Earnings call transcript: First Industrial Realty Trust Q2 2025 sees strong FFO growth

First Industrial Realty Trust (FR), a $7 billion market cap industrial REIT with a 12-year track record of consecutive dividend increases, reported its second-quarter 2025 earnings, showcasing a solid performance with Funds from Operations (FFO) rising to $0.76 per fully diluted share, up from $0.66 in the same quarter last year. The company also reported a significant cash same-store Net Operating Income (NOI) growth of 8.7%, despite a slight decline in occupancy rates. The stock price remained stable, closing at $51.48, offering a 3.5% dividend yield. According to InvestingPro analysis, the stock is currently trading near its Fair Value.

Key Takeaways

• FFO increased by 15.2% year-over-year to $0.76 per share.
• Cash same-store NOI growth was strong at 8.7%.
• Leasing activity covered 2.5 million square feet, with a significant portion from renewals.
• The company issued $450 million in senior unsecured notes at a 5.25% coupon rate.
• Fitch upgraded FR’s credit rating to BBB+.

Company Performance

First Industrial Realty Trust demonstrated robust financial performance in Q2 2025, driven by increased FFO and strong leasing activities. With a healthy gross profit margin of 73% and revenue growth of 8.8% over the last twelve months, the company’s strategic focus on development and selective leasing has allowed it to maintain a diversified portfolio across key markets, despite a slight dip in occupancy rates to 94.2%. The company’s performance aligns with industry trends, where national industrial vacancy rates have slightly increased. InvestingPro subscribers can access 12+ additional key metrics and insights about FR’s financial health.

Financial Highlights

• Revenue: Not specified in the earnings call.
• Funds from Operations (FFO): $0.76 per share, up from $0.66 in Q2 2024.
• Cash same-store NOI growth: 8.7%.
• In-service occupancy: 94.2%, down 110 basis points from the previous quarter.

Outlook & Guidance

First Industrial Realty Trust provided a NAREIT FFO guidance range of $2.88 to $2.96 per share for the upcoming periods. With analyst targets ranging from $52 to $67 per share and a consensus recommendation of 2.17 (Buy), the company expects its quarter-end in-service occupancy to be between 95% and 96%, with a projected cash same-store NOI growth of 6-7%. The company anticipates leasing 1.5 million square feet of development space, reflecting continued confidence in its strategic initiatives. Discover comprehensive valuation analysis and more with a InvestingPro subscription, including access to the detailed Pro Research Report for FR.

Executive Commentary

CEO Peter Baccile highlighted the impact of tariff uncertainties on tenant decision-making, noting, "When the tariff picture becomes more clear, we expect improved confidence, more timely decision making, and an increase of investments in new growth initiatives." Despite these challenges, the company remains optimistic about future growth, driven by strong demand from sectors like e-commerce and logistics.

Risks and Challenges

• Tariff uncertainties affecting tenant decision-making and investments.
• Slight decline in occupancy rates, which could impact future revenue.
• Potential fluctuations in construction costs, although they have decreased 5-10% from last year.
• National industrial vacancy rates have increased slightly, potentially impacting leasing activities.
• Variability in tenant demand, with some sectors pausing leasing activities.

Q&A

During the earnings call, analysts inquired about the impact of tariffs on tenant decisions and the company’s strategies to mitigate these challenges. The executive team emphasized their focus on maintaining a diversified tenant mix and capitalizing on strong interest from sectors like food and beverage, logistics, and manufacturing. They also addressed questions about construction costs and the company’s strategic response to changing market dynamics.

Full transcript - First Industrial Realty Trust Inc (FR) Q2 2025:

Michael, Conference Operator: Good day and welcome to the First Industrial Realty Trust, Inc. Second Quarter 2025 Results Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Art Harmon, Senior Vice President of Investor Relations and Marketing. Please go ahead.

Art Harmon, Senior Vice President of Investor Relations and Marketing, First Industrial Realty Trust: Thank you, Michael. Hello everybody and welcome to our call. Before we discuss our second quarter 2025 results and our updated guidance for the year, please note that our call may include forward-looking statements as defined by federal securities laws. These statements are based on management’s expectations, plans, and estimates of our prospects. Today’s statements may be time sensitive and accurate only as of today’s date, July 17, 2025. We assume no obligation to update our statements or the other information we provide. Actual results may differ materially from our forward-looking statements, and factors which could cause this are described in our 10-K and other SEC filings. You can find a reconciliation of non-GAAP financial measures discussed in today’s call in our supplemental report and our earnings release. The supplemental report, earnings release, and our SEC filings are available at FirstIndustrial.com under the Investors tab.

