Agenda. 9:00 10:30 am Senior Management Presentations

Transcription

1 Investor Day

2 Agenda 9:00 10:30 am Senior Management Presentations 10:30 10:45 am Break Mike Brennan President and CEO Mike Havala Chief Financial Officer Jojo Yap Chief Investment Officer 10:45 12:00 pm Senior Management Presentations and Q&A Jerry Pientka EVP - Development David Draft EVP - Operations Q&A 12:00 1:30 pm Lunch & Virtual Property Tour of Phoenix Market 1:45 2:00 pm Bus to Le*Nature s Headquarters 2:00 3:45 pm Property Tour of Le*Nature s Headquarters 2 4:00 6:00 pm Cocktails and Hors d oeuvres

3 Safe Harbor This webcast contains forward-looking information about the Company. A number of factors could cause the Company's actual results to differ materially from those anticipated, including changes in: economic conditions generally and the real estate market specifically, legislative/regulatory changes (including changes to laws governing the taxation of real estate investment trusts), availability of financing, interest rate levels, competition, supply and demand for industrial properties in the Company's current and proposed market areas, potential environmental liabilities, slippage in development or lease-up schedules, tenant credit risks, higher-than-expected costs and changes in general accounting principles, policies and guidelines applicable to real estate investment trusts. For further information on these and other factors that could impact the Company and the statements contained herein, reference should be made to the Company's filings with the Securities and Exchange Commission. 3

4 Mike Brennan President and CEO 4

5 5 Strengthening the First Industrial Franchise for Long-Term Growth

6 Major Accomplishments Capital Raising Investments Portfolio Net Economic Gains JV Income Customer Service Talent Platform $4 billion in new joint venture capital #1 investor in U.S. industrial real estate > 100 million S.F.; 23% growth since beginning 05 Grew from $22 million to $101 million in five years Triple in 06 vs. 05 Leading scores: 9 of 10 customers recommend FR Increased acquisition, development & net lease expertise Entered/expanded high growth markets Unique Franchise Serving Corporate Customers 6

7 FFO Growth 14% $4.10 G Growth Drivers $3.47 $3.53 $3.61 Net operating income Joint venture investments and income streams Net economic gains Increasing acquisition and development volume G represents midpoint of guidance

8 First Industrial s Mission To create industrial real estate solutions that mutually benefit our customers and our investors 8

9 The First Industrial Factory SALES INVENTORY INVESTMENTS ACQUISITIONS DEVELOPMENTS WORK IN PROCESS DEVELOPMENT ASSET MGT. LEASING CASH FLOW RENTAL INCOME CAPITAL BALANCE SHEET JOINT VENTURES NATIONAL PLATFORM DIVIDENDS 9 LOCAL MARKET / INDUSTRIAL PROPERTY EXPERTISE CUSTOMER FRANCHISE BROKER RELATIONSHIPS

10 Strategically Positioned to Take Advantage of Major Growth Drivers Numerous Growth Drivers 10

11 Strategically Positioned to Take Advantage of Major Growth Drivers Numerous Growth Drivers Strategically Increased Resources 11

12 Strategically Positioned to Take Advantage of Major Growth Drivers Numerous Growth Drivers Strategically Increased Resources Strengthening The First Industrial Franchise 12

13 Strategically Positioned to Take Advantage of Major Growth Drivers Long-Term FFO Growth Numerous Growth Drivers Strategically Increased Resources Strengthening The First Industrial Franchise 13

14 Growth Drivers 1. Corporate Customer Focus 2. International Trade 3. Supply Chain Reconfiguration 4. Demographic Trends 5. Industry Trends 14

15 1. Corporate Customer Focus 2/3 of all industrial real estate in the U.S. 82% capacity utilization Record cash positions 8% increase in business spending in 06 Monetizing surplus property Sale-leaseback volume growing Growing Demand in a Large Customer Market 15

16 Growth Drivers 1. Corporate Customer Focus 2. International Trade 3. Supply Chain Reconfiguration 4. Demographic Trends 5. Industry Trends 16

