First Industrial Realty Trust, Inc.

Good morning. My name is Sia, and I will be the conference operator today. At this time, I would like to welcome everyone to the first industrial 4Q and full year 20 results conference call. 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 that time, simply press star and the number 1 on your telephone keypad. To withdraw the question, press the pound key. Thank you. At this time, I would like to turn the conference over to Art Harmon. Please go ahead.

Thank you, Tia. Hello, everybody, and welcome to our call. Before we discuss our fourth quarter and full year 2020 results, as well as 2021 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, February 11, 2021. 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 Investor Stat. 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. Now let me turn the call over to Peter.

Thanks, Art, and thank you all for joining us. We hope you're doing well and staying healthy. 2020 was a year unlike any other and one which we would each like to put in our very distant memory. Notwithstanding the turmoil, fear, and uncertain operating environment, the FMR team remained focused, executed the plan, and performed admirably, generating outstanding results for shareholders. Our portfolio performance was strong. We maintained high occupancy levels, grew cash rents, and collected over 99% of billed rents. More on that in a moment. We capped off 2020 with an excellent fourth quarter. We delivered year-end occupancy of 95.7%, up 70 basis points from the guidance midpoint provided on our third quarter call. This was driven primarily by leasing at our developments and one of our replacement tenants in Southern California taking occupancy earlier than anticipated. For the full year, we grew cash rental rates 13.5%, which is the second highest in our company's history, just behind the 13.9% growth we achieved in 2019. These metrics reflect consistently strong tenant demand for high-quality logistics space. In our markets, we're seeing well-located and highly functional space being absorbed by e-commerce and other traditional users in their efforts to optimize supply chains. The positive fourth quarter leasing statistics nationally are consistent with our own experience, as CBRE's preliminary figure for net absorption is 104 million square feet, the highest quarterly result in the last four years, and exceeding the 69 million square feet of 4Q completions. For the full year, net absorption was 224 million square feet, 15% higher than 2019. Completions were 265 million square feet, an increase of 10%, over 2019. In 2021, we expect to capitalize on our current land holdings as well as new acquisitions to generate more growth and value creation. We're also focused on making progress in realizing the three-year cash flow growth opportunity we laid out for you at our investor day this past November. I'm pleased to say we're off to a strong start as we've signed leases for approximately 54% of our 2021 rollovers and a cash rental rate increase of approximately 13%. This early performance is consistent with the 10 to 14% increase we expect on our new and renewal leasing for the full year 2021. Our expirations for the balance of 2021 are fairly granular, with our largest remaining rollover now a 400,000 square footer where the tenant is expected to vacate in May. I'd like to highlight several big leasing wins on some of our developments. As evidence of the strength of the South Florida market, we're pleased to announce we have signed a long-term lease for 100% of the three-building First Cypress Creek Commerce Center with a single e-commerce tenant. This project totals 377,000 square feet, and the lease commenced right at completion, on February 1st. Our total investment is $37.1 million, and our first year's stabilized cash yield is 6.6%. In the Inland Empire, at our first Redwood project, we signed and commenced leases for both the 358,000 and the 72,000 square foot facilities in the fourth quarter. And just this week, we fully leased the remaining 44,000 square foot building. Given our own experience and the strong market dynamics reflected in CBRE's fourth quarter update report, which shows the Inland Empire vacancy rate at 1.9%, we're excited to be readying our next start in that market, which I will discuss shortly. Also in the fourth quarter, in Dallas, we signed two leases at First Park 121 to bring a pair of buildings there to 100% occupancy. The first was for the remaining 101,000 square feet at the 434,000 square foot Building E, and the second was a 25,000 square foot expansion at Building B. Each of these leases is a reflection of the continued strong demand for high quality logistics space and the effort and talents of our leasing teams across the country. Turning to new development starts, we've broken ground on PD303 Building C in Phoenix on our wholly owned site. This 548,000 square foot cross dock facility is our fourth speculative development in this highly sought after size range since 2017. Each of our prior projects in this market was fully leased at or near completion. Total investment for this new development is approximately $42.6 million, with a targeted cash yield of 6.6%. Turning now to the new project in the Inland Empire I referenced. We are planning to break ground in the coming weeks on 1st Wilson I, a 303,000 square foot facility in the I-215 corridor of the Inland Empire. This is a $30.2 million development with a targeted completion at the end of December and a projected cash yield of 6.3%. Lastly, we will be starting a 500,000 square foot development in Nashville known as First Rockdale 4. The site is located within a park where we have successfully developed buildings over the years. Tennessee was among the fastest-growing states in the U.S. during 2020, and Nashville is its largest city. We've seen increased absorption and leafing activity for large distribution centers in this sub-market and are excited about this opportunity. Total investment is approximately $26.8 million, with a targeted cash yield of 7.2%. Summing up our development activity in 2020, we placed in service 10 buildings totaling 2.5 million square feet with an estimated investment of $222 million. These assets are 79% leased at an estimated cash yield of 7.2% upon full lease-up. This represents an expected overall margin of 58% to 68%, which is about $1 per share of NAV. One additional item of note regarding our highly successful JV in Phoenix. As we discussed on our third quarter call, we successfully leased the 644,000 square foot spec building at PV 303 to a single tenant. Upon completion in the fourth quarter, we negotiated the acquisition of our partner's interest in the building, reflecting a total purchase price of $42.6 million, which is net of our $5.2 million share of the joint venture's gain-on-sale and incentive fee. Moving now to dispositions, during the quarter we sold 15 properties for $97.1 million at an in-place cap rate of approximately 6.4%. In 2020, excluding the previously reported purchase option-related sale in Phoenix, we sold 1.9 million square feet for a total of 153.4 million, essentially at the midpoint of our target sales guidance range for the year. For 2021, our guidance for sales is 100 to 150 million. In the coming weeks, we anticipate selling a 664,000 square foot building in Houston, at a sales price of approximately $42 million. Given its very high probability of closing, we are including the impact of this sale in 2021 guidance. Aside from the first quarter sale I just mentioned, we expect the majority of the remaining 2021 sales to be back-end loaded. Based upon our strong 2020 performance and 2021 outlook, which Scott will discuss shortly. Our Board of Directors has declared a dividend of $0.27 per share for the first quarter of 2021. This is $1.08 per share annualized, which equates to an 8% increase from 2020. This dividend level represents a payout ratio of approximately 69% of our anticipated AFFO for 2021, as defined in our supplementals. To wrap it up, we had an excellent quarter to end the year on a high note. We're very excited about the strength of our platform and our future development pipeline, both of which position us well to benefit from continued strong fundamentals in the industrial market and to take advantage of the growth opportunities that are to come in 2021. With that, let me turn it over to Scott.