Our call will begin with remarks by Peter Baccile, our President and Chief Executive Officer, and Scott Musil, our Chief Financial Officer, after which we’ll open it up for your questions. Also with us today are Jojo Yap, Chief Investment Officer, Peter Schultz, Executive Vice President, Chris Schneider, Executive Vice President of Operations, and Bob Walter, Executive Vice President of Capital Markets and Asset Management. Now let me hand the call over to Peter.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Thank you Art and thank you all for joining us today. Our portfolio continues to perform well, producing strong cash rental rate growth with a solid pace of renewals. Tenant leasing activity and investments to support new growth continue to move at a deliberate pace. The uncertainty around tariffs, whether they will be applied, where and when and to what degree, continues to dampen momentum around decision making. That said, we have a couple of success stories to share in the form of new development leases that I will review shortly. As we said on prior calls, a positive for our business is with new starts at a decade low, even with modest net absorption, the available alternatives for new Class A space continue to diminish. This trend is reflected in the most recent metrics on the broad industrial market reported by CoStar. Vacancy in Tier 1 U.S.

markets was 6.3% at the end of the second quarter and up 30 basis points compared to the prior quarter. On the demand side, according to CoStar, net absorption year to date totaled 16 million square feet nationally and 5 million square feet in our target markets. We should also point out that there is a wide variation in reported net absorption depending upon the source you use. Year to date, net absorption ranges from negative 4 million square feet to positive 63 million square feet. Nationally, new construction start volume was 62 million square feet in the second quarter versus 66 million in the first quarter of 2025 and 72% lower than the peak of third quarter 2022. In our 15 target markets, new starts were 37 million square feet and completions were 38 million. Space under construction totals 204 million square feet and that is 42% pre-leased.

From a portfolio standpoint, our in-service occupancy at quarter end was 94.2% in line with our expectations reflecting the known 708,000 square foot move out in Central Pennsylvania. In the impact of two developments placed in service partially offset by some new leasing, we’ve now taken care of 88% of our 2025 rollovers by square footage. Our overall cash rental rate increase for new and renewal leasing is 33% and if you exclude the large fixed-rate renewal in Central Pennsylvania we previously disclosed, the cash rental rate increase is 38%. This puts us on track to achieve our overall cash rental rate growth expectations of 30% to 40% and 35% to 45% excluding the fixed-rate renewal.

Moving now to developments, we are pleased to report that after we issued our press release we leased the remaining 501,000 square feet of the 968,000 square foot building in our Camelback 303 joint venture in Phoenix. That brings the entire three building 1.8 million square foot project to 100% leased per our press release. We also leased 58,000 square feet at our First Loop project in Orlando.

Art Harmon, Senior Vice President of Investor Relations and Marketing, First Industrial Realty Trust: As.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Discussed on our last call, we’re underway on two new starts in the quarter. The first is a 176,000 square foot facility at First Park 121 in northwest Dallas. The second is a 226,000 square footer at our First Park New Castle project in the Philadelphia market. The total estimated investment for both of these projects is $54 million with target cash yields of approximately 8% for each. Both of these opportunities are located in infill locations with low submarket vacancies and target the 50,000 to 100,000 square foot tenant segment. Turning to our capital markets activity, we reached two important milestones during the quarter. First, we were upgraded by Fitch to Triple B plus in early May. That upgrade was timely as shortly thereafter we launched our first public bond offering since 2007 in the form of $450 million of senior unsecured notes at a coupon rate of 5.25%.

Demand from fixed income investors was strong and we appreciate their support for the offering. Let me conclude by saying thank you to my teammates around the country who are executing on our plan and taking care of our customers. With that, I’ll turn it over to Scott.

Art Harmon, Senior Vice President of Investor Relations and Marketing, First Industrial Realty Trust: Thanks Peter. Let me recap our results for the quarter. Dayrig funds from operations were $0.76 per fully diluted share compared to $0.66 per share in 2Q 2024. Our cash same-store NOI growth for the quarter excluding termination fees was 8.7%, primarily driven by increases in rental rates on new and renewal leasing and contractual rent bumps, partially offset by lower average occupancy. We finished the quarter with in-service occupancy of 94.2%, down 110 basis points from the quarter. As Peter noted, our occupancy change reflects the impact of the known move out in Central Pennsylvania and two developments entering the in-service pool, offset in part by some new leasing. Summarizing our leasing activity during the quarter, approximately 2.5 million square feet of leases commenced. Of these, approximately 400,000 were new, 2.1 million were renewals, and 100,000 were for developments and acquisition with lease up on the capital side.

