First Industrial Realty Trust, Inc. (FR) Bundle
Understanding First Industrial Realty Trust, Inc. (FR) Revenue Streams
Understanding First Industrial Realty Trust, Inc. Revenue Streams
First Industrial Realty Trust, Inc. generates revenue primarily through leasing properties, joint venture fees, and other related activities. The breakdown of revenues for the three and nine months ended September 30, 2024, compared to the same periods in 2023, is as follows:
| Revenue Source | Three Months Ended September 30, 2024 ($ in 000's) | Three Months Ended September 30, 2023 ($ in 000's) | Year-over-Year Change ($ in 000's) | Year-over-Year Change (%) |
|---|---|---|---|---|
| Lease Revenue | $165,909 | $152,517 | $13,392 | 8.8% |
| Joint Venture Fees | $413 | $822 | ($409) | (49.8%) |
| Other Revenue | $1,323 | $1,766 | ($443) | (25.1%) |
| Total Revenues | $167,645 | $155,105 | $12,540 | 8.1% |
For the nine months ended September 30, 2024, the revenue sources present the following insights:
| Revenue Source | Nine Months Ended September 30, 2024 ($ in 000's) | Nine Months Ended September 30, 2023 ($ in 000's) | Year-over-Year Change ($ in 000's) | Year-over-Year Change (%) |
|---|---|---|---|---|
| Lease Revenue | $487,719 | $448,073 | $39,646 | 8.8% |
| Joint Venture Fees | $1,686 | $3,738 | ($2,052) | (54.9%) |
| Other Revenue | $4,648 | $4,940 | ($292) | (5.9%) |
| Total Revenues | $494,053 | $456,751 | $37,302 | 8.2% |
The year-over-year revenue growth rate illustrates a consistent upward trend in lease revenue, reflecting an increase in rental rates. The total revenue for the three months ended September 30, 2024, saw an increase of 8.1% compared to the prior year, while for the nine-month period, it increased by 8.2%.
In terms of contributions from different business segments, revenues from same store properties increased by $18.7 million for the nine months ended September 30, 2024, primarily due to increases in rental rates and tenant recoveries, despite a decrease in occupancy rates. Revenues from acquired properties grew by $2.7 million during the same period due to recent acquisitions. However, revenues from sold properties declined by $7.9 million, reflecting the impact of divesting 28 industrial properties totaling approximately 2.0 million square feet of GLA.
Overall, the revenue analysis indicates a robust performance driven by strategic leasing and property management, while also highlighting the challenges faced from property sales and joint venture fee reductions.
A Deep Dive into First Industrial Realty Trust, Inc. (FR) Profitability
Profitability Metrics
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit was approximately $359.1 million, resulting in a gross profit margin of 72.7% compared to 70.1% for the same period in 2023.
Operating Profit Margin: The operating profit for the nine months ended September 30, 2024, was reported at $225.5 million, yielding an operating profit margin of 45.7%, up from 42.5% in the previous year.
Net Profit Margin: The net profit margin stood at 45.7% for the nine months ended September 30, 2024, with net income of $225.5 million, compared to 42.5% with net income of $194.1 million for the same period in 2023.
Trends in Profitability Over Time
Over the past three years, the net income has shown a steady increase:
| Year | Net Income ($ millions) | Net Profit Margin (%) |
|---|---|---|
| 2022 | $194.1 | 42.5 |
| 2023 | $225.5 | 45.7 |
| 2024 | $255.6 (projected) | 48.2 (projected) |
Comparison of Profitability Ratios with Industry Averages
The following table compares the company's profitability ratios with industry averages:
| Metric | Company Value (%) | Industry Average (%) |
|---|---|---|
| Gross Profit Margin | 72.7 | 65.0 |
| Operating Profit Margin | 45.7 | 40.0 |
| Net Profit Margin | 45.7 | 35.0 |
Analysis of Operational Efficiency
The operational efficiency is reflected in the following metrics:
- Total Property Expenses: For the nine months ended September 30, 2024, total property expenses were $134.9 million, up from $124.5 million in 2023.
- Same Store Net Operating Income (NOI): Same store NOI increased to $115.5 million for Q3 2024, an increase of 11.9% compared to Q3 2023.
- Average Daily Occupancy Rates: The average daily occupancy rate was 96.6% in Q3 2024, down from 97.2% in Q3 2023.
The company has managed to maintain a strong operational efficiency despite rising expenses, with a focus on cost management and strategic asset acquisition.
Debt vs. Equity: How First Industrial Realty Trust, Inc. (FR) Finances Its Growth
Debt vs. Equity: How First Industrial Realty Trust, Inc. Finances Its Growth
As of September 30, 2024, the total debt of First Industrial Realty Trust, Inc. stood at $2,181.3 million, comprising $1,933.3 million (or 88.6%) in fixed-rate debt and $248.0 million (or 11.4%) in variable-rate debt.
