, C
Slide 45: Acquisition Decision Keys
Acquisition Decision Keys What do we ask in every acquisition discussion? Are we enhancing the portfolio? How will this asset perform across cycles? Are we Are we driving/creating maximizing our value? platform? 45
Slide 46: Property Acquisitions 2016-2017
Property Acquisitions Fo 2016-2017 21301 E33 Dr } : 6635 E 30"St a : 8751 Skinner Ct 99,877 SF : 181,348 SF 81 Paragon Dr 301 Bordentown HeddingRd 125,775 SF 121,142 SF 213,000 SF 10586 Tamarind Ave 106,455 SF 4473 Shader Rd 199,100 . Pr. jae 1445 Engineer St — 450 Gills Dr 86,240 SF 2777 Loker Ave
Slide 47: Bordentown Hedding Rd | New Jersey
—s a 301 Bordentown Hedding Rd | New Jersey 213,000SF a7
Slide 48: y rl 102,568 SF oy
y 3 rl 102,568 SF oy
Slide 49: Pompano Business Center | Miami
Pompano Business Center | Miami =e 172,120 SF
Slide 50: 2777 Loker Avenue West | San Diego
ee ED Ce 2777 Loker Avenue West | San Diego 123,454 SF ¢ 50
Slide 51: 10586 Tamarind Ave | SoCal
\ \ ve 10586 Tamarind Ave | SoCal 106,455 SF
Slide 52: 52
52
Slide 53: (1) Cash yield defined as first year stabilized cash NOI divided by GAAP basis.
(1) Cash yield defined as first year stabilized cash NOI divided by GAAP basis.
Slide 54: (1) Cash yield defined as first year stabilized cash NOI divided by GAAP basis.
(1) Cash yield defined as first year stabilized cash NOI divided by GAAP basis. (2) Excludes from totals SF, average $/SF and average occupancy. (3) Excludes 4.1 acres of excess land also purchased at closing.
Slide 55: Developments
6150 Sycamore Canyon Blvd - Riverside, C
Slide 56: What is Our Development Strategy?
What is Our Development Strategy? Identify Demand/Supply Imbalances Build Employ For Long-Term Hold Existing and New with Highest Quality, Opportunistic Functionality and : ‘ Land Holdings Flexibility ; Service Navigate Current Local Entitlement Demand and Construction Issues Value Creation discipli
Slide 57: Developments Placed In Service 2016-2017
Developments Placed In Service 2016-2017 First San Michele Logistics Center 187,985 SF First Reyes Logistics Center 63,450 SF First Park @ Ocean Ranch — Building III 65,600 SF First Park @ PV 303 First Park Tolleson 618,350 SF 386,100 SF = First Park 94 - Building | 601,439 SF 153,200 SF First Arlin
Slide 58: Liem Sree Secu teas .
Liem Sree Secu teas . 577,200 SF
Slide 59: oO oa) Cc qe) = /-s 7a) - (aa) cf d) > {e) ¢c
oO oa) Cc qe) = /-s 7a) - (aa) 1 cf d) > {e) ¢c (a) U = a4 = © a _ —n i LL
Slide 60: First Arlington Commerce Center II @ I-20 | Dallas
” mae RS aL ae, First Arlington Commerce Center Il @ I-20 | Dallas 234,100 SF
Slide 61: First Reyes Logistics Center | SoCal
DT First Reyes Logistics Center | SoCal 63,450 SF
Slide 62: (1) Cash yield defined as first year stabilized cash NOI divided by GAAP basis.
(1) Cash yield defined as first year stabilized cash NOI divided by GAAP basis.
Slide 63: (1) Cash yield defined as first year stabilized cash NOI divided by GAAP basis.
(1) Cash yield defined as first year stabilized cash NOI divided by GAAP basis. (2) Cost per square foot excludes $11.6M of 65.6 acres of land under lease.
Slide 64: The Pipeline
The Pipeline ne Developments Completed or In Process First Park 94 - Building II 602,348 SF gt 355,199 SF Seon —| First Sycamore 215 Logistics Center 242,580 SF First Logistic: iter @ + 78/8 Building | 738,720 SF First Park @ PV 303 - Buildit 640,000 SF 64
Slide 65: First Logistics Center @ I-78/81 - Building I | Pennsylvania
ca a we: = os iif ‘Stites i. Ls rT U 1 eres — = a ae Se aries, — ee First Logistics Center @ I-78/81 - Building | | Pennsylvania 738,720 SF
Slide 66: First Joliet Logistics Center | Chicago
First Joliet Logistics Center | Chicago 355,199 SF
Slide 67: First Park @ PV - Building II | Phoenix
First Park @ PV 303 - Building Il | Phoenix 640,000 SF
Slide 68: The Ranch by First Industrial
The Ranch by First Industrial | 936,000 SF an (Oa ; t > a \y ‘aN ¥
Slide 69: (1) Cash yield defined as first year stabilized cash NOI divided by GAAP basis.
(1) Cash yield defined as first year stabilized cash NOI divided by GAAP basis.
Slide 70: Strategically Located Land Positions
Strategically Located Land Positions As of September 30, 2017 Site Market Acres Developable SF First Park 94 Chicago 154 3,200,000 First Nandina Logistics Center InlandEmpire 69.2 1,450,000 First Park Fairburn Atlanta 68.7 1,260,000 First Mountain Creek Distribution Center Dallas 104.5 1,200,000 Roc
Slide 71: (1) Represents total developable SF for each site.
(1) Represents total developable SF for each site.