As Peter noted, we were very pleased with our return to the public bond market for the first time since 2007. Our $450 million unsecured notes issued in this offering mature in January 2031 and carry a coupon rate of 5.25%. We remain strongly positioned on the capital front with our next maturity coming in 2027 assuming all available extension options are exercised on one of our bank loans. We would like to thank our banking partners for their outstanding execution and support in this transaction. Now moving on to our guidance, our guidance range for NAREIT FFO for the year remains $2.92 per share at the midpoint, with the range narrowed to $2.88 to $2.96 per share. Our assumptions are as follows. Average quarter-end in-service occupancy of 95% to 96%.

This range reflects approximately 1.5 million square feet of development leasing soon to occur in the fourth quarter of this year. Cash same-store NOI growth before termination fees of 6% to 7%. As a reminder, our same-store guidance excludes the impact of the accelerated recognition of a tenant improvement reimbursement in 2024. Guidance includes the anticipated 2025 costs related to our completed and under construction developments at June 30th. For the full year 2025, we expect to capitalize about $0.09 per share of interest and our G&A expense guidance range is $40.5 million to $41.5 million. Now let me turn it back over to Peter.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Thanks, Scott. Our diversified operating portfolio continues to perform strongly, generating cash rental rate growth on new and renewal leasing amongst the top performers in our sector. When the tariff picture becomes more clear, we expect improved confidence, more timely decision making, and an increase of investments in new growth initiatives. We remain focused on securing and serving existing and new customers to drive long term cash flow growth. Operator, with that, we’re ready to open it up for questions.

Michael, Conference Operator: We will now begin the question and answer session. To ask a question, you may press Star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press Star then two. At this time, we will pause momentarily to assemble our roster, and we also ask that you limit yourselves to one question and one follow-up. Your first question comes from Rob Stevenson with Janney. Please go ahead.

Rob Stevenson, Analyst, Janney: Good morning, guys.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Peter, incremental development starts from here more or less attractive today than they were three or six months ago?

Rob Stevenson, Analyst, Janney: How is construction pricing, you know, in terms of labor, materials today versus in past?

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Take the first part of that. Jojo, you can talk about construction pricing. Like we said on the last call, in order to really get deeper into new starts, we’d like to see more consistent development lease signings. There’s a lot of activity in the market. The amount of gross leasing activity in the first half of the year was pretty strong relative to 2024. We need to see more investment in new growth, more take up of development space. As you’ve seen, we have executed on new starts in certain markets and in those markets that we think continue to show good fundamentals and where there’s demand that is going unmet, we’ll continue to execute starts there. Jojo, you want to talk about the cost? Yes.

Jojo Yap, Chief Investment Officer, First Industrial Realty Trust: For construction costs from the second half of last year, costs are down 5% to 10% depending upon the market from the start of the year. Total construction costs have been pretty flat. The contractors have been more aggressive.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Their margins have compressed.

Jojo Yap, Chief Investment Officer, First Industrial Realty Trust: Slight increase in construction costs are keeping.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: An eye on steel.

Jojo Yap, Chief Investment Officer, First Industrial Realty Trust: There’s some talk that steel might go up, but we haven’t seen it. Contractors, though, are able to keep their.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Pricing for 30 to 60 days, which is good.

Jojo Yap, Chief Investment Officer, First Industrial Realty Trust: You probably all follow this. There’s been a tariff increase in copper. You’re looking at the electrical supply to switch gear, but these items have a small impact on the cost. Maybe total construction costs under 1%.

Rob Stevenson, Analyst, Janney: Okay, that’s helpful. Scott, anything abnormal or not recurring in the second quarter, FFO or anything expected to be sequentially a drag in the back half of the year? Just trying to figure out you guys did $0.76 and just doing a flat $0.76 and $0.76 in the next two quarters puts you at the very high end of your current guidance range. I just wanted to get a feel for what’s coming up here.

Art Harmon, Senior Vice President of Investor Relations and Marketing, First Industrial Realty Trust: I would say in the third and fourth quarter, recognizing more interest expense than in the second quarter. Rob, that’s driven by 2 items. We have to continue to fund our development pipeline. That’s about $110 million of spend for the last six months of the year. That’s driving interest expense higher. Also, the May bond offering was slightly dilutive. We used the funds to pay down our line of credit, and the line of credit had a lower interest rate than what the bond offering rate was. On the back end of the year, you’re going to see a little bit of higher interest expense, which will knock down our FFO in the third and fourth quarter.

