Edgar Filing: FIRST INDUSTRIAL REALTY TRUST INC

Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________

Form 10-Q

_______________________________



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017



¨	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: 1-13102 (First Industrial Realty Trust, Inc.)

333-21873 (First Industrial, L.P.)

_______________________________

FIRST INDUSTRIAL REALTY TRUST, INC.

FIRST INDUSTRIAL, L.P.

(Exact name of Registrant as specified in its Charter)



Maryland (First Industrial Realty Trust, Inc.)		36-3935116 (First Industrial Realty Trust, Inc.)
Delaware ( First Industrial, L.P.)		36-3924586 (First Industrial, L.P.)
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

311 S. Wacker Drive, Suite 3900, Chicago, Illinois		60606
(Address of principal executive offices)		(Zip Code)

(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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



First Industrial Realty Trust, Inc.	Yes þ No o
First Industrial, L.P.	Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).



First Industrial Realty Trust, Inc.	Yes þ No o
First Industrial, L.P.	Yes þ No o

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



First Industrial Realty Trust, Inc.:
Large accelerated filer	þ		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	o
Emerging growth company	o



First Industrial, L.P.:
Large accelerated filer	o		Accelerated filer	þ
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	o
Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.



First Industrial Realty Trust, Inc.	Yes o No o
First Industrial, L.P.	Yes o No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



First Industrial Realty Trust, Inc.	Yes o No þ
First Industrial, L.P.	Yes o No þ

At October 26, 2017, 119,846,991 shares of First Industrial Realty Trust, Inc.’s Common Stock, $0.01 par value, were outstanding.

EXPLANATORY NOTE

This report combines the Quarterly Reports on Form 10-Q for the period ended September 30, 2017 of First Industrial Realty Trust, Inc., a Maryland corporation (the "Company"), and First Industrial, L.P., a Delaware limited partnership (the "Operating Partnership"). Unless stated otherwise or the context otherwise requires, the terms "we," "our" and "us" refer to the Company and its subsidiaries, including the Operating Partnership and its consolidated subsidiaries.

The Company is a real estate investment trust and the general partner of the Operating Partnership. At September 30, 2017, the Company owned an approximate 96.7% common general partnership interest in the Operating Partnership. The remaining approximate 3.3% common limited partnership interests in the Operating Partnership are owned by certain limited partners. As the sole general partner of the Operating Partnership, the Company exercises exclusive and complete discretion over the Operating Partnership’s day-to-day management and control and can cause it to enter into certain major transactions, including acquisitions, dispositions and refinancings. The management of the Company consists of the same members as the management of the Operating Partnership.

The Company and the Operating Partnership are managed and operated as one enterprise. The financial results of the Operating Partnership are consolidated into the financial statements of the Company. The Company has no significant assets other than its investment in the Operating Partnership. Substantially all of the Company’s assets are held by, and its operations are conducted through, the Operating Partnership and its subsidiaries. Therefore, the assets and liabilities of the Company and the Operating Partnership are substantially the same.

We believe it is important to understand the differences between the Company and the Operating Partnership in the context of how the Company and the Operating Partnership operate as an interrelated, consolidated company. The main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership are:


•	Stockholders’ Equity, Noncontrolling Interest and Partners’ Capital. The 3.3% equity interest in the Operating Partnership held by entities other than the Company is classified within partners’ capital in the Operating Partnership’s financial statements and as a noncontrolling interest in the Company's financial statements.

•

Relationship to Other Real Estate Partnerships. The Company's operations are conducted primarily through the Operating Partnership and its subsidiaries, although operations are also conducted through eight other limited partnerships, which are referred to as the "Other Real Estate Partnerships." The Operating Partnership is a limited partner, holding at least a 99% interest, and the Company is a general partner, holding at least a .01% general partnership interest through eight separate wholly-owned corporations, in each of the Other Real Estate Partnerships. The Other Real Estate Partnerships are variable interest entities that both the Company and the Operating Partnership consolidate. The Company's direct general partnership interest in the Other Real Estate Partnerships is reflected as noncontrolling interest within the Operating Partnership's financial statements.

•

Relationship to Service Subsidiary. The Company has a direct wholly-owned subsidiary that does not own any real estate but provides services to various other entities owned by the Company. Since the Operating Partnership does not have an ownership interest in this entity, its operations are reflected in the consolidated results of the Company but not the Operating Partnership. Also, this entity owes certain amounts to the Operating Partnership, for which a receivable is included on the Operating Partnership’s balance sheet but is eliminated on the Company’s consolidated balance sheet, since both this entity and the Operating Partnership are fully consolidated by the Company.

We believe combining the Company’s and Operating Partnership’s quarterly reports into this single report results in the following benefits:


•	enhances investors' understanding of the Company and the Operating Partnership by enabling them to view the business as a whole and in the same manner as management views and operates the business;


•	creates time and cost efficiencies through the preparation of one combined report instead of two separate reports; and


•	eliminates duplicative disclosures and provides a more streamlined and readable presentation for our investors to review since a substantial portion of the Company’s disclosure applies to both the Company and the Operating Partnership.

To help investors understand the differences between the Company and the Operating Partnership, this report provides the following separate disclosures for each of the Company and the Operating Partnership:


•	consolidated financial statements;


•	a single set of consolidated notes to such financial statements that includes separate discussions of each entity’s stockholders’ equity or partners’ capital, as applicable; and


•	a combined Management’s Discussion and Analysis of Financial Condition and Results of Operations section that includes distinct information related to each entity.

This report also includes separate Part I, Item 4, Controls and Procedures sections and separate Exhibit 31 and 32 certifications for the Company and the Operating Partnership in order to establish that the requisite certifications have been made and that the Company and the Operating Partnership are both compliant with Rule 13a-15 and Rule 15d-15 of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350.

FIRST INDUSTRIAL REALTY TRUST, INC. AND FIRST INDUSTRIAL, L.P.

FORM 10-Q

FOR THE PERIOD ENDED SEPTEMBER 30, 2017

INDEX



		Page
PART I: FINANCIAL INFORMATION		3
Item 1.	Financial Statements	3
	First Industrial Realty Trust, Inc.
	Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016	3
	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2017 and 2016	4
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2017 and 2016	5
	Consolidated Statement of Changes in Stockholders’ Equity for the Nine Months Ended September 30, 2017	6
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016	7
	First Industrial, L.P.
	Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016	8
	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2017 and 2016	9
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2017 and 2016	10
	Consolidated Statement of Changes in Partner's Capital for the Nine Months Ended September 30, 2017	11
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016	12
	First Industrial Realty Trust, Inc. and First Industrial, L.P.
	Notes to the Consolidated Financial Statements	14
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39
PART II: OTHER INFORMATION		40
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Mine Safety Disclosures	40
Item 5.	Other Information	40
Item 6.	Exhibits	40
SIGNATURES		41
EXHIBIT INDEX		42

PART I: FINANCIAL INFORMATION



Item 1.	Financial Statements

FIRST INDUSTRIAL REALTY TRUST, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)



