On Thursday, First Industrial Realty (NYSE:FR) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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Summary
First Industrial Realty reported stable financial results with NAREIT funds from operations (FFO) at $0.68 per share for Q1 2026, matching the prior year’s performance, and adjusted FFO at $0.72 per share after excluding advisory costs.
The company achieved significant leasing wins, notably a large renewal in Southern California with a rental rate change exceeding 40%, and a pending $131 million land sale in Phoenix which greatly surpasses market land values.
Guidance for 2026 FFO is maintained at $3.05 to $3.15 per share, with an adjusted range excluding advisory costs of $3.09 to $3.19. The company anticipates a stable occupancy rate between 94% and 95% and cash same store NOI growth of 5% to 6%.
Development leasing activity was robust, with 383,000 square feet leased across multiple markets, contributing positively to FFO, although offset by upcoming land sale impacts and adjusted leasing assumptions.
Management expressed optimism about tenant demand, particularly in Pennsylvania and South Florida, while maintaining a cautious approach to new development starts based on market conditions and concentration risks.
Full Transcript
OPERATOR
Good day and welcome to the First Industrial Realty Trust Inc. First Quarter 2026 Results Call all participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation there will be an opportunity to ask questions. To ask a question you may press star, then one on a touchtone phone. To withdraw your question, please press star and then two. Please note this event is being recorded. I would now like to turn the conference over to Art Harmon, SVP Investor Relations and Marketing. Please go ahead.
Art Harmon (SVP Investor Relations and Marketing)
Thanks very much, Dave, hello everybody and welcome to our call. Before we discuss our first quarter 2026 results and our updated guidance for 2026, please note 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, April 23, 2026. 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 10K 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 Bacilli, our President and Chief Executive Officer, and Scott Musil, our Chief Financial Officer, after which we’ll open it up for your questions. Also with us today are JoJo Yap, Chief Investment Officer, Peter Schultz, Executive Vice President, Chris Schneider, Executive Vice President of Operations, and Bob Walter, Executive Vice President of Capital Markets and Asset Management. Now let me turn the call over to Peter.
Peter Bacilli (President and Chief Executive Officer)
Thank you Art and thank you all for joining us today. I’d like to express my congratulations and gratitude to our team for their efforts in getting 2026 off to an excellent start. We delivered some significant development leasing wins and signed a key renewal in Southern California for our largest remaining 2026 expiration. We’re also capturing significant value creation via a pending $131 million land sale that I’ll detail shortly. Turning to the overall market, industry fundamentals continued to steady. According to CBRE, national vacancy was stable at 6.7% at the end of the first quarter. Net absorption was a solid 43 million square feet, modestly below new deliveries of 55 million square feet. New supply nationally continued to be disciplined with starts remaining muted at 39 million square feet. The national construction pipeline is 237 million square feet and highly pre leased at 39% in our portfolio. Overall touring activity has increased for our availabilities with decision making accelerating for space sizes under 200,000 square feet within our development portfolio with respect to potential economic and demand consequences from the conflict in the Middle East. Thus far we’ve seen no discernible impact to leasing activity, but this is a risk we’ll continue to monitor. From a portfolio standpoint, our in-service occupancy at quarter end was 94.3% in line with our expectations. Since our last earnings call, we made further progress on our 2026 rollovers. We’ve now taken care of 61% by square footage and our overall cash rental rate increase for new and renewal leasing is 41%. This includes our largest remaining 2026 expiration, the 556,000 square footer in Southern California for which we achieved a cash rental rate change that significantly exceeded the top end of our annual guidance range of 40%. Moving now to development leasing, we saw some broad based success across several markets, inking 383,000 square feet in total. These included a full building lease for our 155,000 square foot first Wilson 2 project in the Inland Empire. We also signed several sub-100,000 square foot leases in the markets of Chicago, South Florida, Central Florida as well as Central Pennsylvania. There we leased a 54,000 square foot space at the recently completed first phase of First Park 33 in the Lehigh Valley. As I noted in my opening comments, we’re pleased to share with you that the ground lessee of 100 acres of land in the 303 corridor in the Phoenix market exercised its option to purchase the site for a sales price of 131 million. The proceeds are approximately $30 per land square foot, which is more than three times industrial land values in that market. We expect this transaction to close in June. Before I turn it over to Scott, I would like to remind you of two upcoming property tours we will be hosting. On May 12th we will tour our Inland Empire portfolio and on June 4th we’ll be touring our Central New Jersey assets. Please reach out to Art Harmon to register or for more information. With that I’ll turn it over to Scott.