Rob Stevenson, Analyst, Janney: Okay, that’s helpful, guys.

Jojo Yap, Chief Investment Officer, First Industrial Realty Trust: Thanks.

Rob Stevenson, Analyst, Janney: Appreciate the time this morning.

Michael, Conference Operator: Your next question comes from Vikram Malhotra with Mizuho. Please go ahead.

Morning. Thanks for taking the question. I just want to understand the new lease you just announced that was not in the $1.6 million target. If you can just sort of maybe walk us through some of the bigger pieces in the $1.6 million, like how do the prospects look for 3Q and 4Q?

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Peter, you want to talk about what’s happening in your markets?

Sure.

Rob Stevenson, Analyst, Janney: On the 1.6 million square feet that we have in our guidance at year end, the largest component of that is our building at First Aurora Commerce Center in Denver. We continue to have active prospects for all or portions of the building. In fact, a couple of the prospects have a need for rail, which we can accommodate on this site. It is difficult to peg exactly when those get signed. We continue to be pleased with the level of activity, part of the 1.5 million.

Jojo Yap, Chief Investment Officer, First Industrial Realty Trust: In the West Coast, we have three buildings there, two in a 150,000 square foot range and one in the 324,000 square foot range in East IE. Good product, great product with very, very good functionality. We’re having tours and proposals for every building, but nothing, no lease to announce yet. The remaining in the West would be under the West region. It would be 120,000 square foot in Chicago. Like East IE, we’ve been getting tours and we’re responding to requests for proposals, but don’t have a lease to announce yet.

Okay, can you just clarify the $0.02 impact you had mentioned prior? If you don’t do any of the $1.6 million, is that still the $0.02 is still in the guide, or have you pushed that out? Sorry, if you could just clarify that new 500,000 square foot lease that was not part of the original $1.6 million.

Art Harmon, Senior Vice President of Investor Relations and Marketing, First Industrial Realty Trust: The good news is with the benefit of that lease that Peter just announced in the call, coupled with the lease that we did in First Loop earlier than what we projected, Vikram, that $0.02 a share is now $0.00 a share. What does that mean? The 1.5 million square feet of development leasing that we still have in our guide, and I’ll also throw in the 708,000 square footer in Central Pennsylvania, now effectively have a 12/31 lease up. They’re assumed to be leased up on 12/31.

Great, thank.

Michael, Conference Operator: Your next question comes from Nick Yulico with Baird. Please go ahead.

Art Harmon, Senior Vice President of Investor Relations and Marketing, First Industrial Realty Trust: Following up maybe on that Camelback 303 and.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: The lease-up there.

Art Harmon, Senior Vice President of Investor Relations and Marketing, First Industrial Realty Trust: Is the plan there to kind of take that out like you did similar in Q1?

Jojo Yap, Chief Investment Officer, First Industrial Realty Trust: The plan there is, like every time, to maximize value. We have a couple of executions. We can take it to market, we can acquire the product, we can look at holding it. It’s really all about, again, maximizing value. Also, we’re very pleased about the execution because that JV project delivered returns exceeding our expectations. I also want to remind you there’s another 71 acres left with great land freeway frontage, and that we’re focused on maximizing value there, either developing it or doing a higher and better use deal like we’ve done before.

Art Harmon, Senior Vice President of Investor Relations and Marketing, First Industrial Realty Trust: All of that.

Rob Stevenson, Analyst, Janney: Maybe dovetailing on.

Art Harmon, Senior Vice President of Investor Relations and Marketing, First Industrial Realty Trust: Just on you guys have outlined maybe the potential opportunity for monetizing some of the land bank or existing portfolio for data centers, I guess is there any update there or the size or scope of what that opportunity set is?

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Not really. That’s a pretty big project. It’s going to take some time. We have to look into power. Of course, without that, you really don’t have much to talk about. These things are going to take several months to get to the answers on some of this.

Art Harmon, Senior Vice President of Investor Relations and Marketing, First Industrial Realty Trust: That’s it for me.

Michael, Conference Operator: Thank you. Your next question comes from Craig Mailman with Citi. Please go ahead.

Hey, good morning, Peter. Maybe can you just give some context around the 500,000 to 1,000,000 square foot lease, was that a longer kind of burn.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: On the demand there?

Is that more recent? Just to give us a sense of how quickly some of these can come together, you know, having some bigger ones like First Aurora left to take care of.

Yeah, sure. That was on the shorter end of the spectrum. Jojo, you want to talk about that? Sure, sure.

Jojo Yap, Chief Investment Officer, First Industrial Realty Trust: Basically, the building was just completed. The building was leased at completion.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Craig?