	September 30, 2017			December 31, 2016
	(Unaudited)
ASSETS
Assets:
Investment in Real Estate:
Land	$	870,151		$	794,821
Buildings and Improvements	2,554,194			2,523,015
Construction in Progress	68,302			67,078
Less: Accumulated Depreciation	(794,672		)	(796,492		)
Net Investment in Real Estate	2,697,975			2,588,422
Real Estate and Other Assets Held for Sale, Net of Accumulated Depreciation and Amortization of $20,110 and $1,471	18,646			2,354
Cash and Cash Equivalents	9,496			9,859
Restricted Cash	5,102			11,602
Tenant Accounts Receivable, Net	4,533			4,757
Deferred Rent Receivable, Net	69,623			67,382
Deferred Leasing Intangibles, Net	31,108			29,499
Prepaid Expenses and Other Assets, Net	91,343			79,388
Total Assets	$	2,927,826		$	2,793,263
LIABILITIES AND EQUITY
Liabilities:
Indebtedness:
Mortgage Loans Payable, Net	$	452,551		$	495,956
Senior Unsecured Notes, Net	301,602			204,998
Unsecured Term Loans, Net	457,138			456,638
Unsecured Credit Facility	157,000			189,500
Accounts Payable, Accrued Expenses and Other Liabilities	82,184			84,412
Deferred Leasing Intangibles, Net	10,735			10,400
Rents Received in Advance and Security Deposits	45,495			43,300
Dividends and Distributions Payable	26,848			23,434
Total Liabilities	1,533,553			1,508,638
Commitments and Contingencies	—			—
Equity:
First Industrial Realty Trust Inc.’s Stockholders’ Equity:
Common Stock ($0.01 par value, 225,000,000 and 150,000,000 shares authorized and 119,848,432 and 117,107,746 shares issued and outstanding)	1,199			1,172
Additional Paid-in-Capital	1,964,965			1,886,771
Distributions in Excess of Accumulated Earnings	(614,493		)	(641,859		)
Accumulated Other Comprehensive Loss	(3,153		)	(4,643		)
Total First Industrial Realty Trust, Inc.’s Stockholders’ Equity	1,348,518			1,241,441
Noncontrolling Interest	45,755			43,184
Total Equity	1,394,273			1,284,625
Total Liabilities and Equity	$	2,927,826		$	2,793,263

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

FIRST INDUSTRIAL REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in thousands, except per share data)



	Three Months Ended September 30, 2017			Three Months Ended September 30, 2016			Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
Revenues:
Rental Income	$	76,497		$	72,092		$	227,217		$	216,115
Tenant Recoveries and Other Income	22,813			21,470			67,055			63,929
Total Revenues	99,310			93,562			294,272			280,044
Expenses:
Property Expenses	28,452			27,539			83,835			82,781
General and Administrative	6,492			5,983			21,310			20,090
Acquisition Costs	—			119			—			338
Depreciation and Other Amortization	29,696			28,815			87,230			88,668
Total Expenses	64,640			62,456			192,375			191,877
Other Income (Expense):
Gain on Sale of Real Estate	23,271			16,802			52,140			60,828
Interest Expense	(14,376		)	(14,407		)	(43,660		)	(45,255		)
Amortization of Deferred Financing Costs	(778		)	(782		)	(2,336		)	(2,437		)
Mark-to-Market Gain on Interest Rate Protection Agreements	1,848			—			1,848			—
Loss from Retirement of Debt	—			—			(1,653		)	—
Total Other Income (Expense)	9,965			1,613			6,339			13,136
Income from Operations Before Income Tax Provision	44,635			32,719			108,236			101,303
Income Tax Benefit (Provision)	21			(51		)	(1,236		)	(232		)
Net Income	44,656			32,668			107,000			101,071
Less: Net Income Attributable to the Noncontrolling Interest	(1,458		)	(1,149		)	(3,531		)	(3,635		)
Net Income Available to First Industrial Realty Trust, Inc.’s Common Stockholders and Participating Securities	$	43,198		$	31,519		$	103,469		$	97,436
Basic Earnings Per Share:
Net Income Available to First Industrial Realty Trust, Inc.’s Common Stockholders	$	0.36		$	0.27		$	0.88		$	0.85
Diluted Earnings Per Share:
Net Income Available to First Industrial Realty Trust, Inc.’s Common Stockholders	$	0.36		$	0.27		$	0.87		$	0.85
Dividends/Distributions Per Share	$	0.21		$	0.19		$	0.63		$	0.57
Weighted Average Shares Outstanding - Basic	119,446			116,467			117,870			114,491
Weighted Average Shares Outstanding - Diluted	119,990			116,864			118,352			114,809

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

FIRST INDUSTRIAL REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited; in thousands)



	Three Months Ended September 30, 2017			Three Months Ended September 30, 2016			Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
Net Income	$	44,656		$	32,668		$	107,000		$	101,071
Mark-to-Market Gain (Loss) on Interest Rate Protection Agreements	621			3,768			1,364			(13,848		)
Amortization of Interest Rate Protection Agreements	24			96			180			294
Comprehensive Income	45,301			36,532			108,544			87,517
Comprehensive Income Attributable to Noncontrolling Interest	(1,479		)	(1,295		)	(3,582		)	(3,147		)
Comprehensive Income Attributable to First Industrial Realty Trust, Inc.	$	43,822		$	35,237		$	104,962		$	84,370

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

FIRST INDUSTRIAL REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited; in thousands)



	Common Stock		Additional Paid-in- Capital			Distributions in Excess of Accumulated Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interest			Total
Balance as of December 31, 2016	$	1,172	$	1,886,771		$	(641,859	)	$	(4,643	)	$	43,184		$	1,284,625
Issuance of Common Stock, Net of Issuance Costs	25		74,636			—			—			—			74,661
Stock Based Compensation Activity	2		5,088			(724		)	—			—			4,366
Conversion of Limited Partner Units to Common Stock	—		39			—			—			(39		)	—
Reallocation - Additional Paid-in-Capital	—		(1,569		)	—			—			1,569			—
Common Stock Dividends and Unit Distributions	—		—			(75,379		)	—			(2,544		)	(77,923		)
Net Income	—		—			103,469			—			3,531			107,000
Reallocation - Other Comprehensive Income	—		—			—			(3		)	3			—
Other Comprehensive Income	—		—			—			1,493			51			1,544
Balance as of September 30, 2017	$	1,199	$	1,964,965		$	(614,493	)	$	(3,153	)	$	45,755		$	1,394,273

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



FIRST INDUSTRIAL REALTY TRUST, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited; in thousands)
	Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	107,000		$	101,071
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation	70,697			72,317
Amortization of Deferred Financing Costs	2,336			2,437
Other Amortization, including Stock Based Compensation	22,059			21,699
Provision for Bad Debt	181			567
Gain on Sale of Real Estate	(52,140		)	(60,828		)
Loss from Retirement of Debt	1,653			—
Mark-to-Market Gain on Interest Rate Protection Agreements	(1,848		)	—
Increase in Tenant Accounts Receivable, Prepaid Expenses and Other Assets, Net	(6,792		)	(2,830		)
Increase in Deferred Rent Receivable, Net	(4,104		)	(5,121		)
Increase (Decrease) in Accounts Payable, Accrued Expenses, Other Liabilities, Rents Received in Advance and Security Deposits	9,152			(1,545		)
Payments of Prepayment Penalties and Discounts Associated with Retirement of Debt	(1,453		)	(554		)
Net Cash Provided by Operating Activities	146,741			127,213
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of Real Estate	(160,065		)	(95,157		)
Additions to Investment in Real Estate and Non-Acquisition Tenant Improvements and Lease Costs	(104,658		)	(117,630		)
Net Proceeds from Sales of Investments in Real Estate	95,233			133,602
Repayments of Notes Receivable	51			43
Decrease in Escrows	4,805			11,051
Net Cash Used in Investing Activities	(164,634		)	(68,091		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Financing and Equity Issuance Costs	(1,918		)	(375		)
Proceeds from the Issuance of Common Stock, Net of Underwriter’s Discount	74,880			124,936
Repurchase and Retirement of Restricted Stock	(2,401		)	(5,242		)
Common Stock Dividends and Unit Distributions Paid	(74,508		)	(59,678		)
Repayments on Mortgage Loans Payable	(44,152		)	(66,551		)
Proceeds from Senior Unsecured Notes	200,000			—
Repayments of Senior Unsecured Notes	(101,871		)	(159,125		)
Proceeds from Unsecured Credit Facility	326,000			397,000
Repayments on Unsecured Credit Facility	(358,500		)	(286,000		)
Net Cash Provided by (Used in) Financing Activities	17,530			(55,035		)
Net (Decrease) Increase in Cash and Cash Equivalents	(363		)	4,087
Cash and Cash Equivalents, Beginning of Year	9,859			3,987
Cash and Cash Equivalents, End of Period	$	9,496		$	8,074




