First Industrial Realty Trust, Inc. (FR - Snapshot Report), a real estate investment trust (REIT), has recently announced its plans to offer 8.4 million common shares. UBS Securities LLC, an indirect wholly-owned subsidiary of UBS AG (UBS - Analyst Report) is acting as the sole book-running manager for the offering. First Industrial intends to utilize the proceeds from the secondary offering to repay its debt.
The latest equity offer is part of the long-term strategy of the company to de-lever its balance sheet and increase its liquidity. By the end of first quarter 2011, First Industrial had total debt of $1.6 billion. The company expects to meet both its short-term and long-term liquidity needs with proceeds from asset sale, the issuance of additional secured debt, and through equity issuance.
Earlier, the company had reported relatively strong first quarter 2011 results with FFO (funds from operations) of 20 cents per share, compared with 11 cents in the year-earlier quarter. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. Excluding the one-time items, recurring FFO for first quarter 2011 was 23 cents per share.
In-service occupancy was 84.7% at the end of the quarter, compared to 81.4% at the end of first quarter 2010. Having outperformed the prior-year results in the last reported quarter on the basis of occupancy, First Industrial expects to maintain its bull run in the coming quarters as well, with stabilization in market fundamentals.
First Industrial owns and operates industrial real estate assets and provides supply chain solutions to multinational corporations and regional customers that range from 1,000 square feet to over 1 million square feet in leading industrial markets.
Since its inception in 1994, the company has developed a niche in offering premier industrial space across major markets in North America, including bulk and regional distribution centers, light industrial and other industrial facility types.
We presently have a Neutral rating on First Industrial, which currently has a Zacks #4 Rank that translates into a short-term Sell recommendation and indicates that the stock is expected to underperform the overall U.S. equity market for the next 1-3 months.