17 2. International Trade 8.6% growth in U.S. imports 8.6% growth in total U.S. port activity 8.8% containerized cargo import growth More Demand for Distribution Centers Higher Cargo Volume Estimates. Source: U.S. DOT and PIERS Global Intelligence Solutions

18 Growth Drivers 1. Corporate Customer Focus 2. International Trade 3. Supply Chain Reconfiguration 4. Demographic Trends 5. Industry Trends 18

19 3. Supply Chain Reconfiguration Containerized cargo X Use of multiple ports X Just-in-case logistics planning X Rail, trucking & labor issues 19 Supply Chain Complexity & Demand for Industrial RE

20 Growth Drivers 1. Corporate Customer Focus 2. International Trade 3. Supply Chain Reconfiguration 4. Demographic Trends 5. Industry Trends 20

21 4. Demographic Trends 21 Larger Population More Consumption Demand for Industrial RE

22 Growth Drivers 1. Corporate Customer Focus 2. International Trade 3. Supply Chain Reconfiguration 4. Demographic Trends 5. Industry Trends 22

23 5. Industry Trends Retooling of U.S. industrial supply chain 126 million S.F. net absorption projected for 07* 3.7% market rental rate increase forecasted for 07* Increasing portfolio allocations to industrial real estate Solid Industry Fundamentals Higher Growth 23 *Source: Torto Wheaton & Real Capital Analytics

24 Strategy Creating Value for Customers 24

25 idea NEW PRODUCT launch START PRODUCTION Industrial Supply Chain Solutions for Every Phase of Our Customers Business Cycle grow ACCELERATING DEMAND reconfigure SHIFTING NEEDS expand NEW MARKETS AND PRODUCTS 25

26 idea NEW PRODUCT launch START PRODUCTION Industrial Supply Chain Solutions for Every Phase of Our Customers Business Cycle grow ACCELERATING DEMAND reconfigure SHIFTING NEEDS expand NEW MARKETS AND PRODUCTS 26

27 idea NEW PRODUCT launch START PRODUCTION Industrial Supply Chain Solutions for Every Phase of Our Customers Business Cycle grow ACCELERATING DEMAND reconfigure SHIFTING NEEDS expand NEW MARKETS AND PRODUCTS 27

28 idea NEW PRODUCT launch START PRODUCTION Industrial Supply Chain Solutions for Every Phase of Our Customers Business Cycle grow ACCELERATING DEMAND reconfigure SHIFTING NEEDS expand NEW MARKETS AND PRODUCTS 28

29 idea NEW PRODUCT launch START PRODUCTION Industrial Supply Chain Solutions for Every Phase of Our Customers Business Cycle grow ACCELERATING DEMAND reconfigure SHIFTING NEEDS expand NEW MARKETS AND PRODUCTS 29

30 Strategy All Industrial Facility Types in Supply Chain Creating Value for Customers 30

31 Strategy All Industrial Facility Types in Supply Chain Creating Value for Customers Local Market Expertise 31

32 Strategy All Industrial Facility Types in Supply Chain Creating Value for Customers Local Market Expertise Leading Customer Service 32

33 Strategy All Industrial Facility Types in Supply Chain Creating Value for Customers Local Market Expertise Multiple Capital Sources Leading Customer Service 33

34 Strategy All Industrial Facility Types in Supply Chain Expertise Across All Real Estate Disciplines Creating Value for Customers Local Market Expertise Multiple Capital Sources Leading Customer Service 34

35 Strengthening the Franchise Customer Relationships 35

36 36 Customer Relationships

37 Strengthening the Franchise Customer Relationsh Broker Relationships 37

38 38 Broker Relationships

39 Strengthening the Franchise Customer Relationships Broker Relationshi Co-Investors / Capital 39

40 New Co-Investment Partners Second Largest Public Pension Fund in U.S. World s Largest Wealth Manager 40

41 Strengthening the Franchise Talented Professionals Customer Relationships Broker Relationships Co-Investors / Capital 41

42 Increasing Specialization to Enhance Growth Due Diligence SPECIALISTS Acquisitions Development SPECIALISTS Capital Markets Leasing Property Management Dispositions 42