FIRST INDUSTRIAL REALTY TRUST, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Unaudited; in thousands)
	Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS:
Interest Expense Capitalized in Connection with Development Activity	$	3,014		$	2,279
Supplemental Schedule of Non-Cash Investing and Financing Activities:
Common Stock Dividends and Unit Distributions Payable	$	26,848		$	23,357
Exchange of Limited Partnership Units for Common Stock:
Noncontrolling Interest	$	(39	)	$	(819	)
Common Stock	—			1
Additional Paid-in-Capital	39			818
Total	$	—		$	—
Assumption of Indebtedness and Other Liabilities in Connection with the Acquisition of Real Estate	$	1,138		$	5,227
Accounts Payable Related to Construction in Progress and Additions to Investment in Real Estate	$	23,247		$	28,788
Write-off of Fully Depreciated Assets	$	(27,455	)	$	(34,360	)

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

FIRST INDUSTRIAL, L.P.

CONSOLIDATED BALANCE SHEETS

(In thousands, except Unit data)



	September 30, 2017			December 31, 2016
	(Unaudited)
ASSETS
Assets:
Investment in Real Estate:
Land	$	870,151		$	794,821
Buildings and Improvements	2,554,194			2,523,015
Construction in Progress	68,302			67,078
Less: Accumulated Depreciation	(794,672		)	(796,492		)
Net Investment in Real Estate (including $279,626 and $278,398 related to consolidated variable interest entities, see Note 5)	2,697,975			2,588,422
Real Estate and Other Assets Held for Sale, Net of Accumulated Depreciation and Amortization of $20,110 and $1,471	18,646			2,354
Cash and Cash Equivalents	9,496			9,859
Restricted Cash	5,102			11,602
Tenant Accounts Receivable, Net	4,533			4,757
Deferred Rent Receivable, Net	69,623			67,382
Deferred Leasing Intangibles, Net	31,108			29,499
Prepaid Expenses and Other Assets, Net	101,526			89,826
Total Assets	$	2,938,009		$	2,803,701
LIABILITIES AND PARTNERS’ CAPITAL
Liabilities:
Indebtedness:
Mortgage Loans Payable, Net (including $61,586 and $70,366 related to consolidated variable interest entities, see Note 5)	$	452,551		$	495,956
Senior Unsecured Notes, Net	301,602			204,998
Unsecured Term Loans, Net	457,138			456,638
Unsecured Credit Facility	157,000			189,500
Accounts Payable, Accrued Expenses and Other Liabilities	82,184			84,412
Deferred Leasing Intangibles, Net	10,735			10,400
Rents Received in Advance and Security Deposits	45,495			43,300
Distributions Payable	26,848			23,434
Total Liabilities	1,533,553			1,508,638
Commitments and Contingencies	—			—
Partners’ Capital:
First Industrial, L.P.'s Partners' Capital:
General Partner Units (119,848,432 and 117,107,746 units outstanding)	1,326,815			1,219,755
Limited Partners Units (4,035,938 and 4,039,375 units outstanding)	80,104			79,156
Accumulated Other Comprehensive Loss	(3,260		)	(4,804		)
Total First Industrial L.P.'s Partners’ Capital	1,403,659			1,294,107
Noncontrolling Interest	797			956
Total Partners’ Capital	1,404,456			1,295,063
Total Liabilities and Partners’ Capital	$	2,938,009		$	2,803,701

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

FIRST INDUSTRIAL L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in thousands, except per Unit data)



	Three Months Ended September 30, 2017			Three Months Ended September 30, 2016			Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
Revenues:
Rental Income	$	76,497		$	72,092		227,217			$	216,115
Tenant Recoveries and Other Income	22,813			21,470			67,055			63,929
Total Revenues	99,310			93,562			294,272			280,044
Expenses:
Property Expenses	28,452			27,539			83,835			82,781
General and Administrative	6,492			5,983			21,310			20,090
Acquisition Costs	—			119			—			338
Depreciation and Other Amortization	29,696			28,815			87,230			88,668
Total Expenses	64,640			62,456			192,375			191,877
Other Income (Expense):
Gain on Sale of Real Estate	23,271			16,802			52,140			60,828
Interest Expense	(14,376		)	(14,407		)	(43,660		)	(45,255		)
Amortization of Deferred Financing Costs	(778		)	(782		)	(2,336		)	(2,437		)
Mark-to-Market Gain on Interest Rate Protection Agreements	1,848			—			1,848			—
Loss from Retirement of Debt	—			—			(1,653		)	—
Total Other Income (Expense)	9,965			1,613			6,339			13,136
Income from Operations Before Income Tax Provision	44,635			32,719			108,236			101,303
Income Tax Benefit (Provision)	21			(51		)	(1,236		)	(232		)
Net Income	44,656			32,668			107,000			101,071
Less: Net Income Attributable to the Noncontrolling Interest	(43		)	(38		)	(96		)	(112		)
Net Income Available to Unitholders and Participating Securities	$	44,613		$	32,630		$	106,904		$	100,959
Basic Earnings Per Unit:
Net Income Available to Unitholders	$	0.36		$	0.27		$	0.87		$	0.85
Diluted Earnings Per Unit:
Net Income Available to Unitholders	$	0.36		$	0.27		$	0.87		$	0.84
Distributions Per Unit	$	0.21		$	0.19		$	0.63		$	0.57
Weighted Average Units Outstanding - Basic	123,483			120,740			121,909			118,781
Weighted Average Units Outstanding - Diluted	124,027			121,137			122,391			119,099

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

FIRST INDUSTRIAL L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited; in thousands)



	Three Months Ended September 30, 2017			Three Months Ended September 30, 2016			Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
Net Income	$	44,656		$	32,668		$	107,000		$	101,071
Mark-to-Market Gain (Loss) on Interest Rate Protection Agreements	621			3,768			1,364			(13,848		)
Amortization of Interest Rate Protection Agreements	24			96			180			294
Comprehensive Income	$	45,301		$	36,532		$	108,544		$	87,517
Comprehensive Income Attributable to Noncontrolling Interest	(43		)	(38		)	(96		)	(112		)
Comprehensive Income Attributable to Unitholders	$	45,258		$	36,494		$	108,448		$	87,405

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

FIRST INDUSTRIAL, L.P.