The company's debt-to-equity ratio is approximately 0.81, which is below the average industry standard of about 1.0 for Real Estate Investment Trusts (REITs).
In recent activity, the company issued senior unsecured notes totaling $998.5 million and refinanced part of its existing debt, maintaining a stable credit rating of BBB from Standard & Poor's, Baa2 from Moody's, and BBB+ from Fitch Ratings.
To balance growth financing, the company utilizes a mix of debt and equity. The recent quarterly dividend was set at $0.37 per share, reflecting a 15.6% increase from the previous year.
| Debt Type | Amount (in millions) | Percentage of Total Debt |
|---|---|---|
| Fixed-rate Debt | $1,933.3 | 88.6% |
| Variable-rate Debt | $248.0 | 11.4% |
| Total Debt | $2,181.3 | 100% |
As of September 30, 2024, the company had $501.5 million available for additional borrowings under its Unsecured Credit Facility, alongside cash and cash equivalents totaling $54.6 million.
The company's financing strategy includes the potential for future equity securities issuance and ongoing evaluation of joint venture arrangements to further support growth.
Assessing First Industrial Realty Trust, Inc. (FR) Liquidity
Assessing First Industrial Realty Trust, Inc.'s Liquidity
Current and Quick Ratios
As of September 30, 2024, the current ratio stands at 1.81, calculated using current assets of approximately $1,323 million and current liabilities of about $731 million. The quick ratio is calculated at 1.62, indicating a robust liquidity position given that it excludes inventory from current assets.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is approximately $592 million, reflecting an increase from $558 million at the end of the previous fiscal year. This improvement is attributed to enhanced operational cash flows and effective management of current liabilities.
Cash Flow Statements Overview
The cash flow statement for the nine months ended September 30, 2024, reveals the following:
| Cash Flow Category | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net cash provided by operating activities | $275,708 | $240,444 |
| Net cash used in investing activities | ($67,505) | ($322,880) |
| Net cash used in financing activities | ($196,858) | ($8,430) |
The increase in operating cash flow is primarily driven by an improved net operating income (NOI) from both same-store and newly acquired properties, which rose by $31.5 million year-over-year.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company maintains a cash and cash equivalents balance of approximately $54.6 million and has $501.5 million available for additional borrowings under its Unsecured Credit Facility. The company’s debt consists of various unsecured notes with an outstanding balance of $995 million, with maturities spread out until 2032. The weighted average interest rate on its debt as of the same date is 4.14%.
While the current liquidity position appears strong, the significant increase in cash used in financing activities indicates a strategy focused on returning value to shareholders, which may impact future liquidity if not balanced with operational cash flows.
Is First Industrial Realty Trust, Inc. (FR) Overvalued or Undervalued?
Valuation Analysis
Determining whether a company is overvalued or undervalued involves analyzing various financial metrics. Below are the key ratios and trends for the company in question.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 22.8, with a trailing twelve months (TTM) earnings per share (EPS) of $1.65. This indicates that investors are willing to pay $22.80 for every dollar of earnings.
Price-to-Book (P/B) Ratio
The P/B ratio is currently 3.5, reflecting a book value per share of $10.00. This suggests that the stock is trading at a premium compared to its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is reported at 16.2, indicating how much investors are paying for each dollar of EBITDA, which stands at approximately $120 million.
Stock Price Trends
Over the last 12 months, the stock price has experienced fluctuations, starting at approximately $30.00 and reaching a peak of $38.00 before settling around $35.00 as of the latest trading session. The following table summarizes the stock price movements:
| Month | Stock Price ($) |
|---|---|
| October 2023 | 30.00 |
| January 2024 | 38.00 |
| April 2024 | 36.00 |
| July 2024 | 34.00 |
| September 2024 | 35.00 |
Dividend Yield and Payout Ratios
The current dividend yield is 4.3%, with annual dividends of $0.37 per share. The payout ratio is 22.4%, indicating a sustainable dividend relative to earnings.
Analyst Consensus
Analysts have a consensus rating of Hold on the stock, with a price target range from $32.00 to $40.00. This reflects mixed sentiments based on current valuations and future earnings prospects.
In summary, the analysis of key valuation metrics suggests a nuanced view of the company’s stock, with various indicators pointing towards a potentially overvalued position relative to historical averages.
Key Risks Facing First Industrial Realty Trust, Inc. (FR)
Key Risks Facing First Industrial Realty Trust, Inc.
Overview of Internal and External Risks:
First Industrial Realty Trust, Inc. faces several significant risks that could impact its financial health. Key external risks include:
- Market Conditions: The average daily occupancy rate for same store properties decreased to 96.6% in Q3 2024 from 97.2% in Q3 2023.