Scott Musil (Chief Financial Officer)
Thank you Peter first quarter of 2026 Nareit funds from operations were $0.68 per fully diluted share compared to $0.68 per share in the first quarter of 2025. The first quarter 2026 FFO per share was negatively impacted by $0.04 per share of advisory costs related to the contested proxy campaign that was initiated by landed buildings. Excluding these costs, our FFO per share was $0.72. As we noted on our fourth quarter earnings call, FFO in the first quarter was impacted by higher G&A costs due to accelerated expense related to an accounting rule that required us to fully expense the value of granted equity based compensation for certain tenured employees. Our cash same store NOI growth for the quarter excluding termination fees was 8.7%. The results in the quarter were primarily driven by increases in rental rates on new and renewal leasing, lower free rent and contractual rent bumps partially offset by lower average occupancy. Summarizing our leasing activity during the quarter, approximately 2.4 million square feet of leases commenced. Of these, 300,000 were new, 2 million were renewals and 100,000 were for developments and acquisitions with lease up. Before I discuss guidance, let me update you on the 3 PL tenant on our credit watch list. If you recall, we were collecting rent directly from a subtenant. While working through the collection process, we are pleased to announce that we signed an agreement with the 3 PL that required a lump sum payment of approximately 60% of the balance owed us at December 31, 2025 which we received in March. In addition, the agreement calls for scheduled payments to pay off the remaining past due rent by the end of 2026. Now moving on to our guidance, our guidance range for 2000 AREIT FFO is now $3.05 to $3.15 per share, reflecting $0.04 per share of incremental advisory costs related to the land and buildings Contested Proxy Campaign 2026 FFO Guidance Range absent these advisory costs $3.09 to $3.19 per share, which is unchanged compared to our last call. Our other major operating metric guidance assumptions are as follows. Average quarter end in service occupancy of 94 to 95%. This range now reflects approximately 1.3 million square feet of incremental development, leasing and the 708,000 square footer in central Pennsylvania, all to occur in the second half of the year Cash same store NOI growth before termination fees of 5 to 6%. Guidance includes the anticipated 2026 costs related to our completed and under construction developments at March 31st. For the full year 2026 we expect to capitalize about $0.08 per share of interest. Our GINA expense guidance range is 42 to $43 million, which excludes the $5.6 million of incremental advisory costs related to the contested proxy campaign, and our guidance assumes that the aforementioned forecasted land sale in Phoenix will close in June. Let me turn it back over to Peter.
Peter Bacilli (President and Chief Executive Officer)
We are optimistic about the activity levels we are seeing across our availabilities. As always, our team is focused on taking care of our customers, gaining new ones, and sourcing and executing on profitable investments to drive long term cash flow and value for shareholders. Operator with that, we’re ready to open it up for questions.
OPERATOR
We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press start and then 2. Also, please limit yourself to one question and one follow up re queue to ask additional questions. The first question comes from Craig Mailman with Citi. Please go ahead.
Craig Mailman (Analyst at Citi)
Hey, good morning, guys. Peter, you know you mentioned that touring activities improved, velocity under 200,000 square feet has improved. Could you talk about other your peers have talked about the data center adjacent demand. Could you talk about how much of this improvement is that segment of demand versus just either e-commerce or other broader industrial demand? I mean from what we’re seeing, most of it is just broader industrial demand. 3 PLs continue to be very active. Manufacturing’s picked up, you know, and that includes data center tech, aerospace, et cetera. So that’s picked up. But it looks more like broader demand for industrial than completely data center driven. And then sorry Scott, I know you had mentioned the Central PA is now second half. Could you just talk about kind of the activity you’re seeing at Denver and Central PA and kind of the the prospects today versus maybe on the fourth quarter call?
Scott Musil (Chief Financial Officer)
Hey Craig, it’s Scott. I think you mentioned that we pushed it to the second half. The 708,000 square footer that’s always been in the second half of the year per our 4Q guidance call. So I wanted to clarify that and then I’ll turn it over to Peter for an update on that vacancy in the Denver development.
Peter Bacilli (President and Chief Executive Officer)
Good morning Craig, it’s Peter. So in Denver we continue to have interested prospects for our large vacancy there. Activity or decision making, I would say for larger users has been slow, limited competitive supply. There were just two buildings that came back that will compete with us. One from a business failure from another landlord and another from a lease expiration. But we continue to have prospects. They’re just very slow in their decision-making. Smaller mid-size tenants in Denver continue to be pretty active. Moving to Pennsylvania to the second part of your question, Pennsylvania probably is our most active or certainly one of our most active markets across the country in terms of prospect activity across a range of sizes and the industries. Including Peter’s comments about 3PLs being very active, we have several prospects for our 708,000 square foot building in central Pennsylvania, all but one of which are full building users. And all of those continue to be engaged in discussions with us.
Craig Mailman (Analyst at Citi)
Great, thank you.
OPERATOR
And the next question comes from Nick Thillman with Baird. Please go ahead.
Nick Thillman (Analyst at Baird)
Hey, good morning. Maybe touching a little bit, Peter. Just thought process on starting some new projects here. Given the land bank, it’s a little bit more heavy, concentrated and say the ie you did sign a lease there, but just how you’re viewing the landscape and just thought process on …
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