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL

(Unaudited; in thousands)



	General Partner Units			Limited Partner Units			Accumulated Other Comprehensive Loss			Noncontrolling Interest			Total
Balance as of December 31, 2016	$	1,219,755		$	79,156		$	(4,804	)	$	956		$	1,295,063
Contribution of General Partner Units, Net of Issuance Costs	74,661			—			—			—			74,661
Stock Based Compensation Activity	4,366			—			—			—			4,366
Conversion of Limited Partner Units to General Partner Units	39			(39		)	—			—			—
Unit Distributions	(75,379		)	(2,544		)	—			—			(77,923		)
Contributions from Noncontrolling Interest	—			—			—			29			29
Distributions to Noncontrolling Interest	—			—			—			(284		)	(284		)
Net Income	103,373			3,531			—			96			107,000
Other Comprehensive Income	—			—			1,544			—			1,544
Balance as of September 30, 2017	$	1,326,815		$	80,104		$	(3,260	)	$	797		$	1,404,456

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



FIRST INDUSTRIAL, L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited; in thousands)
	Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	107,000		$	101,071
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation	70,697			72,317
Amortization of Deferred Financing Costs	2,336			2,437
Other Amortization, including Stock Based Compensation	22,059			21,699
Provision for Bad Debt	181			567
Gain on Sale of Real Estate	(52,140		)	(60,828		)
Loss from Retirement of Debt	1,653			—
Mark-to-Market Gain on Interest Rate Protection Agreements	(1,848		)	—
Increase in Tenant Accounts Receivable, Prepaid Expenses and Other Assets, Net	(6,537		)	(2,680		)
Increase in Deferred Rent Receivable, Net	(4,104		)	(5,121		)
Increase (Decrease) in Accounts Payable, Accrued Expenses, Other Liabilities, Rents Received in Advance and Security Deposits	9,152			(1,545		)
Payments of Prepayment Penalties and Discounts Associated with Retirement of Debt	(1,453		)	(554		)
Net Cash Provided by Operating Activities	146,996			127,363
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of Real Estate	(160,065		)	(95,157		)
Additions to Investment in Real Estate and Non-Acquisition Tenant Improvements and Lease Costs	(104,658		)	(117,630		)
Net Proceeds from Sales of Investments in Real Estate	95,233			133,602
Repayments of Notes Receivable	51			43
Decrease in Escrows	4,805			11,051
Net Cash Used in Investing Activities	(164,634		)	(68,091		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Financing and Equity Issuance Costs	(1,918		)	(375		)
Contribution of General Partner Units	74,880			124,936
Repurchase and Retirement of Restricted Units	(2,401		)	(5,242		)
Unit Distributions Paid	(74,508		)	(59,678		)
Contributions from Noncontrolling Interests	29			114
Distributions to Noncontrolling Interests	(284		)	(264		)
Repayments on Mortgage Loans Payable	(44,152		)	(66,551		)
Proceeds from Senior Unsecured Notes	200,000			—
Repayments of Senior Unsecured Notes	(101,871		)	(159,125		)
Proceeds from Unsecured Credit Facility	326,000			397,000
Repayments on Unsecured Credit Facility	(358,500		)	(286,000		)
Net Cash Provided by (Used in) Financing Activities	17,275			(55,185		)
Net (Decrease) Increase in Cash and Cash Equivalents	(363		)	4,087
Cash and Cash Equivalents, Beginning of Year	9,859			3,987
Cash and Cash Equivalents, End of Period	$	9,496		$	8,074



FIRST INDUSTRIAL, L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Unaudited; in thousands)
	Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS:
Interest Expense Capitalized in Connection with Development Activity	$	3,014		$	2,279
Supplemental Schedule of Non-Cash Investing and Financing Activities:
General and Limited Partner Unit Distributions Payable	$	26,848		$	23,357
Exchange of Limited Partner Units for General Partner Units:
Limited Partner Units	$	(39	)	$	(819	)
General Partner Units	39			819
Total	$	—		$	—
Assumption of Indebtedness and Other Liabilities in Connection with the Acquisition of Real Estate	$	1,138		$	5,227
Accounts Payable Related to Construction in Progress and Additions to Investment in Real Estate	$	23,247		$	28,788
Write-off of Fully Depreciated Assets	$	(27,455	)	$	(34,360	)

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

FIRST INDUSTRIAL REALTY TRUST, INC. AND FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; dollars in thousands, except per share and Unit data)

1. Organization

First Industrial Realty Trust, Inc. (the "Company") is a self-administered and fully integrated real estate company which owns, manages, acquires, sells, develops and redevelops industrial real estate. The Company is a Maryland corporation organized on August 10, 1993 and a real estate investment trust ("REIT") as defined in the Internal Revenue Code of 1986. Unless stated otherwise or the context otherwise requires, the terms "we," "our" and "us" refer to the Company and its subsidiaries, including its operating partnership, First Industrial, L.P. (the "Operating Partnership"), and its consolidated subsidiaries.

We began operations on July 1, 1994. The Company's operations are conducted primarily through the Operating Partnership, of which the Company is the sole general partner (the "General Partner"), with an approximate 96.7% ownership interest ("General Partner Units") at September 30, 2017. The Operating Partnership also conducts operations through eight other limited partnerships (the "Other Real Estate Partnerships"), numerous limited liability companies ("LLCs") and certain taxable REIT subsidiaries ("TRSs"), the operating data of which, together with that of the Operating Partnership, is consolidated with that of the Company as presented herein. The Operating Partnership holds at least a 99% limited partnership interest in each of the Other Real Estate Partnerships. The general partners of the Other Real Estate Partnerships are separate corporations, wholly-owned by the Company, each with at least a .01% general partnership interest in the Other Real Estate Partnerships. The Company does not have any significant assets or liabilities other than its investment in the Operating Partnership and its 100% ownership interest in the general partners of the Other Real Estate Partnerships. Noncontrolling interest in the Operating Partnership of approximately 3.3% at September 30, 2017 represents the aggregate partnership interest held by the limited partners thereof ("Limited Partner Units" and together with the General Partner Units, the "Units").

Profits, losses and distributions of the Operating Partnership, the LLCs, the Other Real Estate Partnerships and the TRSs are allocated to the general partner and the limited partners, the members or the shareholders, as applicable, of such entities in accordance with the provisions contained within their respective organizational documents.

As of September 30, 2017, we owned 516 industrial properties located in 22 states, containing an aggregate of approximately 62.8 million square feet of gross leasable area ("GLA"). Of the 516 properties owned on a consolidated basis, none of them are directly owned by the Company.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the accounting policies described in the consolidated financial statements and related notes included in our annual report on Form 10-K for the year ended December 31, 2016 ("2016 Form 10-K") and should be read in conjunction with such consolidated financial statements and related notes. The 2016 year end consolidated balance sheet data included in this Form 10-Q filing was derived from the audited consolidated financial statements in our 2016 Form 10-K, but does not include all disclosures required by accounting principles generally accepted in the United States of America ("GAAP"). The following notes to these interim consolidated financial statements highlight significant changes to the notes included in the December 31, 2016 audited consolidated financial statements included in our 2016 Form 10-K and present interim disclosures as required by the Securities and Exchange Commission.

Use of Estimates

In order to conform with GAAP, in preparation of our consolidated financial statements we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of September 30, 2017 and December 31, 2016, and the reported amounts of revenues and expenses for the three and nine months ended September 30, 2017 and 2016. Actual results could differ from those estimates. In our opinion, the accompanying unaudited interim consolidated financial statements reflect all adjustments necessary for a fair statement of our financial position as of September 30, 2017 and December 31, 2016, the results of our operations and comprehensive income for each of the three and nine months ended September 30, 2017 and 2016, and our cash flows for each of the nine months ended September 30, 2017 and 2016. All adjustments are of a normal recurring nature.

Investment in Real Estate and Depreciation

Effective January 1, 2017, we adopted Accounting Standards Update ("ASU") No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business" ("ASU 2017-01"). ASU 2017-01 clarifies the framework for determining whether an integrated set of assets and activities meets the definition of a business. The revised framework establishes a screen for determining whether an integrated set of assets and activities is a business and narrows the definition of a business, which is expected to result in fewer transactions being accounted for as business combinations. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset acquisitions. We applied ASU 2017-01 prospectively. We anticipate that our acquisitions of real estate in the future will generally not meet the definition of a business combination and, accordingly; transaction costs which have historically been expensed will be capitalized as part of the basis of the real estate assets acquired.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 requires entities to recognize revenue when they transfer promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual periods beginning after December 15, 2017. We will adopt the new standard effective January 1, 2018 and expect to utilize the modified retrospective approach upon adoption. While lease contracts with customers, which constitute a vast majority of our revenues, are a specific scope exception, certain of our revenue streams may be impacted by the new guidance, however we do not believe there will be a material financial statement impact or that our pattern of revenue recognition will be materially impacted by the adoption of ASU 2014-09.

