First Industrial Realty Trust, Inc.

Ladies and gentlemen, and thank you for standing by. Welcome to the first industrial first quarter 2021 results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there may be a question and answer session. To ask a question during the session, you will need to press star then 1 on your telephone keypad. As a reminder, this conference call is being recorded. If you require any further assistance, please press star then 0. At this time, I would like to turn the conference over to Mr. Art Harmon. Thank you. Sir, please begin.

Thank you, Howard. Hello, everybody, and welcome to our call. Before we discuss our first quarter 2021 results, as well as 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 22, 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 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, 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 were very pleased with our first quarter performance, and we are encouraged by the continuing strong economic growth supported by improving consumer confidence and significant government economic stimulus. Similar to our fourth quarter call, we continue to see exceptionally strong fundamentals in the industrial market, For the recent CBRE flash report, US industrial net absorption totaled 100 million square feet in the first quarter. This marks the first time ever that demand has exceeded 100 million square feet in consecutive quarters. Net absorption also significantly exceeded first quarter completions of 57 million square feet. As you would expect, in response to this demand, high occupancy levels, and strong rent growth, we are continuing to invest in new development projects, which I will discuss shortly. Before I recap first quarter results and activity, let me start by updating you on a couple of items since our last call. As we announced earlier this month, David Harker will be retiring as Executive Vice President of our Central Region, effective June 30th. David has been a valued member of the FR team since 1998 when he joined the company as our regional director in Nashville. He has served our company and our shareholders as head of our central region since 2009, helping to shape and grow our portfolio. We will miss Dave's enthusiasm, tenacity, and energy and wish him well in his retirement. With David's departure, we will consolidate our regional structure into two regions, with JoJo Yap and Peter Schultz each assuming responsibility for portions of David's region. Also during the first quarter, we were pleased to welcome Marcus Smith as the newest member of our board, where he will serve on our investment and nominating corporate governance committees. Marcus is the director of MCSI Inc. and was most recently the director of equity and the portfolio manager at MFS Investment Management. We also want to acknowledge Peter Sharp, who will be retiring from our board. Thank you, Peter, for your more than 10 years of value service to our company and our shareholders. Now moving on to our portfolio results for the quarter. Occupancy at quarter end was 95.7%, and cash same-store NOI growth was 2.2%. For the quarter, we grew cash rental rates 10.4%, and as of today, we have renewed approximately 72% of our 2021 expirations with a cash rental rate increase of 12.7%. Moving on to sales. During the quarter, we sold three properties and two condo units for $67 million at an in-place cap rate of approximately 8.4%. The vast majority of the sales total related to two larger properties leased at significantly above market rents to tenants we expect to move out. Thus far in the second quarter, we sold a land parcel for $11 million bringing our year-to-date total to $78 million, well on our way to our sales guidance of $100 to $150 million. Turning now to new investments. As we continue to seek out profitable opportunities, development remains our primary means of new investment to drive future cash flow growth. As most of you are aware, as part of our underwriting process and to manage risk, we operate with a self-imposed speculative leasing cap. Based on the strong fundamentals combined with the growth of our company, our balance sheet strength, portfolio performance, and our significant future growth opportunities, we believe it is prudent to increase our speculative leasing cap by $150 million to $625 million. When we first initiated this leasing cap nine years ago, It represented approximately 9% of our total market cap. The new cap level represents a similar percentage. Further, we are pleased to announce two new development projects scheduled to break ground in the second quarter. These are in addition to the three first quarter starts in the Inland Empire, Nashville, and Phoenix we told you about on our February earnings call. The first project is at our first Park 121 in Dallas, comprised of two buildings totaling 375,000 square feet with an estimated investment of $30 million and a targeted cash yield of 7%. This is the third and final phase of our park in Louisville, adding to the three previously completed buildings that total 779,000 square feet. We pre-leased the 125,000 square foot building, so we're 33% leased on the new phase prior to groundbreaking. The other start is the second building at our first Aurora Commerce Center project in the airport submarket of Denver. It's a 588,000 square footer adjacent to the 556,000 square foot building we completed in the third quarter of 2019, which was 100% leased within a couple months of completion. Estimated investment is 53 million with a targeted cash yield of 6%. This new building positions us well to serve the significant demand for larger spaces we are seeing in that market and we look forward to future growth at that park on our remaining land on which we can develop three additional buildings totaling approximately 700,000 square feet. Including these two new development starts, our developments in process today total 3.3 million square feet with a total estimated investment of $318 million. At a cash yield of 6.2%, our expected overall development margin on these projects is a healthy 45 to 55%. Moving on to acquisitions, during the quarter we bought one building and three land sites for a total purchase price of $24 million. The existing asset is a 62,000 square foot distribution facility in the Oakland submarket. The total purchase price was $12 million and the expected stabilized cash yield is 4.8%. The three new land sites total 16.6 acres and are located in the Lehigh Valley in Pennsylvania, the Inland Empire East, and the Oakland Market of Northern California. Total purchase price was $12 million, and these sites can accommodate up to 275,000 square feet of future development. In total, our balance sheet land today can support more than 10 million square feet of new investments And our two joint ventures can support 11 million square feet with our share around 5 million. So we're well positioned for future growth. As always, we continue to utilize the strength of our platform to secure profitable new investments. Our team is working around the clock to execute our capital deployment plan with a focus on growth. With that, let me turn it over to Scott.