FIRST INDUSTRIAL LP Annual Report - Your Investor's Guide

Unlock a clear understanding of FIRST INDUSTRIAL LP's performance for the fiscal year ending December 31, 2025. This guide cuts through the jargon, offering essential insights into their operations, financial health, strategic direction, and the challenges and opportunities ahead. Our goal is to equip you with actionable information to better comprehend this key player in industrial real estate.

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1. Business Overview (What FIRST INDUSTRIAL LP Does)

FIRST INDUSTRIAL LP, the operating partnership for FIRST INDUSTRIAL REALTY TRUST, INC., owns, operates, and develops high-quality industrial properties. These include warehouses, distribution centers, and light manufacturing facilities. Essentially, the company provides essential logistics and supply chain space to businesses across major U.S. markets. Its status as a "Large Accelerated Filer" (Trust) and "Accelerated Filer" (LP) with the SEC reflects its significant market capitalization and subjects it to rigorous public reporting standards.

For the fiscal year ending December 31, 2025, FIRST INDUSTRIAL LP achieved robust operational performance. The company actively managed its extensive portfolio, completing significant acquisitions, strategic dispositions, and new development projects. It focused on high-growth industrial markets, capitalizing on strong demand for modern logistics facilities.

2. Financial Performance (Revenue, Profit, and Growth)

FIRST INDUSTRIAL LP delivered strong financial results this past year. Total revenues grew approximately 12% to $650 million, driven by higher occupancy rates and rising rental income across its portfolio. Net income increased 15% to $280 million. Funds From Operations (FFO), a key metric for real estate investment trusts (REITs) like FIRST INDUSTRIAL, rose. FFO per share increased 10% to $2.50, reflecting efficient property management and successful development lease-ups. Same-store Net Operating Income (NOI) increased a healthy 7.5%, indicating strong organic growth from existing properties. Occupancy rates remained high at 98%, and average lease terms extended to 7 years, providing stable, long-term cash flows.

3. Management Discussion (MD&A Highlights)

Major Wins and Challenges This Year:

• Strategic Portfolio Expansion: The company successfully acquired 1.5 million square feet of industrial space across key logistics hubs, valued at $250 million. It also began developing 2 million square feet of new projects, with 70% pre-leased. This proactive approach ensures a pipeline of modern, high-demand assets.
• Strong Leasing Activity: The company achieved significant rent growth on new and renewed leases, averaging 15% cash rent growth and 25% GAAP rent growth, reflecting robust market demand.
• Effective Capital Management: It engaged in joint venture acquisitions to diversify risk and leverage partner expertise. The company also strategically used interest rate swaps to hedge against rising borrowing costs, stabilizing its financial outlook.

Challenges:

• Rising Interest Rates: While managed through hedging, the broader increase in interest rates challenged financing for new acquisitions and developments, potentially impacting future capital costs.
• Supply Chain Volatility: Ongoing global supply chain disruptions, though easing, continued to create operational complexities for tenants, potentially affecting demand for space or tenant stability.
• Increased Competition: The industrial real estate market remains highly competitive, with new entrants and existing players vying for prime assets and development opportunities, potentially driving up acquisition costs.

Leadership and Strategy: Executive leadership remained stable during the fiscal year. The company's core strategy remains consistent:

• Focus on High-Growth Markets: The company concentrates investments in major logistics hubs with strong demographic and economic fundamentals.
• Disciplined Development: It pursues build-to-suit and speculative development projects with high pre-leasing rates to maximize value.
• Active Portfolio Management: It continuously evaluates assets for acquisition, disposition, and redevelopment to optimize portfolio quality and returns.
• Sustainable Practices: It integrates ESG (Environmental, Social, and Governance) considerations into development and operations, including energy-efficient designs and green building certifications.

Market Trends and Regulatory Changes: The industrial real estate market continues to benefit from robust tailwinds, including:

• E-commerce Expansion: This drives demand for last-mile and regional distribution centers.
• Reshoring/Nearshoring: Companies are bringing manufacturing and logistics closer to home, increasing demand for domestic industrial space.
• Inventory Build-Up: Businesses maintain higher inventory levels to mitigate future supply chain disruptions.
• Automation and Technology: This creates a need for modern facilities that can accommodate advanced automation and robotics.

The filing noted no significant new regulatory changes impacting the industrial real estate sector, though ongoing environmental and zoning regulations continue to influence development processes.

4. Financial Health (Debt, Cash, and Liquidity)

FIRST INDUSTRIAL LP maintains a diversified and well-managed capital structure, utilizing various debt instruments, including:

• Mortgages: Secured by specific properties, totaling $800 million.
• Senior Notes: Unsecured debt with staggered maturities, including $300 million due in 2027, $400 million in 2028, $250 million in 2031, and $350 million in 2032, providing a balanced maturity profile.
• Private Placement Notes: $200 million in direct loans from institutional investors.
• Unsecured Term Loans: Including a $150 million loan maturing in 2026 and a $200 million loan maturing in 2028.
• Revolving Line of Credit: A $750 million unsecured credit facility, with $100 million currently drawn, providing ample liquidity for operations and opportunistic investments.

The company's net debt-to-EBITDA ratio stands at a healthy 5.5x, and its fixed charge coverage ratio is 3.0x, indicating strong debt servicing capacity. Interest rate swaps cover approximately 70% of its variable-rate debt, mitigating interest rate risk. The equity structure includes common stock, additional paid-in capital, and accumulated distributions, alongside noncontrolling interests representing the portion of the partnership not owned by the general partner.

5. Risk Factors (Key Risks)

Investors should be aware of several risks:

• Economic Downturns: A significant economic slowdown could reduce demand for industrial space, leading to lower occupancy rates and rental income.
• Interest Rate Fluctuations: Despite hedging, prolonged high interest rates could increase borrowing costs for new debt and refinancing existing debt, impacting profitability.
• Tenant Concentration/Defaults: While diversified, a default by a major tenant or a cluster of smaller tenants could impact cash flow.
• Competition: Intense competition in key markets could lead to oversupply or pressure on rental rates.
• Supply Chain Disruptions: Continued global supply chain issues could affect tenant operations and, indirectly, their ability to pay rent or renew leases.
• Environmental Regulations: Evolving environmental regulations could impose additional costs for property maintenance or development.

6. Competitive Position

FIRST INDUSTRIAL LP is a leading player in the U.S. industrial real estate market, competing with other large REITs, private equity funds, and developers. Its competitive advantages include:

• Strategic Land Bank: The company holds a significant land pipeline for future development in high-barrier-to-entry markets.
• Modern Portfolio: It focuses on developing and acquiring state-of-the-art logistics facilities that meet the evolving needs of e-commerce and modern supply chains.
• Strong Tenant Relationships: The company maintains a diverse tenant base of credit-worthy companies.
• Operational Expertise: It has a proven track record in property management, leasing, and development.

7. Future Outlook (Guidance, Strategy)

FIRST INDUSTRIAL LP anticipates continued strong demand for industrial space, driven by e-commerce growth, supply chain reconfigurations, and inventory optimization trends. The company projects FFO per share growth of 8-10% for the upcoming fiscal year, fueled by ongoing development deliveries and positive rent growth. It plans to deploy $400-500 million in new development and acquisition capital in the next 12 months, focusing on infill locations and build-to-suit opportunities. It expects to maintain high occupancy rates and continue to benefit from contractual rent escalations.