In February 2016, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2016-02, "Leases" ("ASU 2016-02"), which amends the existing accounting standards for lease accounting and sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract. Under ASU 2016-02, lessees will be required to record a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term and a lease liability, which is a lessee’s right to use, or control the use of, a specified asset for the lease term. We are a lessee on certain ground and operating leases as disclosed in Note 14 to the consolidated financial statements in our 2016 Form 10-K. While we expect to record a right-of-use asset and lease liability upon adoption of this standard, we anticipate the impact will not be material to our overall financial condition and results of operations. We are the lessor on a significant number of leases, however, we believe that ASU 2016-02 will have minimal impact to our financial condition or results of operations as leases where we are the lessor will continue to be accounted for as operating leases. The most significant changes ASU 2016-02 will have to lessor accounting will be the requirement that lessors expense certain initial direct costs that are not incremental in negotiating a lease as incurred as well bifurcating lease generated revenue into lease and non-lease components. ASU 2016-02 requires the use of a modified retrospective approach for all leases existing at, or entered into after, the beginning of the earliest period presented in the consolidated financial statements, with certain practical expedients available. If practical expedients are elected, we would not be required to reassess (1) whether an expired or existing contract meets the definition of a lease; (2) the lease classification for expired or existing leases; and (3) whether costs previously capitalized as initial direct costs would continue to be amortized. We are continuing the process of evaluating and quantifying the effect that ASU 2016-02 will have on our consolidated financial statements and related disclosures. We will adopt ASU 2016-02 on January 1, 2019 and anticipate electing the practical expedients.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” ("ASU 2016-15"). ASU 2016-15 addresses eight specific cash flow issues and intends to reduce the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for annual periods beginning after December 15, 2017 with retrospective application required. We expect ASU 2016-15 to impact the presentation of our consolidated statement of cash flows and we will adopt ASU 2016-15 on January 1, 2018.

In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash" ("ASU 2016-18"). ASU 2016-18 requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash and restricted cash equivalents when reconciling the beginning- of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for annual periods beginning after December 15, 2017. We expect ASU 2016-18 to impact the presentation of our consolidated statement of cash flows and we will adopt ASU 2016-18 on January 1, 2018.

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeting Improvements to Accounting for Hedging Activities” (“ASU 2017-12”). ASU 2017-12 is intended to better align financial reporting for hedging activities with the economic objectives of those activities. As a result of the transition guidance, cumulative ineffectiveness that has been previously recognized on cash flow and net investment hedges that are still outstanding and designated as of the date of adoption will be adjusted and removed from beginning retained earnings and placed in accumulated other comprehensive income. ASU 2017-12 is effective for annual periods beginning after December 15, 2018. We continue to assess all the potential impacts of ASU 2017-12, however, we do not expect the adoption to have a material impact on our financial condition or results of operations.

3. Investment in Real Estate

REIT Acquisition

On August 15, 2017, via a stock purchase agreement, we acquired a private real estate investment trust that owns one industrial property consisting of 0.2 million square feet of GLA from a third party seller in exchange for $20,962, exclusive of closing costs and credits (“REIT Acquisition”). As part of the REIT Acquisition, we acquired 100% of the private REIT’s common stock.

Acquisitions

During the nine months ended September 30, 2017, we acquired six industrial properties comprised of approximately 0.9 million square feet of GLA (inclusive of the REIT Acquisition) and several land parcels. The following table summarizes the amounts recognized for each major class of asset and liability for the industrial properties and land parcels acquired during the nine months ended September 30, 2017:



	Purchase Price			Weighted Average Life (in Months)
Land	$	90,429		N/A
Building and Improvements	61,973			(A)
Other Assets	1,195			(B)
In-Place Leases	6,670			70
Above Market Leases	127			34
Below Market Leases	(1,420		)	85
Total Purchase Price (C)	$	158,974

(A) See Note 2 to the consolidated financial statements in our 2016 Form 10-K for the disclosure of useful lives of our Investment in Real Estate and our Depreciation policy.

(B) Represents leasing commissions, which are included in prepaid expenses and other assets, net on the consolidated balance sheets and amortized over the remaining term of each lease.

The revenue and net income associated with the acquisition of the industrial properties, since their respective acquisition dates, are not significant for the nine months ended September 30, 2017.

Real Estate Held for Sale

As of September 30, 2017, we had eight industrial properties comprised of approximately 1.1 million square feet of GLA and one land parcel held for sale.

Sales

During the nine months ended September 30, 2017, we sold 30 industrial properties comprised of approximately 1.9 million square feet of GLA. Gross proceeds from the sales of these industrial properties were $99,279. The gain on sale of real estate was $52,140.

4. Indebtedness

The following table discloses certain information regarding our indebtedness:



	Outstanding Balance at						Interest Rate at September 30, 2017	Effective Interest Rate at Issuance	Maturity Date
	September 30, 2017			December 31, 2016			Interest Rate at September 30, 2017	Effective Interest Rate at Issuance	Maturity Date
Mortgage Loans Payable, Gross	$	454,283		$	498,435		4.03% – 8.26%	3.82% – 8.26%	June 2018 – September 2022
Unamortized Deferred Financing Costs	(2,033		)	(2,905		)
Unamortized Premiums	301			426
Mortgage Loans Payable, Net	$	452,551		$	495,956
Senior Unsecured Notes, Gross
2017 Notes	54,981			54,981			7.50%	7.52%	12/1/2017
2027 Notes	6,070			6,070			7.15%	7.11%	5/15/2027
2028 Notes	31,901			31,901			7.60%	8.13%	7/15/2028
2032 Notes	10,600			10,600			7.75%	7.87%	4/15/2032
2017 II Notes	—			101,871			N/A	N/A	5/15/2017
2027 Private Placement Notes	125,000			—			4.30%	4.30%	4/20/2027
2029 Private Placement Notes	75,000			—			4.40%	4.40%	4/20/2029
Subtotal	$	303,552		$	205,423
Unamortized Deferred Financing Costs	(1,864		)	(320		)
Unamortized Discounts	(86		)	(105		)
Senior Unsecured Notes, Net	$	301,602		$	204,998
Unsecured Term Loans, Gross
2014 Unsecured Term Loan (A)	$	200,000		$	200,000		3.99%	N/A	1/29/2021
2015 Unsecured Term Loan (A)	260,000			260,000			3.39%	N/A	9/12/2022
Subtotal	$	460,000		$	460,000
Unamortized Deferred Financing Costs	(2,862		)	(3,362		)
Unsecured Term Loans, Net	$	457,138		$	456,638
Unsecured Credit Facility (B)	$	157,000		$	189,500		2.39%	N/A	3/11/2019

(A) The interest rate at September 30, 2017 reflects the interest rate protection agreements we entered into to effectively convert the variable rate to a fixed rate. See Note 10.

(B) The maturity date may be extended an additional year at our election, subject to certain restrictions. Amounts exclude unamortized deferred financing costs of $1,881 and $2,876 as of September 30, 2017 and December 31, 2016, respectively, which are included in prepaid expenses and other assets on the consolidated balance sheets.