43 Strengthening the Franchise Talented Professio Brand Awareness Customer Relationships Broker Relationships Co-Investors / Capital 43

44 Brand Awareness Growing broker relationships 7,900 brokers participated in our FirstPlace program, up 23% from the beginning of 2005 Targeted communications with corporate clients, corporate services brokers, and investment bankers Strategically use marketing and PR in industry trade, supply chain and financial media Trusted Provider of Industrial RE Solutions 44

45 Strengthening the Franchise Unique Franchise Talented Professionals Brand Awareness Customer Relationships Broker Relationships Co-Investors / Capital 45

46 Strengthening the First Industrial Franchise for Growth STRONG FRANCHISE FFO GROWTH GROWTH DRIVERS Corporate Customer Demand International Trade Supply Chain Reconfiguration Demographic Trends Industry Trends STRATEGY Corporate Customer Focus Complete Supply Chain Solutions Local Market Knowledge Leading Customer Service Multiple Capital Sources Expertise Across R.E. Functions Customer Relationships Broker Relationships Co-investors/ Capital Talented Professionals Brand Awareness Leading Industrial R.E. Provider to Corporate Customers 46

47 First Industrial s Goals 2007 Goals 10% FFO growth $2 billion+ investments $750 million of development starts and land acquisitions Key Corporate Objectives Top corporate industrial real estate provider in U.S. Top 3 investor in industrial real estate in U.S. Top 3 industrial developer in U.S. Expand private capital platform 47

48 Mike Havala Chief Financial Officer 48

49 Expanding Capital Base to Fund Growth Nearly doubled capital base in past 18 months $8.1 Billion Land/Development $950 Million Development/ Repositioning $950 Million Core Acquisition $1 Billion $4.4 Billion Net Lease $400 Million Net Lease $1.2 Billion Balance Sheet $4 Billion Balance Sheet $4 Billion 49 March September

50 Broad Capital Increases Opportunities Lower Risk/Return Spectrum Higher Long-Term Net Lease Core Development/ Redevelopment Strategic Land/ Development UBS JV Balance Sheet FirstCal 2 JV FirstCal 1 JV FirstCal 3 JV 50

51 Growth in JV Income ($ millions) $53 $43 $ G 2007 G 51 *2006 and 2007 represent midpoint of guidance.

52 Joint Venture Income Streams - Fees Property Management Leasing Acquisition Development Disposition JV/Asset Management Incentive Fees Development/ Repositioning (FirstCal 1) Core (FirstCal 2) Strategic Land and Development (FirstCal 3) Long-Term Net Lease (UBS) 52

53 Why Develop Inside a JV? An Example (in millions) $100 Million Project Cost Balance Sheet (100%) Joint Venture (10%) Capital Deployed $100.0 $4.0 Ownership in Profit (15% Margin) $15.0 $1.5 Fees: Development N/A $3.0 Leasing N/A $0.5 High ROI High Dollar Earnings Lower Risk Incentive N/A $2.9 Total $15.0 $7.9 53

54 Substantial Capital Capacity - and Growing $2.3 billion available + revolving capital New core development take-out capital (2H 2007) Long-Term Core (Re)development Strategic Land Core Net Lease Portfolio & Repositioning & Development Development (UBS JV) (FirstCal 2 JV) (FirstCal 1 JV) (FirstCal 3 JV) Take-Out $900 million $1 billion $950 million $950 million TBD $770 Million $590 Million $950 Million 54

55 Growing Capital Sources - Private Capital Few industrial property platforms exist High investment demand that is increasing Continued increase in income from JVs 55

56 Jojo Yap Chief Investment Officer 56

57 Substantial Capital Capacity - and Growing $2.3 billion available + revolving capital New core development take-out capital (2H 2007) Long-Term Core (Re)development Strategic Land Core Net Lease Portfolio & Repositioning & Development Development (UBS JV) (FirstCal 2 JV) (FirstCal 1 JV) (FirstCal 3 JV) Take-Out $900 million $1 billion $950 million $950 million TBD $770 Million $590 Million $950 Million 57

