Fitch Rates First Industrial's Bonds & Pfd Stock 'BBB' & 'BBB-'.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch rates First Industrial Realty Trust's (First Industrial) $200 million senior unsecured note offering 'BBB' and $150 million preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. offering 'BBB-'. The Rating Outlook is Stable. Proceeds from the offering, as well as proceeds from a recent offering of $50 million of common stock, are expected to be used primarily to repay borrowings on the company's revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility, as well as to finance several property acquisitions that are anticipated in the near term. The transaction itself is not expected to have a material impact on leverage or fixed-charge coverage fixed-charge coverage The number of times that a firm's operating income exceeds its fixed payments. Fixed-charge coverage is a measure of a firm's ability to meet contractually fixed payments, with high coverage indicating significant flexibility for making . In fact, management has targeted lower leverage into the 49% range from the recent 50% to 54% range in the first quarter of 2006. This may also help the company's fixed-charge coverage, which is at the low end of the range for the current rating. First Industrial's credit strengths center on its solid and increasingly diversified pool of industrial properties. In the past year, the company has demonstrated traction in its ability to improve occupancy and net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. (NOI NOI Net Operating Income NOI Notice of Intent NOI Nation of Islam NOI Notice of Inquiry NOI Neuro Orthopaedic Institute NOI New Organizing Institute NOI Notice of Interest NOI No Offense Intended NOI National Olympiad in Informatics ). Occupancy has improved to 91.6% at Sept. 30, 2005 from 89.5% one year earlier, while same property NOI was nearly flat after declining in previous periods. Other credit strengths center on the company's funding profile, which boasts a very low usage of floating-rate debt, significant use of unsecured financing, and solid unencumbered asset coverage. Following the completion of the transaction, Fitch expects First Industrial's floating-rate financing exposure to be down to approximately 12% of total debt. With over 92% of its real estate properties unencumbered, the company exhibits solid operating and financial flexibility. Rating concerns center on the direction of the company's leverage in the past year. First Industrial continues recycle capital and increases its construction pipeline; this has driven leverage to the high end of what is acceptable for the current rating. Further, the growth of the construction pipeline has also had a significant impact on risk-adjusted capitalization, which has deteriorated in recent quarters, although it remains acceptable for the rating. Management plans for asset sales in conjunction with the recent equity offering may help alleviate some of this pressure. In addition, the company's recurring fixed-charge coverage metrics have shown the company becoming increasingly reliant on transactional sources of income. Fixed-charge coverage for the nine months ended Sept. 30, 2005 was 1.1 times (x) and 1.3x, if discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. are excluded and included, respectively. Looking forward, Fitch expects that the demonstrated trends of improving occupancy and NOI traction to provide some support for these metrics. First Industrial Realty Trust, Inc. is an equity real estate investment trust (REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). ) focused on the acquisition, ownership, management, development, and redevelopment of industrial properties. Headquartered in Chicago, Illinois, First Industrial's portfolio exhibits a nationwide geographic presence consisting of 846 properties, encompassing 64.5 million square feet. As of Sept. 30, 2005, the company had $2.9 billion of gross assets at book value and $1.2 billion of undepreciated book equity. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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