Mortgage Loans Payable, Net

During the nine months ended September 30, 2017, we paid off mortgage loans in the amount of $36,108. In connection with the mortgage loans paid off during the nine months ended September 30, 2017, we recognized $1,653 as loss from retirement of debt representing prepayment penalties and the write-off of unamortized deferred financing costs.

As of September 30, 2017, mortgage loans payable are collateralized, and in some instances cross-collateralized, by industrial properties with a net carrying value of $580,202. We believe the Operating Partnership and the Company were in compliance with all covenants relating to mortgage loans as of September 30, 2017.

Senior Unsecured Notes, Net

During the nine months ended September 30, 2017, the Operating Partnership issued $125,000 of 4.30% Series A Guaranteed Senior Notes due April 20, 2027 (the “2027 Private Placement Notes”) and $75,000 of 4.40% Series B Guaranteed Senior Notes due April 20, 2029 (the “2029 Private Placement Notes”) (collectively, the "Private Placement Notes") in a private placement pursuant to a Note and Guaranty Agreement dated February 21, 2017. The 2027 Private Placement Notes and the 2029 Private Placement Notes are unsecured obligations of the Operating Partnership that are fully and unconditionally guaranteed by the Company and require semi-annual interest payments.

Additionally, during the nine months ended September 30, 2017, we paid off and retired our 2017 II Notes (as described in the table above), at maturity in the amount of $101,871.

Indebtedness

The following is a schedule of the stated maturities and scheduled principal payments of our indebtedness, exclusive of premiums, discounts and deferred financing costs, for the next five years as of September 30, and thereafter:



	Amount
Remainder of 2017	$	57,662
2018	165,449
2019	236,329
2020	58,762
2021	266,818
Thereafter	589,815
Total	$	1,374,835

Our unsecured credit facility (the "Unsecured Credit Facility"), the Unsecured Term Loans (as defined in Note 10), the Private Placement Notes and the indentures governing our senior unsecured notes contain certain financial covenants, including limitations on incurrence of debt and debt service coverage. Under the Unsecured Credit Facility and the Unsecured Term Loans an event of default can occur if the lenders, in their good faith judgment, determine that a material adverse change has occurred which could prevent timely repayment or materially impair our ability to perform our obligations under the loan agreements. We believe that the Operating Partnership and the Company were in compliance with all covenants relating to the Unsecured Credit Facility, the Unsecured Term Loans, the Private Placement Notes and indentures governing our senior unsecured notes as of September 30, 2017. However, these financial covenants are complex and there can be no assurance that these provisions would not be interpreted by our lenders and noteholders in a manner that could impose and cause us to incur material costs.

Fair Value

At September 30, 2017 and December 31, 2016, the fair value of our indebtedness was as follows:



	September 30, 2017				December 31, 2016
	Carrying Amount (A)		Fair Value		Carrying Amount (A)		Fair Value
Mortgage Loans Payable, Net	$	454,584	$	466,999	$	498,861	$	513,540
Senior Unsecured Notes, Net	303,466		325,580		205,318		222,469
Unsecured Term Loans	460,000		468,089		460,000		458,602
Unsecured Credit Facility	157,000		157,116		189,500		189,500
Total	$	1,375,050	$	1,417,784	$	1,353,679	$	1,384,111

(A) The carrying amounts include unamortized premiums and discounts and exclude unamortized deferred financing costs.

The fair values of our mortgage loans payable were determined by discounting the future cash flows using the current rates at which similar loans would be made based upon similar remaining maturities. The current market rates we utilized were internally estimated. The fair value of the senior unsecured notes were determined by using rates, as advised by our bankers, that are based upon recent trades within the same series of the senior unsecured notes, recent trades for senior unsecured notes with comparable maturities, recent trades for fixed rate unsecured notes from companies with profiles similar to ours, as well as overall economic conditions. The fair value of the Unsecured Credit Facility and the Unsecured Term Loans was determined by discounting the future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining term, assuming no repayment until maturity. We have concluded that our determination of fair value for each of our mortgage loans payable, senior unsecured notes, the Unsecured Term Loans and the Unsecured Credit Facility was primarily based upon Level 3 inputs.

5. Variable Interest Entities

The Other Real Estate Partnerships are variable interest entities ("VIEs") of the Operating Partnership and the Operating Partnership is the primary beneficiary, thus causing the Other Real Estate Partnerships to be consolidated by the Operating Partnership. In addition, the Operating Partnership is a VIE of the Company and the Company is the primary beneficiary.

The following table summarizes the assets and liabilities of the Other Real Estate Partnerships included in our consolidated balance sheets, net of intercompany amounts:



	September 30, 2017		December 31, 2016
ASSETS
Assets:
Net Investment in Real Estate	$	279,626	$	278,398
Other Assets, Net	23,976		24,401
Total Assets	$	303,602	$	302,799
LIABILITIES AND PARTNERS’ CAPITAL
Liabilities:
Mortgage Loans Payable, Net	$	61,586	$	70,366
Other Liabilities, Net	9,602		9,138
Partners’ Capital	232,414		223,295
Total Liabilities and Partners’ Capital	$	303,602	$	302,799

6. Stockholders’ Equity of the Company and Partners' Capital of the Operating Partnership

Issuance of Shares of Common Stock

During the nine months ended September 30, 2017, the Company issued 2,560,000 shares of the Company's common stock in an underwritten public offering. Proceeds to the Company, net of the underwriter's discount, were $74,880. The proceeds were contributed to the Operating Partnership in exchange for General Partner Units and are reflected in the financial statements as a general partner contribution.

Increased Authorized Shares of Common Stock

On May 11, 2017, we filed an amendment to the Company’s articles of incorporation, increasing the number of shares of the Company’s common stock authorized for issuance from 150 million to 225 million shares.

Noncontrolling Interest of the Company

The following table summarizes the changes in noncontrolling interest for the Company for the nine months ended September 30, 2017 and 2016:



	2017			2016
Balance as of December 31	$	43,184		$	42,035
Net Income	3,531			3,635
Unit Distributions	(2,544		)	(2,436		)
Other Comprehensive Income	51			(449		)
Conversion of Limited Partner Units to Common Stock (A)	(39		)	(819		)
Reallocation - Additional Paid-in-Capital	1,569			2,489
Reallocation - Other Comprehensive Income	3			—
Balance as of September 30	$	45,755		$	44,455

(A) For the nine months ended September 30, 2017 and 2016, 3,437 and 76,674 Limited Partner Units, respectively, were converted into an equivalent number of shares of common stock of the Company, resulting in a reclassification of $39 and $819, respectively, of noncontrolling interest to the Company’s stockholders’ equity.

Noncontrolling Interest of the Operating Partnership

The following table summarizes the changes in noncontrolling interest for the Operating Partnership for the nine months ended September 30, 2017 and 2016:



	2017			2016
Balance as of December 31	$	956		$	1,096
Net Income	96			112
Contributions	29			114
Distributions	(284		)	(264		)
Balance as of September 30	$	797		$	1,058

Dividends/Distributions

During the nine months ended September 30, 2017, we declared $77,923 common stock dividends and Unit distributions.