58 Growth Drivers Actions Taken Growing International Trade Formed Strategic Land & Development JV Expanded in Hub Markets, Inland Ports & Sea Ports 58

59 Growth Drivers Actions Taken Growing International Trade Supply Chain Reconfiguration Formed Strategic Land & Development JV Expanded in Hub Markets, Inland Ports & Sea Ports Grew National Platform to Accommodate Customers Business Expansion Increase Multi-Market Investments 59

60 Growth Drivers Actions Taken Growing International Trade Supply Chain Reconfiguration Formed Strategic Land & Development JV Expanded in Hub Markets, Inland Ports & Sea Ports Grew National Platform to Accommodate Customers Business Expansion Increase Multi-Market Investments Demographic Trends Increased Investment in Phoenix & Southern California Entered S. Florida Market 60

61 Growth Drivers Actions Taken Growing International Trade Supply Chain Reconfiguration Formed Strategic Land & Development JV Expanded in Hub Markets, Inland Ports & Sea Ports Grew National Platform to Accommodate Customers Business Expansion Increase Multi-Market Investments Demographic Trends Increased Investment in Phoenix & Southern California Entered S. Florida Market 61 Corporations Monetizing Real Estate Formed Net Lease Program with UBS Created FirstCal 1 JV to Reposition Surplus Corporate Properties

62 05/ 06YTD Investments in Strategic High Growth Markets Market Total Investment (millions) Atlanta $554 S. California 304 Baltimore 166 Central PA 118 Chicago 306 Dallas 146 Florida 206 Houston 58 N. New Jersey 113 Phoenix 216 San Francisco 132 Total $2,319 62

63 Growth Opportunities - International Trade Customer Needs Receive & distribute increasing containerized cargo from Far East Western port distribution center Distribute goods to 70 retail stores in the northwestern U.S., Alaska, and Western Canada FR Solution 450,000 S.F. distribution facility located near Port of Tacoma as an alternative to traditional West Coast ports World-class facility with advanced systems, high-finish design, multiple bays Expandable by 250,000 S.F. for future growth 63

64 Growth Opportunities - Supply Chain Reconfiguration Customer Needs Reconfigure manufacturing & distribution supply chain Operational flexibility with mid/long-term use of space 24 buildings FR Solution $152 million single transaction Provide operational flexibility through lease terms ranging from 5 to 15 yrs. Purchased multiple facility types across multiple markets 64

65 Growth Opportunities - Demographic Trends Customer Needs Manufacture & distribute products to serve increasing South West & West Coast population FR Solution Acquired ideal land site near airport and interstate highway Built $65 million, 550,000 S.F. customized, state-of-theart HQ, manufacturing and distribution facility 65

66 Growth Opportunities - Companies Monetizing Real Estate Customer Need Monetize real estate (surplus & sale-leaseback) FR Solution Acquire single assets and multidimensional portfolios Multi-term lease back $949 million total investment, 71 transactions* 66 * 2005/2006YTD

67 Corporate Customer Transactions ($ millions) $525 $322 $98 $148 $

68 Growth in Net Economic Gains ($ millions) CAGR = 28% $101 $115 $125 $78 $38 $46 $56 $ E 2007E 68

69 Growth in JV Income ($ millions) $43 $53 More JV Capital Higher Volume of Investments Faster Value Creation $ G 2007 G and 2007 represent midpoint of guidance

70 Dispositions Disposition Capability Dedicated team of 12 professionals Sold 747 properties through 519 transactions totaling $3.3 billion since 2001 spread across markets and facility types In 2005, one sale every two business days Liquid Market Users, 1031 exchange, TIC, private, pension funds Institutional investors allocating more $$ to industrial real estate Increased liquidity = shorter cycle time = less risk Capital Recycling Funds Higher Return Investments 70

71 Holding Period of Properties Sold # of Years Held H2006 Faster Value Creation 71 * Balance Sheet, Weighted by S.F.

72 Casting A Wider Net $18.7B YTD Submissions $1.1B YTD Investments Balance Sheet UBS FirstCal 1 FirstCal 2 FirstCal 3 FirstCal 2 72 FirstCal 1 More Capital More Investment Opportunities High Margins