Jojo Yap, Chief Investment Officer, First Industrial Realty Trust: We had a number of showings. As you may recall too, that building has been 48% leased. We’ve leased already basically half the building, and we had continuous showings on the remaining vacancy. We actually had three interested parties, and this party wanted to really, they needed to grow and they wanted to control the space.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Pretty quick, tell them how long from beginning to now that discussion.

Jojo Yap, Chief Investment Officer, First Industrial Realty Trust: The discussion I would say would be about 45 days.

Okay, and when does that one commence?

Right now?

Yeah, right now.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Oh, immediately.

Michael, Conference Operator: Okay.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Yes, immediately.

Okay, just I guess more broadly, Peter, you’re kind of showing that there’s some improvement in demand, but it doesn’t sound like you guys are getting excited about it yet. At the same time, there can be some big deals that can come quickly. I’m just kind of curious as you guys are talking to people.

At some.

Of these developments, like First Aurora has been one that’s been vacant for two years. Are some of these?

Michael, Conference Operator: I don’t want.

To call them stubborn vacancies, but kind of longer tailed lease ups? Are these, in your opinion, like is it a leasing strategy issue, is it a product issue, or is it just a market issue that you guys are contending with on some of these?

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Are taking a little bit longer to lease up? It’s a demand side issue. It’s finding the right fit at the right time for the particular candidate or potential tenant. People make decisions. This particular tenant that took the Phoenix.

Jojo Yap, Chief Investment Officer, First Industrial Realty Trust: Property or the other half of the.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Phoenix Property made some business decisions that caused them to need it pretty quickly. It’s really just finding the right fit, Craig, and having the right size space at the right time. We’ve had, as you point out, several tenants come by there and actually traded proposals with several tenants. Look, there’s definitely pent up demand, there’s frustration to some degree. The tariff thing has really caused people to pause. Yet there are also other tenants who are less tariff sensitive who are going to do deals. That would in fact include the one that signed the lease in Phoenix.

Great, thank you.

Michael, Conference Operator: Your next question comes from Blaine Heck with Wells Fargo. Please go ahead.

Art Harmon, Senior Vice President of Investor Relations and Marketing, First Industrial Realty Trust: Great, thanks.

Michael, Conference Operator: Good morning.

Art Harmon, Senior Vice President of Investor Relations and Marketing, First Industrial Realty Trust: One of your competitors mentioned that their build-to-suit pipeline is very strong, I guess. Are you seeing demand on that side as well? What’s your general appetite for build-to-suits, and how do those returns compare with what you might be able to generate through speculative development?

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Yeah, the returns are always going to be a little bit lower unless there’s a special circumstance. We do execute on build-to-suits. You’ve seen us do that. It’s also not ever been a very high volume component of our business. Our platform is set up and our land holdings are such that we’re more targeted to the speculative development business. We do like the build-to-suit business depending on what we can earn. Obviously, we’re trying to maximize returns for shareholders. We’re going to evaluate the kinds of returns we can earn on a build-to-suit relative to the risk and return of taking on a speculative project.

Art Harmon, Senior Vice President of Investor Relations and Marketing, First Industrial Realty Trust: Great, that’s helpful. Maybe a little bit more high level. It seems as though there are different strategies we’re seeing from tenants, those that are continuing on with their business plans and leasing despite the uncertainty. You’ve got those that are strategizing more, but still in the market, but taking a little bit longer to make decisions, and those that are completely on pause and waiting for clarity, I guess. Would you agree with that characterization, and how would you kind of characterize the relative size of each of those groups today in your markets?

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: I would agree with it. We’ve had some conversations. We’re close to trading paper, and they said, gee, we want your building, but we’ve just got word from HQ that we have to pause now. That was post April 2nd. There is definitely a large group there. There is definitely a large group who window shop because they know they need space, they’re just not sure when, and then there are the ones who are a bit more bold and some of them who say, hey, we see what Amazon’s doing, spending $15 billion on new centers, largely in rural areas, and they’re going to build out their same day delivery from the city to the suburbs to the rural areas. They can’t afford to sit and watch, so they’re going to go ahead and sign leases. I think you outlined it pretty well.

You’ve got tenants kind of active across the spectrum in terms of objectives.

Art Harmon, Senior Vice President of Investor Relations and Marketing, First Industrial Realty Trust: Do you think those different strategies are roughly equal in size, or would you say one or another are more prominent here?

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Hard to say.

Art Harmon, Senior Vice President of Investor Relations and Marketing, First Industrial Realty Trust: Okay, fair enough. Thank you, Gus.