7. Accumulated Other Comprehensive Loss

The following table summarizes the changes in accumulated other comprehensive loss by component for the Company and the Operating Partnership for the nine months ended September 30, 2017:



	Interest Rate Protection Agreements			Accumulated Other Comprehensive Loss of the Operating Partnership			Comprehensive Loss Attributable to Noncontrolling Interest of the Company			Accumulated Other Comprehensive Loss of the Company
Balance as of December 31, 2016	$	(4,804	)	$	(4,804	)	$	161		(4,643		)
Other Comprehensive Income Before Reclassifications	(2,122		)	(2,122		)	(54		)	(2,176		)
Amounts Reclassified from Accumulated Other Comprehensive Loss	3,666			3,666			—			3,666
Net Current Period Other Comprehensive Income	1,544			1,544			(54		)	1,490
Balance as of September 30, 2017	$	(3,260	)	$	(3,260	)	$	107		$	(3,153	)

The following table summarizes the reclassifications out of accumulated other comprehensive loss for both the Company and the Operating Partnership for the nine months ended September 30, 2017 and 2016:



	Amounts Reclassified from Accumulated Other Comprehensive Loss
Details about Accumulated Other Comprehensive Loss Components	Three Months Ended September 30, 2017		Three Months Ended September 30, 2016		Nine Months Ended September 30, 2017		Nine Months Ended September 30, 2016		Affected Line Items in the Consolidated Statements of Operations
Interest Rate Protection Agreements:
Amortization of Interest Rate Protection Agreements (Previously Settled)	$	24	$	96	$	180	$	294	Interest Expense
Settlement Payments to our Counterparties	912		1,774		3,486		5,425		Interest Expense
Total	$	936	$	1,870	$	3,666	$	5,719

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in other comprehensive income (loss) and is subsequently reclassified to earnings through interest expense over the life of the derivative or over the life of the debt. In the next 12 months, we expect to amortize approximately $95 into net income by increasing interest expense for interest rate protection agreements we settled in previous periods. Additionally, recurring settlement amounts on the 2014 Swaps and 2015 Swaps (as defined in Note 10) will also be reclassified to net income. See Note 10 for more information about our derivatives.

8. Earnings Per Share and Earnings Per Unit ("EPS"/"EPU")

The computation of basic and diluted EPS of the Company is presented below:



	Three Months Ended September 30, 2017			Three Months Ended September 30, 2016			Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
Numerator:
Net Income Available to First Industrial Realty Trust, Inc.’s Common Stockholders and Participating Securities	$	43,198		$	31,519		$	103,469		$	97,436
Net Income Allocable to Participating Securities	(145		)	(110		)	(327		)	(329		)
Net Income Available to First Industrial Realty Trust, Inc.’s Common Stockholders	$	43,053		$	31,409		$	103,142		$	97,107
Denominator (In Thousands):
Weighted Average Shares - Basic	119,446			116,467			117,870			114,491
Effect of Dilutive Securities:
LTIP Unit Awards (As Defined in Note 9)	544			397			482			318
Weighted Average Shares - Diluted	119,990			116,864			118,352			114,809
Basic EPS:
Net Income Available to First Industrial Realty Trust, Inc.’s Common Stockholders	$	0.36		$	0.27		$	0.88		$	0.85
Diluted EPS:
Net Income Available to First Industrial Realty Trust, Inc.’s Common Stockholders	$	0.36		$	0.27		$	0.87		$	0.85

The computation of basic and diluted EPU of the Operating Partnership is presented below:



	Three Months Ended September 30, 2017			Three Months Ended September 30, 2016			Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
Numerator:
Net Income Available to Unitholders and Participating Securities	$	44,613		$	32,630		$	106,904		$	100,959
Net Income Allocable to Participating Securities	(145		)	(110		)	(327		)	(328		)
Net Income Available to Unitholders	$	44,468		$	32,520		$	106,577		$	100,631
Denominator (In Thousands):
Weighted Average Units - Basic	123,483			120,740			121,909			118,781
Effect of Dilutive Securities that Result in the Issuance of General Partner Units:
LTIP Unit Awards (As Defined in Note 9)	544			397			482			318
Weighted Average Units - Diluted	124,027			121,137			122,391			119,099
Basic EPU:
Net Income Available to Unitholders	$	0.36		$	0.27		$	0.87		$	0.85
Diluted EPU:
Net Income Available to Unitholders	$	0.36		$	0.27		$	0.87		$	0.84

Participating securities include 401,217 and 406,855 of unvested restricted stock or restricted Unit awards outstanding at September 30, 2017 and 2016, respectively, which participate in non-forfeitable distributions. Under the two class method, participating security holders are allocated income, in proportion to total weighted average shares or Units outstanding, based upon the greater of net income or common stock dividends or Unit distributions declared.

9. Benefit Plans

Restricted Stock or Restricted Unit Awards

For the nine months ended September 30, 2017, the Company awarded 252,213 shares of restricted stock awards to certain employees, which had an aggregate fair value of $6,631 on the date such awards were approved by the Compensation Committee of the Board of Directors. These restricted stock awards were granted based upon the achievement of certain corporate performance goals and generally vest over a period of three years. Additionally, during the nine months ended September 30, 2017, the Company awarded 15,108 shares of restricted stock to non-employee members of the Board of Directors, which had an aggregate fair value of $420 on the date of approval. These restricted stock awards vest over a one-year period. The Operating Partnership issued restricted Unit awards to the Company in the same amount for both restricted stock awards.

Compensation expense is charged to earnings over the vesting periods for the restricted stock or restricted Unit awards expected to vest except if the recipient is not required to provide future service in exchange for vesting of such restricted stock or restricted Unit awards. If vesting of a recipient's restricted stock or restricted Unit awards is not contingent upon future service, the expense is recognized immediately at the date of grant. During both the nine months ended September 30, 2017 and 2016, we recognized $1,590 of compensation expense related to restricted stock or restricted Unit awards granted to our former Chief Executive Officer for which future service was not required.

LTIP Unit Awards

For the nine months ended September 30, 2017, the Company granted to certain employees 195,951 Long-Term Incentive Program ("LTIP") performance units ("LTIP Unit Awards"), which had a fair value of $2,473 on the grant date as determined by a lattice-binomial option-pricing model based on a Monte Carlo simulation. The LTIP Unit Awards vest based upon the relative total shareholder return ("TSR") of the Company's common stock compared to the TSRs of the MSCI US REIT Index and the NAREIT Industrial Index over a performance period of three years. Compensation expense is charged to earnings on a straight-line basis over the performance period. At the end of the performance period each participant will be issued shares of the Company's common stock equal to the maximum shares issuable to the participant for the performance period multiplied by a percentage, ranging from 0% to 100%, based on the Company's TSR as compared to the TSRs of the MSCI US REIT Index and the NAREIT Industrial Index. The Operating Partnership issues General Partner Units to the Company in the same amounts for vested LTIP Unit Awards.

Outstanding Restricted Stock or Restricted Unit Awards and LTIP Unit Awards

We recognized $1,844 and $1,428 for the three months ended September 30, 2017 and 2016, respectively and $6,767 and $5,898 for the nine months ended September 30, 2017 and 2016 respectively, in amortization related to restricted stock or restricted Unit awards and LTIP Unit Awards. Restricted stock or restricted Unit award and LTIP Unit Award amortization capitalized in connection with development activities was not significant. At September 30, 2017, we had $9,629 in unrecognized compensation related to unvested restricted stock or restricted Unit awards and LTIP Unit Awards. The weighted average period that the unrecognized compensation is expected to be recognized is 0.94 years.

10. Derivatives

Our objectives in using derivatives are to add stability to interest expense and to manage our cash flow volatility and exposure to interest rate movements. To accomplish this objective, we primarily use interest rate protection agreements as part of our interest rate risk management strategy. Interest rate protection agreements designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

Our agreements with our derivative counterparties contain provisions whereby a default on any of our indebtedness, could cause us to be declared in default on our derivative obligations subject to certain thresholds. As of September 30, 2017, we had not posted any collateral related to these agreements and were not in breach of any of the provisions of these agreements. If we had breached these agreements, we could have been required to settle our obligations under the agreements at their termination value.