73 Investment Pipeline Totals $1.7 Billion ($ millions) On Balance Sheet: $789 In JVs: $933 Acquisitions: $388 Acquisitions: $652 Developments: $401 Developments: $281 73

74 Jerry Pientka EVP, Development 74

75 Catalysts for Expanding Development Strategy Increasing international trade Growth in containerized cargo TEUs Supply chain reconfiguration Demographic trends 75

76 U.S. Containerized Cargo Volume (Millions of TEU) CAGR E: 7.2% E 2007E 2008E 2009E 2010E Source: Drewry 76

77 North American Container Port Traffic: TEUs Seattle/Tacoma 4,154,376 Oakland 2,272,525 NY/NJ: 4,792,922 Los Angeles 14,193,442 Houston 1,582,081 Charleston: 1,986,586 Savannah: 1,901,520 Jacksonville: 777,318 Palm Beach: 248,206 Miami: 1,054, Source: Cushman & Wakefield data.

78 Supply Chain Alternatives Customers seeking predictable supply chains Port diversification strategy Just-in-case vs. just-intime 78

79 Direct Absorption: Warehouse/Distribution (sq ft) Seattle 11,220,679 Chicago: 35,268,131 N. California 1,916,427 Kansas City 4,577,220 Indianapolis 5,031,727 New Jersey: 4,794,222 S. California 48,142,018 Phoenix: 7,012,694 Dallas 7,004,566 Memphis 8,640,951 Atlanta: 22,183,843 Orlando: 5,382,309 Miami: 6,618,401 Houston 13,040,177 Tampa / St. Petersburg 3,575, Source: Cushman & Wakefield. January 04 April 06 data.

80 Hub Markets Expected to experience the greatest demand for industrial space Common characteristics: Proximity to major population centers Sea ports and/or intermodal rail yards Efficient highway networks Southern California, Chicago, Atlanta, Toronto, Dallas, and New York/New Jersey 80

81 Inland Port Markets Significant demand for large scale distribution centers Common characteristics: Bypass port congestion and customs Rail more competitive than trucking Columbus, Harrisburg, Memphis, Nashville L.A./Long Beach container traffic 2/3 shipped inland intact 1/3 off-loaded for local consumption 81

82 Sea Port Markets Expect double-digit growth in container traffic Major ports are expanding capacity Characteristics: Proximity to major population centers Efficient intermodal rail capacity Available land for distribution centers Seattle/Tacoma, Norfolk, Houston, Jacksonville & Savannah 82

83 Southern California Port of LA Port of Long Beach 83

84 Southern California Port Growth (Millions of TEUs) million TEUs Los Angeles Long Beach 84

85 Southern California Strategy in Action 1 2 Inland Empire East

86 Investments in Southern California 05 and 06 $310 million total investment * 33 transactions 20 additional transactions being pursued 86 *Acquisitions + Total Development (includes projected build-out)

87 Development Market Strategy Investment Category Hub Markets Proximity to major population centers Rail capacity Highway network Seaport/intermodal Sea Port Markets East Coast ports growing faster Dredging for Port-Panamax ships Proximity to population centers Inland Port Markets Proximity to major population centers Containers shipped intact from seaports Convergence of rail carriers Demographic Driven Markets Higher rate of population growth Constrained land supply Markets S. California Chicago Atlanta S. California Seattle/Tacoma Norfolk Houston Chicago Atlanta Dallas Harrisburg S. California N. California Phoenix Toronto Dallas New York/New Jersey Jacksonville Savannah New York/New Jersey Nashville Columbus Toronto Memphis Florida Baltimore/W. Corridor Local Market Opportunities/BTS Serve customer growth Nationally 87

88 Development - Market Focus Seattle Toronto N. New Jersey Northern California Chicago Harrisburg Columbus Baltimore Norfolk Nashville Southern California Phoenix Dallas Memphis Atlanta Savannah Jacksonville Houston Florida 88

