First Industrial EPS Climbs 10.5% In Q2

Key Points

• Earnings per share reached $0.42 for Q2 2025, exceeding the $0.38 analyst estimate.

• Revenue grew to $180.2 million in Q2 2025, surpassing consensus expectations and increasing 9.8% year over year.

• Funds From Operations (FFO) per share/unit (diluted) was $0.76, compared to $0.66 for Q2 2024, a 15.2% increase, with ongoing strength in rental and same store NOI growth.

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First Industrial Realty Trust (NYSE:FR), a real estate investment trust focused on logistics and industrial properties in major U.S. markets, reported fiscal 2025 second-quarter results on Wednesday, July 16, that topped analysts' consensus expectations. Earnings per share (EPS) of $0.42 beat the forecasted $0.38, while Q2 revenue came in at $180.2 million, ahead of the $177.6 million consensus estimate.

The quarter showed strong operational execution with expansion in FFO per share, but revealed a slight decline in occupancy rates. Overall, the period highlighted notable rental growth, a disciplined development strategy, and a robust capital position, though occupancy and leasing velocity faced some recent pressure.

Source: First Industrial Realty. Note: Analysts' consensus estimates provided by FactSet. YOY = Year over year. Same-store net operating income (NOI) growth is on a cash basis, before termination fees. bps = basis points.

Business Overview and Strategic Focus

The company operates as a real estate investment trust (REIT) specializing in the ownership, development, and management of logistics and industrial facilities. Its portfolio is concentrated in 15 key U.S. logistics markets, many of which are coastal regions with limited land supply. This focus allows it to benefit from consistently strong demand, long-term rent growth potential, and capital appreciation.

Recently, the company's strategy has focused on driving internal rental growth through lease renewals, rent escalations, and targeted development projects. Disciplined investment in high-demand, supply-constrained markets and financial management, including prudent debt issuance and maintaining capital flexibility, remain key to its success. Management's ability to respond to market demand and control operating expenses is also vital.

Quarter Highlights: Growth, Leasing, Financials, and Capital Activity

The second quarter saw robust gains in rental revenue and profitability. Revenue (GAAP) was $180.2 million, compared to $164.1 million in Q2 2024, a 9.8% increase. Same store net operating income (NOI), a non-GAAP metric that tracks the performance of properties held for at least a year and eliminates distortions from acquisitions and dispositions, rose 8.7%. FFO per share/unit (diluted) grew 15.2% compared to Q2 2024, reflecting both stronger recurring earnings and conservative capital management.

Leasing metrics showed both notable strengths and some emerging caution signals. Rental rates on new and renewal leases increased 28.0% on a cash basis and 47.1% on a straight-line basis, meaning that, accounting for contractual rent escalations, future revenue from these leases should remain strong. Excluding a large fixed-rate renewal, cash rental uplifts rose 46.1%, underscoring strong tenant demand. However, In-service occupancy was 94.2% at the end of the quarter, compared to 95.3% at the end of Q1 2025 and Q2 2024, which management attributes to planned move-outs and unleased newly-developed space. Management indicated that 88% of space expiring in 2025 is already addressed, helping ease concerns about rollover risk.

Development activity featured the start of two new projects -- one in Dallas at 176,000 square feet with a $23 million investment and another in Philadelphia at 226,000 square feet and $31 million invested. Both target yields near 8%, with a focus on smaller tenants and underserved segments. The company also leased part of a newly developed building in Orlando and completed a small asset sale in Detroit for $2 million. Property expenses increased by 5.6% compared to Q2 2024, while general and administrative costs declined 12.4% compared to Q2 2024.

From a balance sheet and capital markets perspective, the company issued $450 million in senior unsecured notes at 5.25% due in 2031, its first public bond since 2007. The company’s senior unsecured debt was upgraded to BBB+ by Fitch Ratings during the quarter. Total debt at quarter-end increased to $2.393 billion as of June 30, from $2.209 billion at the end of 2024, reflecting ongoing development activity. Importantly, there are no major debt maturities until 2027, assuming all extension options are exercised, giving it more flexibility for managing growth and refinancing risk.

The quarterly dividend was raised 20.3% to $0.445 per share for Q1 2025, continuing a series of increases. This dividend growth supports shareholders and underscores confidence in the company's earnings trajectory and cash flow stability.

Looking Ahead: Guidance and Key Trends

Management reaffirmed its full-year fiscal 2025 guidance. The company expects GAAP net income per share between $1.53 and $1.61 for FY2025 and FFO per share between $2.88 and $2.96. Average in-service occupancy is forecasted at 95% to 96% for 2025, and management projects same-store NOI growth of 6% to 7% for 2025 before termination fees. Guidance for general and administrative expenses is $40.5 million to $41.5 million for 2025. All guidance excludes potential impacts from future, uncommitted acquisition, sales, or financing actions.

Management cautioned about persistent uncertainty from U.S. trade tariffs, noting some leasing decisions have slowed or paused as tenants wait for policy clarity. The company ran a sensitivity analysis showing that if the largest new developments are not leased up by the end of the year, the potential impact on FFO per share would be limited to $0.02, which is still within management’s stated full-year 2025 guidance range. The company has achieved a cash rental rate increase of approximately 33% on leases signed to date in 2025, reflecting 88% of 2025 expirations by square footage.

Note: Revenue and net income are presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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