Slide 72: | Ya Be vt
3,200,000 SF | Ya Be vt
Slide 73: First I-20/35 Distribution Center | Dallas
420,000 SF ‘ie ouston,;School.Rd SUBeZERO z, . ‘ : > 8 First I-20/35 Distribution Center | Dallas } mel | tebe
Slide 74: BO gSRme ms Ge:
BO gSRme ms Ge: = NS B. mM) 2. § 4 “Se | 2S Ses ~ Pe a \ deckers A ri ee « 4 7 OUTDOOR CORPORATION tS Le F a - ki’ dl? ath J TS, | . 1,450,000 SF aan ( 1 ae 74
Slide 75: Industrial Tour of the U.S.
6150 Sycamore Canyon Blvd - Riverside, C
Slide 76: Market Roundtable Participants
Market Roundtable Participants a> John Hanlon 28 years of industrial experience Adam Moore 19 years of industrial experience Robert Allen 14 years of industrial experience Ryan McClean 20 years of industrial experience 76
Slide 77: 6150 Sycamore Canyon Blvd - Riverside, C
6150 Sycamore Canyon Blvd - Riverside, C
Slide 78: Investment
Investment 1:00 Supply & Demand Cap Rates Geographical Focus Develop or Buy? Building Features “PTI
Slide 79: Investment
Investment 1:00 Supply & Demand Cap Rates Geographical Focus Develop or Buy? Building Features “PTI
Slide 80: Investment
Investment 1:00 Supply & Demand Cap Rates Geographical Focus Develop or Buy? Building Features “PTI
Slide 81: Investment
Investment 1:00 Supply & Demand Cap Rates Geographical Focus Develop or Buy? Building Features “PTI
Slide 82: Investment
Investment 1:00 Supply & Demand Cap Rates Geographical Focus Develop or Buy? Building Features “PTI
Slide 83: Development: Demand for 1MSF
Development Demand for 1MSF
Slide 84: Development: E-commerce Buildings
Development E-commerce Buildings
Slide 85: Development: Construction Cost Trends
Development Construction Cost Trends
Slide 86: Development: Building Non-Bulk?
Development Building Non-Bulk?
Slide 87: Development: Entitlements/NIMBY
Development Entitlements/NIMBY
Slide 88: Development: Competitive Threats
Development Competitive Threats
Slide 89: Development
Development
Slide 90: Development: Party Over?
Development Party Over?
Slide 91: Supply Chain Trends
1:00 Supply Chain Trends Housing-Related Activity Which Industries Active Outside the Box Parcel Companies Amazon and Whole Foods “PTI
Slide 92: Supply Chain Trends
1:00 Supply Chain Trends Housing-Related Activity Which Industries Active Outside the Box Parcel Companies Amazon and Whole Foods “PTI
Slide 93: Supply Chain Trends
1:00 Supply Chain Trends Housing-Related Activity Which Industries Active Outside the Box Parcel Companies Amazon and Whole Foods “PTI
Slide 94: Supply Chain Trends
1:00 Supply Chain Trends Housing-Related Activity Which Industries Active Outside the Box Parcel Companies Amazon and Whole Foods “PTI
Slide 95: Supply Chain Trends
1:00 Supply Chain Trends Housing-Related Activity Which Industries Active Outside the Box Parcel Companies Amazon and Whole Foods “PTI
Slide 96: Supply Chain Trends
1:00 Supply Chain Trends Housing-Related Activity Which Industries Active Outside the Box Parcel Companies Amazon and Whole Foods “PTI
Slide 97: Potpourri
Potpourrl 1 -00 C-Mall Redevelopment Houston Outlook Panama Canal Driverless Vehicles Labor Availability The Last Mile “PTI
Slide 98: Potpourri
Potpourrl 1 -00 C-Mall Redevelopment Houston Outlook Panama Canal Driverless Vehicles Labor Availability The Last Mile “PTI
Slide 99: Potpourri
Potpourrl 1 -00 C-Mall Redevelopment Houston Outlook Panama Canal Driverless Vehicles Labor Availability The Last Mile “PTI
Slide 100: Potpourri
Potpourrl 1 -00 C-Mall Redevelopment Houston Outlook Panama Canal Driverless Vehicles Labor Availability The Last Mile “PTI
Slide 101: Potpourri
Potpourrl 1 -00 C-Mall Redevelopment Houston Outlook Panama Canal Driverless Vehicles Labor Availability The Last Mile “PTI
Slide 102: Potpourri
Potpourrl 1 -00 C-Mall Redevelopment Houston Outlook Panama Canal Driverless Vehicles Labor Availability The Last Mile “PTI
Slide 103: First Industrial 2020
First Industrial 2020 Peter Baccile, President & Chief Executive Officer
Slide 104: FR 2020: What you should have learned today
FR 2020: What you should have learned today rr It’s all driven by the platform! ° The portfolio transformation is complete ° Change in perspective from “fixing” to “growing” * Opportunity to drive 9% annualized AFFO growth from 2018 - 2020 The cap rate disconnect is not warranted 104
Slide 105: Valuation
A | Valuation [7a as of 10/30/17 SpE? First Industrial $30.68 5.6% Duke Realty $28.38 5.2% Prologis $64.08 4.7% DCT Industrial $57.94 4.6% Liberty $42.81 5.9% EastGroup $89.81 4.9% Significant valuation gap to public industrial peers () Wall Street estimates. 105
Slide 106: The Platform — Drives it All!
The Platform — Drives it All! Operations ¢ Provides Best-in-Class Customer Service * Maximizes the Economics of Every Lease = FIRST & > Portfolio loa | INDUSTRIAL — atl - - * Responsible Growth and Value Creation REALTY-TRUST 7 + Constant Portfolio Improvement Balance Sheet * Capital Availability *
Slide 107: 6150 Sycamore Canyon Blvd - Riverside, C
6150 Sycamore Canyon Blvd - Riverside, C
First Industrial Realty Trust — Investor Day (November 2017) on 6ix