First Industrial Realty Trust, Inc.

Good morning. My name is Thea, and I will be the conference operator today. At this time, I would like to welcome everyone to the first industrial first quarter results conference. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star and the number one on your telephone keypad. If you would like to withdraw the question, press the pound key. Thank you. At this time, I would like to turn the conference over to Art Harmon, Vice President of Investor Relations and Marketing. Please go ahead, sir.

Thank you, Thea. Hello, everybody, and welcome to our call. Before we discuss our first quarter 2020 results and updated guidance, let me remind everyone 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 Thursday, April 23, 2020. 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 financials 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 Basile, our President and Chief Executive Officer, and Scott Musil, our Chief Financial Officer, after which we'll open it up for your questions. Also on the call today are Jojo Yap, our Chief Investment Officer, Peter Schultz, Executive Vice President, Chris Schneider, Senior Vice President of Operations, and Bob Walter, Senior Vice President of Capital Markets and Asset Management. One note before we begin. Our team is practicing social distancing as we conduct this call, so we apologize in advance for any slight gaps or delays we may experience, particularly when we get to the Q&A segment of our call. With that, let me turn the call over to Peter.

Thanks, Art, and thank you all for joining us today. I'd like to begin my remarks today by saying that the entire First Industrial team hope that you, your families, and loved ones have maintained your health while we all do what's necessary to get through COVID-19 together, hopefully sooner rather than later. With respect to measuring the eventual economic impact of COVID-19 and related stay-at-home orders in the US, it's still early. Over the coming months, as stay-at-home orders are reduced and eventually lifted, we will gain a wealth of knowledge about how our actions impacted outcomes. While it is still early, we are extremely pleased about not only our strong Q1 results, but especially about how our team has performed during the past six weeks. I'd like to thank my first industrial teammates who have risen to the occasion maintain high levels of productivity and responsiveness to our customers while largely working from home, and employing social distancing practices to protect our customers, our communities, and each other. Due to the shelter-in-place orders in most of the country, the virus has significantly impacted commerce. Unemployment has increased at an alarming rate in a short period of time, and the second quarter is likely to show a significant reduction in GDP. Prior to the shelter in place orders, the vast majority of our tenants' businesses were doing well. So we're hopeful that the overall economy and their businesses will bounce back as the social distancing restrictions are reduced or removed, whenever that may be. Moving now to our recent rent collection experience. I'll start by saying we value our tenants and our relationships with them. In an effort to get ahead of these conversations, in late March, we contacted a number of our tenants to make sure they were knowledgeable about the available financial relief programs from the government. In cases where our customers may not have had firmly established financial relationships, we referred them to one of our bank resources willing to assist them in the process. We also made an internal resource available to walk them through the loan application process. Through the end of March, we collected about 97% of our March billings, which was in line with what we experienced before COVID-19. For April billings, as of April 22nd, we have collected about 93%, which includes Pier 1. For April billings for which we have yet to receive payment, approximately two-thirds are in jurisdictions which currently have moratoriums on evictions, or evictions aren't being enforced, which is negatively impacting collection. Because we're in the early phases of experiencing the economic impact of COVID-19, it's prudent to include in our updated guidance an additional $1 million of reserves for bad debt, which Scott will walk through shortly. Moving now to rent relief requests from our tenants. Including those requests from clearly well-capitalized tenants, Total requests for rent relief in the form of rent deferral or abatement represented approximately 19% of our April billings. Excluding the well-capitalized tenants and only including tenants that asked for specific terms, this represents 8% of our April billings, of which approximately 85% had paid April rent. This subset occupies an average of 48,000 square feet and represent a broad range of industries. At this time, we've not granted rent relief and it's not clear how many tenants will legitimately require rent relief. We hope the range of information we've provided gives you an idea of what we are experiencing today. Needless to say, this is a point in time picture. We won't try to predict when infection rates will begin to decline and when or how the phase-out of the shelter-in-place restrictions will flow through to our tenants' businesses and financial health. Moving now to general activity in the leasing markets. Prior to COVID-19, there were a substantial number of new requirements across our markets, led by e-commerce and food-related businesses, but representing a broad range of uses. In our portfolio, as of April 22nd, we have signed 72% of our 2020 lease expirations, which is consistent with our experience the past several years. These signings have a cash rental rate increase of 8.4%. Over the past few weeks, we have seen leasing activity on most of our vacancies, but the pace around some of those conversations has slowed or paused. As a result, as part of our revised guidance, we have pushed out the leasing assumptions for two of our developments to the end of the year, which Scott will walk through shortly. We feel very good about the long-term prospects for our business. The COVID-19 virus has accelerated the adoption of e-commerce for many consumers for necessities as well as routine needs, which should boost future demand. We also expect an increase in inventories to provide cushion against product shortages due to supply chain shocks such as we are experiencing now. All in all, in the long run, these factors should drive incremental demand for industrial space. Moving to dispositions. We've closed on 13 million of sales in addition to the Tampa portfolio we closed in early February. Through today, we've closed on 40 million of sales this year on our way to meeting our 2020 sales guidance range of 125 to 175 million. As we noted on our last call, we expect sales to be back-end loaded in the year. Note that our sales guidance excludes the expected 55 million Phoenix sale in the third quarter in which the tenant exercised its purchase option in 2019. As always, our sales process is focused on maximizing value for shareholders while improving our cash flow growth profile. As we think about new investment opportunities at this point in time, we will continue to be judicious with our capital with a near-term emphasis on maintaining liquidity. We are proceeding with all of our developments in process, which totaled 1.5 million square feet and a total investment of 154 million at March 31st. At this time, we are not targeting any new speculative development starts. This includes the postponement of our planned summer start at First Park Miami, where we will continue to monitor the market. Due to the impact of COVID-19, we are seeing some delays in certain of our projects as contractors and suppliers deal with shutdown orders, social distancing requirements, slower approval and permitting, and other restrictions. Of this group, only our 100,000 square foot Philadelphia development has been halted entirely due to statewide restrictions on construction deemed non-essential, although those restrictions will be lifted as of May 8th, subject to forthcoming guidelines. As a result of these delays, you will see in our supplemental page 22 that we've adjusted some of our estimated completion dates accordingly. Let me recap some recent investment activity. In February, we were pleased to acquire Nottingham Ridge Logistics Center, a two-building development forward, totaling 751,000 square feet in the Greater Baltimore Industrial Market, where the sub-market vacancy is under 4%. The park has I-95 frontage and is located just 12 miles north of the Port of Baltimore at the intersection of Route 43. Today it is 15% pre-leased, and we are seeing good interest on the remainder of the space. Our total investment is estimated to be $82 million, with an expected cash yield of 5.7%. In the first quarter and second quarter to date, we also completed the acquisition of two buildings in the East Bay market of Northern California for a total purchase price of $14 million at a weighted average yield of 5.2%. The first property is a 39,000 square footer in Fremont, and the other is a 23,000 square foot building in Hayward. Both are in the I-880 corridor. The buildings are 58% occupied. We also acquired a 24,000 square foot building in Los Angeles in the South Bay that we plan to redevelop. The purchase price was $14.4 million. In the first quarter, in addition to the First Park Miami land, we also acquired a nine-acre site in Southern California in the Inland Empire East for $2 million that is developable to 189,000 square feet. On the development front, we placed in service our Ferrero built-to-suit development at PV 303, totaling 644,000 square feet, with a total investment of $53 million and a stabilized yield of 7.9%. With that, let me turn it over to Scott to discuss our results, our strong balance sheet position, and our updated guidance. Scott?