Michael, Conference Operator: Your next question comes from Caitlin Burrows with Goldman Sachs. Please go ahead.

Hi, good morning. I think you historically mentioned the answer was that it doesn’t. To what extent have you found that reducing price can create more leasing demand, whether it’s developments or other vacancies? Have you seen this work in some places but not others?

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: You know, Caitlin, we really, first of all, we focus on the NPV of that discussion, if you want to call it that. There are lots of different inputs. Certainly rate is one, TI’s, free rent, and move-in dates. Some people want to sign leases and not move in for six or eight months. There’s a lot of variable there. Lowering the rate doesn’t create new demand. You subject yourself to a big hit to that NPV model. That’s always the thing you try to hold steady on is rate.

Got it. Okay. On the decision to issue the unsecured bonds, I was wondering if you guys could go through. I don’t think you had talked about it before, but maybe you had. What drove that? Is it based on your size today, efficiency of the market, that you’re not doing dispositions, or what was different now versus the last 18 or so years?

Art Harmon, Senior Vice President of Investor Relations and Marketing, First Industrial Realty Trust: Sure. Caitlin, it’s Scott. I think we saw that we had a path to be a serial issuer in the public bond market. We’ve got maturities coming up the next five years. If you look over the majority of the years in the last 20 years, the pricing in the public bond market is inside of this pricing in the private placement market from a spread point of view. That was the rationale for doing it. As far as the home for the offering, we had about $500 million on our line of credit. We utilized the proceeds to pay down our line.

Got it. In terms of what was different now versus, like four years ago or something, to not do it then, any comments on that?

If you look at our maturity schedule over the next five years, we’ve got enough maturities to be somewhat of a serial issuer in the public bond market, which is what the investor base wants to see. Four years ago, we just didn’t. If we did something then we might not have been back to the market for a couple of years, and the public bond investor is likely to be back on a more reoccurring basis.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: The size of the offering back four years ago was smaller than it is today. It wasn’t benchmark size. In some cases, the private placement market was cheaper actually than the public market.

Art Harmon, Senior Vice President of Investor Relations and Marketing, First Industrial Realty Trust: 17 and 18.

Michael, Conference Operator: Yep.

Got it. Okay, thanks.

Your next question comes from Jessica Zhang with Green Street. Please go ahead.

Good morning. I was wondering if you have any insights around how private industrial developers are behaving in the current environment. I just wonder for the firms that are sitting on spec developments, are they start to offer elevated concession packages or are they materially cutting the face rents to try to secure a tenant?

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Peter and Jojo, you guys want to talk about what you’re seeing? Sure.

Rob Stevenson, Analyst, Janney: I would say, generally speaking, where there are more choices, you’ve seen concessions drift.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Up.

Rob Stevenson, Analyst, Janney: Because tenants have a lot of choices, developers are responding in that way. I wouldn’t say there’s a material difference across the landscape for developers.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Jojo.

Jojo Yap, Chief Investment Officer, First Industrial Realty Trust: Yes, I would agree. In terms of starts, they’re cautious. It’s hard to get debt. Debt is expensive. They’re sitting. A lot of developers are sitting on their land because they’ve got still some vacancies on their new developments.

Thank you.

Michael, Conference Operator: Your next question comes from Nick Yulico with Scotiabank. Please go ahead. Hello, this is Victor Feygin with Nick Yulico. Now that the focus is shifted to addressing 2026, 2027 expirations, we see that expiring rents are rather on the lower end for 2026 and 2027 as well. Are those assets indicative and comparable to the types of assets you leased in 2020, 2025? Just trying to understand here the demand and potential rent spreads for those properties.

Art Harmon, Senior Vice President of Investor Relations and Marketing, First Industrial Realty Trust: Regarding 2026 and 2027 expirations and how the rent stacks up, 2026 compared to 2025 is pretty consistent. In 2026, we do have a higher proportion of expirations in Dallas and Atlanta, which have been very good markets over the last several years. That is pretty much the difference between 2026 and 2025. For 2027, I don’t know right off hand. I can get back to you after the call.

Michael, Conference Operator: Got it, thank you. Quick follow up on your current development. Leasing, any types of tenants that you might highlight that are having a kind of higher interest in your assets at this point, or there is no particular trend you can highlight.

Rob Stevenson, Analyst, Janney: I would say generally we’re seeing a lot of activity from food and beverage and third-party logistics, some automotive, some manufacturing, some consumer products. E-commerce continues to be very busy. As Peter mentioned a couple of minutes ago, Amazon in particular has a range of requirements in a number of markets. They’re very, very active.