89 Total Development Opportunities ($ millions) $2,600 $1,200 $1,400 $236 $242 Current Land Holdings Potential Investment Land Pipeline Potential Investment Total Potential Investment 89

90 David Draft EVP, Operations 90

91 Operations Driving Growth Customers Growth Service Organization Specialization Training and development Portfolio drivers Occupancy Rental rates 91

92 Growth in Number of Customers 3,800 2, June '06 92

93 Customer Relationships 9 out of 10 customers would recommend First Industrial First Industrial Kingsley Index 93 Scale = 1 (lowest) to 5 (highest)

94 Valuable Broker Relationships > 90% of investment opportunities originate with brokers Market to more than 10,000 commercial brokers First Place broker program $18.7 billion in submittals YTD 06, up from $10.8 billion in 2005 More Broker Relationships x Increased Marketing = More Opportunities 94

95 National Platform Seattle San Francisco Salt Lake City Denver Minneapolis Milwaukee Chicago Indianapolis St. Louis Toronto Detroit Central PA Cleveland Columbus Cincinnati Louisville N. New Jersey Philadelphia S. New Jersey Baltimore/ DC Nashville Los Angeles Irvine San Diego Phoenix Dallas Memphis Atlanta Houston Tampa Orlando Miami 95

96 Enhanced Organizational Structure National Director of Leasing and Asset Management West VP Leasing VP Operations Central VP Leasing VP Operations East VP Leasing VP Operations Benefits of Organizational Structure Greater expertise Greater focus Greater capacity Higher NOI 96

97 Productivity/Expense Management Opportunities Spreading best practices throughout organization Improvements in technology and processes Investment in training 97

98 Investment Officer Success Factors Personality performance driven Network relationship building Knowledge industry expertise Acumen leverage the FR franchise 98

99 Improving Occupancy 100% 98% 96% 94% Estimate 92.5% 92% 87.7% 90% 88% 86% E 2007 E 99 Full year average

100 Rental Rate Increase Drivers More favorable lease rollovers Strong retention Positive net absorption Growing demand for new space 100

101 Operations Summary Improving portfolio performance NOI growth Organizational structure aligned with corporate customer strategy Customer service leader Focus on recruiting and developing the right people to grow business 101

102 Mike Havala Chief Financial Officer Guidance 102

103 Guidance: 2006 and E 2007 E FFO/share $3.61 $4.00-$4.20 $4.40-$4.60 GAAP EPS $1.80 $2.10-$2.30 $2.30-$

104 Guidance: 2006 and E 2007 E Occupancy (Average) 91.5% 92% 92-93% Same Store NOI (Average) -1% Even 2-3% 104

105 Guidance: 2006 and 2007 ($ millions) On Balance Sheet: E 2007 E Acquisitions/Development Sales Net Economic Gain $895 $ $ $656 $ $ $101 $ $ In Joint Ventures: Acquisitions/Development Sales FFO from Joint Ventures* $1,444 $ $1,200-1,300 $37 $ $ $15 $40-45 $ *Includes fees, incentive payments & pro rata share of operations/net economic gains

106 Balance Sheet Strength and Flexibility E 2007 E Debt to Market Cap 44% 40% 40% Fixed Charge Coverage EBITDA 2.6x 2.7x 2.9x Interest Coverage EBITDA 3.0x 3.3x 3.5x Weighted Avg. Maturity Permanent Debt 8.7 years 8.4 years 8.3 years Fixed Rate Permanent Debt 100% 100% 100% Unencumbered Assets 97% 97% 97% 106

107 Michael Brennan President and CEO 107

108 Strengthening the First Industrial Franchise for Growth FFO GROWTH STRONG FRANCHISE GROWTH DRIVERS Corporate Customer Demand International Trade Supply Chain Reconfiguration Demographic Trends Industry Trends STRATEGY Corporate Customer Focus Complete Supply Chain Solutions Local Market Knowledge Leading Customer Service Multiple Capital Sources Expertise Across R.E. Functions Customer Relationships Broker Relationships Co-investors/ Capital Talented Professionals Brand Awareness Leading Industrial R.E. Provider to Corporate Customers 108

109 109 Question and Answer