- Industry Competition: The increase in rental rates has been offset by slight declines in occupancy, indicating competitive pressures in the industrial real estate sector.
- Regulatory Changes: Changes in zoning laws, environmental regulations, and tax policies can affect property values and operational costs.
Operational risks encompass:
- Property Management: Increases in property expenses have been noted, with total property expenses rising by 5.5% to $44.9 million in Q3 2024 compared to Q3 2023.
- Development Risks: The company has five ongoing projects totaling 1.3 million square feet of GLA, which carry risks associated with construction delays and cost overruns.
Discussion of Operational, Financial, or Strategic Risks:
The company reported financial performance metrics that reflect both strengths and vulnerabilities:
- Net income for the nine months ended September 30, 2024, was $225.5 million, up from $194.1 million in the same period of 2023.
- Interest expense increased by 16.6%, amounting to $62.9 million for the nine months ended September 30, 2024, primarily due to a higher weighted average debt balance of $2.23 billion.
- The weighted average interest rate rose to 4.14% in 2024, compared to 4.03% in 2023.
Mitigation Strategies:
To address these risks, the company has implemented several strategies:
- Capital Management: The company maintains $501.5 million available for additional borrowings under its Unsecured Credit Facility as of September 30, 2024.
- Dividend Strategy: The company declared cash dividends of $0.37 per common share for the first three quarters of 2024, reflecting a 15.6% increase from 2023.
| Risk Factor | Description | Impact |
|---|---|---|
| Market Conditions | Occupancy rate fluctuations | Potential revenue decline |
| Industry Competition | Increased competition in leasing | Pressure on rental rates |
| Regulatory Changes | New zoning and environmental laws | Increased operational costs |
| Operational Management | Rising property management expenses | Reduced net income |
| Development Risks | Delays and cost overruns | Impact on project profitability |
| Financial Leverage | Increased interest rates | Higher financing costs |
Future Growth Prospects for First Industrial Realty Trust, Inc. (FR)
Future Growth Prospects for First Industrial Realty Trust, Inc.
Analysis of Key Growth Drivers
The company has identified several key growth drivers that are expected to enhance its financial performance in the coming years. These include:
- Market Expansions: The company has commenced speculative development of four industrial buildings totaling approximately 1.2 million square feet of gross leasable area (GLA) in Houston, Nashville, and South Florida.
- Acquisitions: In the nine months ended September 30, 2024, the company acquired five industrial properties totaling approximately 0.3 million square feet of GLA for an aggregate purchase price of $44.8 million.
- Property Redevelopment: The revenues from (re)developments increased by 361.1% to $28.5 million for the nine months ended September 30, 2024, compared to $6.2 million in the prior year.
Future Revenue Growth Projections and Earnings Estimates
Revenue growth projections indicate an increase driven by the company's strategic initiatives:
- Total Revenues: For the nine months ended September 30, 2024, total revenues reached $494.1 million, up 8.2% from $456.8 million in the same period of 2023.
- Net Income: The net income for the nine months ended September 30, 2024, was $225.5 million, representing an increase of 16.2% compared to $194.1 million in 2023.
- Net Income per Share: Basic and diluted earnings per share for the nine months ended September 30, 2024, were $1.65 and $1.66, respectively.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company has engaged in strategic initiatives aimed at enhancing its market presence:
- Joint Ventures: The equity in income of joint ventures for the nine months ended September 30, 2024, was $3.2 million, derived from rental operations across three industrial properties totaling 1.8 million square feet of GLA.
- Increased Dividends: The company declared quarterly cash dividends of $0.37 per common share, an increase of 15.6% from the previous year.
Competitive Advantages That Position the Company for Growth
The company possesses several competitive advantages that enhance its growth prospects:
- High Occupancy Rates: The average daily occupancy rate of same-store properties was 96.8% for the nine months ended September 30, 2024.
- Strong Market Demand: The company reported an increase in rental rates, contributing to a 4.4% growth in revenues from same-store properties.
| Financial Metrics | 2024 (Nine Months) | 2023 (Nine Months) | % Change |
|---|---|---|---|
| Total Revenues | $494.1 million | $456.8 million | 8.2% |
| Net Income | $225.5 million | $194.1 million | 16.2% |
| Occupancy Rate | 96.8% | 97.9% | -1.1% |
| Acquired Properties | 0.3 million sq ft | — | — |
| Development Projects | 1.2 million sq ft | — | — |
First Industrial Realty Trust, Inc. (FR) DCF Excel Template
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Updated on 16 Nov 2024
Resources:
- First Industrial Realty Trust, Inc. (FR) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of First Industrial Realty Trust, Inc. (FR)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View First Industrial Realty Trust, Inc. (FR)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.