Michael, Conference Operator: So.

Rob Stevenson, Analyst, Janney: Activity overall continues to be pretty broad based. We’re pleased with the breadth of that.

Michael, Conference Operator: Got it. Thank you.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Again.

Michael, Conference Operator: If you have a question, please press Star then one. Your next question comes from Brendan Lynch with Barclays. Please go ahead.

Art Harmon, Senior Vice President of Investor Relations and Marketing, First Industrial Realty Trust: Great, thanks for taking my questions. You mentioned the interest rate drag on FFO in the back half. Can you also discuss the drag on same store that’s implied in guidance for the second half as well?

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Chris?

Rob Stevenson, Analyst, Janney: Yeah, if you look at same-store, kind of the second half, that’s primarily due to lower average occupancy in the.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Second half of the year compared to.

Art Harmon, Senior Vice President of Investor Relations and Marketing, First Industrial Realty Trust: The first half of the year, a little bit less contribution of the cash rental rate increases, and then we have some assumed increased pre rent concessions on deleasing. That’s really what’s driving that a little bit lower than the second half of the year. Okay, thanks, that’s helpful. Can you also discuss what dictates when you grant a fixed-rate renewal option for tenants? Where does that kind of fall on your list of priorities when negotiating a lease? Should we expect any more of these in the remainder of 2025 or into 2026?

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: It’s not on page one of the list, let’s put it that way. Obviously you’d rather not do that, but sometimes there is a benefit. In that particular case, very large tenant, very good credit, and it made sense for that deal.

Rob Stevenson, Analyst, Janney: Brendan, the timing of that was done in 2017 as part of a lease renewal at that point. You should not take that as a reflection of market conditions in the current environment.

Jojo Yap, Chief Investment Officer, First Industrial Realty Trust: Yeah, we know it very rarely.

Art Harmon, Senior Vice President of Investor Relations and Marketing, First Industrial Realty Trust: Okay, very good. Thank you.

Michael, Conference Operator: Your next question comes from Todd Thomas with KeyBanc Capital Markets. Please go ahead.

Hi, thanks. First question, just from your comments earlier around the Camelback 303 lease, you mentioned that it replaced the lease up assumptions on the 1.6 million square feet that you had in guidance, the $0.02, and that you’re now assuming a 12/31 lease up essentially. Two questions. Do you actually feel different or less confident in the timing of the lease up on that 1.6 million square foot bucket any different than you did last quarter? I suspect this means that the 95% to 96% occupancy assumptions, if you’re pushing out some of that leasing, that should sort of be disregarded, I guess, to some extent as it pertains to 2025. We can do the math. I just wanted to ask about that also, since this sort of hit after the release, it sounds like.

Jojo Yap, Chief Investment Officer, First Industrial Realty Trust: Scott.

Art Harmon, Senior Vice President of Investor Relations and Marketing, First Industrial Realty Trust: The occupancy assumptions don’t change, Todd, because both the $1.5 million actually and also that includes the 708,000, they’re assumed at least up on 12/31. That positively impacts our fourth quarter average on that. I’m sorry, what was the other question you had? I think I took care of the last part first.

Whether or not you actually feel different at all around the timing of that $1.6 million square foot lease up, Camelback helps in the sense that you’re kind of pushing back that assumption. In terms of traffic and the leasing prospects that you’re working on, do you feel any different than you did last quarter?

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Look, we’ve got five and a.

Jojo Yap, Chief Investment Officer, First Industrial Realty Trust: Half months left in the year.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Traffic around those assets is decent. Most of them happen to be assets, as someone earlier pointed out, that have been available for a while. The risk of getting those done is not zero. Generally, we felt that it was more reflective of the probability to push those to the end of the year.

Okay, got it. Thank you.

Michael, Conference Operator: Your next question comes from Michael Carroll with JPMorgan. Please go ahead.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Yeah, hi.

Rob Stevenson, Analyst, Janney: Two questions and one’s probably like a really dumb clarification question, but on the first one, was there anything to note out of the ordinary with either property operating expenses or recoveries this quarter? It just looked like the ratio, the expense ratios were kind of lighter compared to where they’ve been running, especially compared to last year and stuff.