Fair Value Hedges

In connection with the originations of the seven-year, $200,000 unsecured loan (the "2014 Unsecured Term Loan") and the seven-year, $260,000 unsecured loan (the "2015 Unsecured Term Loan" and together with the 2014 Unsecured Term Loan, the "Unsecured Term Loans") (See Note 4) , we entered into interest rate protection agreements to manage our exposure to changes in the one month LIBOR rate. The four interest rate protection agreements, which fix the variable rate of the 2014 Unsecured Term Loan, have an aggregate notional value of $200,000, mature on January 29, 2021 and fix the LIBOR rate at a weighted average rate of 2.29% (the "2014 Swaps"). The six interest rate protection agreements, which fix the variable rate of the 2015 Unsecured Term Loan, have an aggregate notional value of $260,000, mature on September 12, 2022 and fix the LIBOR rate at a weighted average rate of 1.79% (the "2015 Swaps"). We designated the 2014 Swaps and 2015 Swaps as cash flow hedges.

Derivative Instruments Not Designated for Hedge Accounting Treatment

In September 2017, we entered into two interest rate protection agreements (the "Treasury Locks"), with an aggregate notional value of $100,000, in order to fix the interest rate on an anticipated unsecured debt offering. The Treasury Locks fix the ten year U.S. Treasury rate at a weighted average rate of approximately 2.18% and are required to be cash settled by March 2, 2018. Due to the strict requirements surrounding the application of hedge accounting, we elected not to designate the Treasury Locks as hedges. As such, the full change in the fair value of the Treasury Locks during the third quarter is recorded as a mark-to-market gain on interest rate protection agreements within the income statement as opposed to being recorded in other comprehensive income. For the three months ended September 30, 2017, we recognized $1,848 in mark-to-market gain on interest rate protection agreements related to the Treasury Locks.

The following table sets forth our financial assets and liabilities related to the 2015 Swaps and the Treasury Locks, which are included in prepaid expenses and other assets on the consolidated balance sheets, and the 2014 Swaps, which are included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheets, and all of which are accounted for at fair value on a recurring basis as of September 30, 2017:



				Fair Value Measurements at Reporting Date Using:
Description	Fair Value			Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)			Unobservable Inputs (Level 3)
Derivatives designated as a hedging instrument:
Assets:
2015 Swaps	$	1,174		—	$	1,174		—
Liabilities:
2014 Swaps	$	(3,405	)	—	$	(3,405	)	—

Derivatives not designated as a hedging instrument:
Assets:
Treasury Locks	$	1,848		—	$	1,848		—

There was no ineffectiveness recorded on the 2014 Swaps and 2015 Swaps during the nine months ended September 30, 2016. See Note 7 for more information regarding our derivatives.

The estimated fair value of the 2014 Swaps, 2015 Swaps and the Treasury Locks was determined using the market standard methodology of netting the discounted fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of interest rates (forward curves) derived from observable market interest rate curves. In addition, credit valuation adjustments are incorporated in the fair value to account for potential non-performance risk, including our own non-performance risk and the respective counterparty’s non-performance risk. We determined that the significant inputs used to value the 2014 Swaps, the 2015 Swaps and the Treasury Locks fell within Level 2 of the fair value hierarchy.

11. Related Party Transactions

At September 30, 2017 and December 31, 2016, the Operating Partnership had receivable balances of $10,194 and $10,448, respectively, from a direct wholly-owned subsidiary of the Company.

12. Commitments and Contingencies

In the normal course of business, we are involved in legal actions arising from the ownership of our industrial properties. In our opinion, the liabilities, if any, that may ultimately result from such legal actions are not expected to have a materially adverse effect on our consolidated financial position, operations or liquidity.

In conjunction with the development of industrial properties, we have entered into agreements with general contractors for the construction of industrial properties. At September 30, 2017, we had nine industrial properties totaling approximately 2.7 million square feet of GLA under construction. The estimated total investment as of September 30, 2017 is approximately $192,600. Of this amount, approximately $120,900 remains to be funded. There can be no assurance that the actual completion cost will not exceed the estimated total investment.

During the year ended December 31, 2016, a fire significantly destroyed one industrial property totaling approximately 0.03 million square feet of GLA located in San Diego, California (the “2016 Fire”). In a separate event, on April 3, 2017, a fire caused significant damage to one industrial property totaling approximately 0.08 million square feet of GLA located in Los Angeles, California (the “2017 Fire”). During the respective periods in which the fires occurred, we wrote off the unamortized net book value of the building improvements for the damaged portions of the industrial properties and recorded a receivable from our insurance company for the amount of the write off, less our $25 deductible per occurrence. As of September 30, 2017, we have an aggregate receivable outstanding from the insurance company for both the 2016 Fire and the 2017 Fire of $8,830. While we believe the damages incurred due to the 2016 Fire and 2017 Fire are fully insured and reimbursable in accordance with our insurance policies, subject to the deductibles, there can be no assurance that the cost to repair the damages will be collected.

13. Subsequent Events

From October 1, 2017 to October 26, 2017, we sold nine industrial properties for approximately $54,075.

From October 1, 2017 to October 26, 2017, we acquired one industrial property for a purchase price of approximately $8,235, excluding costs and credits incurred in conjunction with the acquisition of the property.



Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Form 10-Q. Unless stated otherwise or the context otherwise requires, the terms "we," "our" and "us" refer to First Industrial Realty Trust, Inc. (the "Company") and its subsidiaries, including First Industrial, L.P. (the "Operating Partnership") and its consolidated subsidiaries.

Forward-Looking Statements

The following discussion may contain 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 (the "Exchange Act"). We intend for 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. Forward-looking statements are based on certain assumptions and describe our future plans, strategies and expectations, and are generally identifiable by use of the words "believe," "expect," "plan," "intend," "anticipate," "estimate," "project," "seek," "target," "potential," "focus," "may," "will," "should" or similar words. Although we believe the expectations reflected in forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be attained or that results will not materially differ. Factors which could have a materially adverse effect on our operations and future prospects include, but are not limited to:


•	changes in national, international, regional and local economic conditions generally and real estate markets specifically;


•	changes in legislation/regulation (including changes to laws governing the taxation of real estate investment trusts) and actions of regulatory authorities;


•	our ability to qualify and maintain our status as a real estate investment trust;


•	the availability and attractiveness of financing (including both public and private capital) and changes in interest rates;


•	the availability and attractiveness of terms of additional debt repurchases;


•	changes in our credit agency ratings;


•	our ability to comply with applicable financial covenants;


•	our competitive environment;


•	changes in supply, demand and valuation of industrial properties and land in our current and potential market areas;


•	difficulties in identifying and consummating acquisitions and dispositions;


•	our ability to manage the integration of properties we acquire;


•	potential liability relating to environmental matters;


•	defaults on or non-renewal of leases by our tenants;


•	decreased rental rates or increased vacancy rates;


•	higher-than-expected real estate construction costs and delays in development or lease-up schedules;


•	changes in general accounting principles, policies and guidelines applicable to real estate investment trusts; and


•	other risks and uncertainties described in this report, in Item 1A, "Risk Factors" and elsewhere in our annual report on Form 10-K for the year ended December 31, 2016 as well as those risks and uncertainties discussed from time to time in our other Exchange Act reports and in our other public filings with the Securities and Exchange Commission (the “SEC”).

We caution you not to place undue reliance on forward-looking statements, which reflect our outlook only and speak only as of the date of this report. We assume no obligation to update or supplement forward-looking statements.

General

The Company is a self-administered and fully integrated real estate company which owns, manages, acquires, sells, develops and redevelops industrial real estate. The Company is a Maryland corporation organized on August 10, 1993 and a real estate investment trust ("REIT") as defined in the Internal Revenue Code of 1986 (the "Code").

We began operations on July 1, 1994. The Company's operations are conducted primarily through the Operating Partnership