First Industrial Realty Trust, Inc.

Ladies and gentlemen, thank you for standing by and to welcome to the first industrial fourth quarter earnings result conference call. At this time, our participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during that time, please press star one on your telephone keypad. To withdraw the question, please press the pound key. Please be advised that today's conference call is being recorded. Thank you. At this time, I'll return the call over to Art Harmon, Vice President of Investor Relations. So you may begin.

Thank you very much, Valerie. Hello, everybody, and welcome to our call. Before we discuss our fourth quarter and full year 2021 results and our guidance for 2022, 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, February 10, 2022. We assume no obligation to update our statements or the other information we provide. Actual results may differ materially from 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.

Thank you, Art, and thank you all for joining us today. Our outstanding fourth quarter results capped another excellent year as shown in our year-end occupancy rate of 98.1% and record cash rental rate growth of 16.2%. Thanks to every member of the FIRST Industrial team, for your commitment and many contributions to our success in 2021. We enter 2022 with great momentum and strong enthusiasm for our cash flow growth and value creation opportunities. Those opportunities are embedded within our portfolio and our sizable and highly profitable development pipeline, along with our well-located land positions that will be the source of significant future growth. I will touch on each of these areas shortly, but before I do, let me update you on the strength of the U.S. industrial market. Logistics real estate continues to enjoy very strong demand from users representing a wide range of businesses as they remain focused on expanding their competitive positions and optimizing supply chains. CBRE econometric advisors reported that net absorption for the fourth quarter was 121 million square feet compared to 81 million square feet of completions. For the year, net absorption was 433 million square feet, a new record, well in excess of completions, which totals 268 million square feet. This supply-demand dynamic is contributing to significant rental rate growth across all of our markets, as shown in our progress to date with our 2022 rollovers. As of yesterday, we had taken care of 54% of our 2022 expirations at a cash rental rate increase of more than 19%. To capitalize on the many opportunities to serve tenant demand in our markets, we are announcing five more development starts this quarter, totaling 1.3 million square feet with an estimated investment of approximately $168 million. In the Inland Empire, we will be adding to our Southern California portfolio with the 324,000 square foot First Rider Logistics Center. Located just off the I-215, proximate to several of our other successful developments, we are excited to bring this project to a market which boasts a vacancy level of one-half of 1%. Total investment is $44 million, with a targeted cash yield of 9.5%. This outsized yield is due to our favorable basis and the rapid rent growth in Southern California. In South Florida, at our first Park Miami project, where we are experiencing significant tenant activity, we are launching our fifth building, a 198,000 square footer. including our planned future takedown of 59 acres on which we can develop an additional 1.3 million square feet. First Park Miami will total 2.5 million square feet when fully built out over the next several years and serve as the centerpiece of our growing South Florida portfolio. Our projected investment for this new building is $37 million, and our targeted cash yield is 6.2%. In Denver, we will begin construction of our first 76 logistics center in an infill location in the sought after I-76 corridor just north of downtown. The total estimated investment for the 200,000 square footer is $34 million with a projected cash yield of 5.6%. In the Lehigh Valley, we are starting the 105,000 square foot first Lehigh logistics center located adjacent to the airport and the new FedEx ground hub. Total investment is $16 million, and our projected cash yield is 5.3%. Lastly, in Chicago, at our first Park 94 in Kenosha, we are moving forward with a 451,000 square footer that is expandable to 617,000 square feet. Estimated investment is 38 million and our target yield is 6.3%. These newly announced development starts average a cash yield of 6.9% and an estimated development margin of 96% to 106%. Including these new development starts, our developments in process total 7.1 million square feet with a total investment of $802 million and are currently 32% leased. At a cash yield of 6.4%, our expected overall development margin is 75% to 85%. We are also busy in the quarter adding new development sites to capitalize on the positive industrial real estate fundamentals. We purchased a total of 294 acres for 125 million. Adjusting for our newly announced development starts, in total, our balance sheet land today can support an additional 14.4 million square feet. This represents more than 1.6 billion of potential new investment. That 1.6 billion is using today's estimated construction costs and the land at our book basis. In addition, our remaining joint venture can support up to 8.9 million square feet, with our share around 3.8 million square feet. So we're very well positioned for future growth. Moving on to dispositions. In the fourth quarter, we sold 1.2 million square feet for 125 million, which included our last two buildings in the Milwaukee market. Our sales for the year totaled 243 million, which was 43 million higher than the sales guidance midpoint discussed on our third quarter call. For 2022, we expect to sell a total of 100 to 150 million, with the majority expected to close in the latter part of the year. Before turning it over to Scott, let me conclude by saying that through the efforts of our team, Combined with the underlying strength of our portfolio and the future growth opportunities we highlighted for you, our board of directors has declared a dividend of 29.5 cents per share for the first quarter of 2022. This represents a 9.3% increase from the prior rate and a payout ratio of approximately 69% based on our anticipated ASFO for 2022 as defined in our supplemental. With that, I'll turn it over to Scott.