Art Harmon, Senior Vice President of Investor Relations and Marketing, First Industrial Realty Trust: Mike, it’s Scott. I’ll explain it this way. It has to do with our tenured policy related to equity-based compensation. If you remember, in the first quarter our G&A was a lot higher because of that tenure-based policy. What does that mean? GAAP accounting requires us to expense immediately awards issued to folks that reach a certain point of age and have a certain point of service in accordance with our policy. You saw that it increased our G&A that quarter. It also increases our property expenses because our people that manage our properties, their compensation is reflected down in that line item. It causes a depressed margin in the first quarter and then in the second, third, and fourth quarter the margins are elevated. If you were to look back in 1Q24 and compare it to the following quarters, that same dynamic happened.

My bet is if you look back further years, that dynamic has happened. I would say that’s the cause of the differential in margins between 1Q25 and 2Q25.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Got it. Okay.

Rob Stevenson, Analyst, Janney: Yeah, I just thought it was a little bit bigger even compared to last year, but maybe not in that context. The second one, and this is kind of the dumber question, when you talk about the development leasing, because in my mind, I think development, external growth, development pipeline. When I think of same store, I think of occupancy, the in-service portfolio. How much of this is all the $1.6 million development leasing you’re talking about doing or the $1.5 million, is all that related to the in-service portfolio? It just happens to be stuff that you developed at some point in.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Time that is in there.

Rob Stevenson, Analyst, Janney: Can you have development leasing that’s impacting your occupancy guidance for the in-service portfolio, or is a portion of that true development leasing where it’s not in the in-service portfolio? It’s just getting a little confusing from my standpoint, Mike.

Jojo Yap, Chief Investment Officer, First Industrial Realty Trust: I mean, the way that we look.

Art Harmon, Senior Vice President of Investor Relations and Marketing, First Industrial Realty Trust: As it relates to what’s already in service, that’s the $1.65 million. If you want to walk through those projects after the call, I’d definitely be willing to do so now. Life isn’t perfect in development leasing, though. We saw that last year as well. There might be 300,000 square feet of projects that we’ve completed that aren’t in service, that aren’t in our guidance, that we lease up this year that have a positive impact that make up maybe for not leasing up some of the $1.5 million square feet, but what we have in guidance is in service. Again, I’d be glad to walk through the projects with you after the call if you’d like to.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Got it. That helps.

Rob Stevenson, Analyst, Janney: Appreciate it.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Thank you.

Michael, Conference Operator: Your next question is a follow-up from Caitlin Burrows with Goldman Sachs. Please go ahead.

Oh, hi again. I feel like there hasn’t been much talk about specific markets, so I figured I would follow up on it. Could you talk a little bit first about SoCal, how you saw it evolve during the quarter, maybe from a demand perspective and on the rent side, and whether there are any differences to call out by submarkets.

Jojo Yap, Chief Investment Officer, First Industrial Realty Trust: Sure. Caitlin, let’s start with the rent. Rent, I would say from Q1 to Q2, there was a 5% decline in market rents. But still, rents today are probably about 100% or double the pre-Covid rents. That’s the way to look at it. If you look at it, it’s about 13.5%, 14% CAGR. Now let’s move on to activity. Gross leasing activity in Q2 was kind of comparable to Q1. Vacancy increased about 10 bps in both IE West and IE East. IE West is a little bit lower vacancy rate. It’s performing better than IE East. In terms of net absorption, it’s somewhat flat because despite the positive gross leasing activity, there’s been a little bit higher give back of space. Moving on to the supply stats, deliveries and starts have been really low.

Total deliveries is under $2 million, of which roughly about 35% is pre-leased, and starts are about $1.6 million. Under $2 million, of which $600,000 was.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: A build-to-suit.

Jojo Yap, Chief Investment Officer, First Industrial Realty Trust: You know the stats I’m giving you is basically only, i.e., core because we don’t invest in the high desert that is north, which is less.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Than 4% of the market.

Jojo Yap, Chief Investment Officer, First Industrial Realty Trust: Anyway, I hope that helps in terms of rents and absorption and activity.

It does. Thanks. As you think about the other markets you guys are in, are there any to call out as being strongest versus weakest today?

Rob Stevenson, Analyst, Janney: I would say Nashville continues to be among the strongest in the country. Little new supply, good demand. Rents continue to go up. We’ve seen some increased activity in Florida recently, so all the markets are doing pretty well. Those would be two of the stronger.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Caitlin, I’d just add certain submarkets at Dallas and Houston we like right now. They’re doing well. Thanks.

Michael, Conference Operator: This concludes our question and answer session. I would like to turn the conference back over to Peter Baccile for any closing remarks.

Peter Baccile, President and Chief Executive Officer, First Industrial Realty Trust: Thank you, operator, and thanks to everyone for participating on our call today. If you have any follow-ups from our call, please reach out to Art Harmon, Scott Musil, or me.

Michael, Conference Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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