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Executives

Art Harmon – Head of Investor Relations

Bruce W. Duncan – President and Chief Executive Officer

Scott Musil – Chief Financial Officer

Johannson Yap – Chief Investment Officer

Christopher Schneider – Senior Vice President, Operations and Chief Information Officer

Robert Walter – Senior Vice President, Capital Markets

Analysts

Ki Bin Kim – Macquarie

Suzanne Kim – Credit Suisse

Steve Frankel – Green Street Advisors

Michael Mueller – JPMorgan

Ki Bin Kim – Macquarie

Daniel Donlan – Janney Montgomery Scott LLC

First Industrial Realty Trust (FR) Q2 2011 Earnings Call July 28, 2011 12:00 PM ET

Operator

Ladies and gentlemen, thank you for standing, and welcome to the First Industrial Second Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) Thank you.

I’ll now turn the floor to Mr. Art Harmon, Head of Investor Relations of First Industrial.

Art Harmon

Thank you Beverly, and hello everyone and welcome to our call. Before we discuss our second quarter 2011 results, let me remind everyone that the speakers on today’s call will make various remarks regarding future expectations, plans and prospects for First Industrial, such as those related to our liquidity, management of our debt maturities, portfolio performance, our overall capital deployment, our planned dispositions, our development and joint venture activities, continued compliance with our financial covenants, and expected earnings.

These remarks constitute forward-looking statements under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. First Industrial assumes no obligation to update or supplement these forward-looking statements. Such forward-looking statements involve important factors that could cause actual results to differ materially from those in forward-looking statements, including those risks discussed in First Industrial’s 10-K for the year ending December 31st, 2010 filed with the SEC and subsequent reports on 10-Q.

Reconciliation from GAAP financial measures to non-GAAP financial measures are provided in our supplemental report available at firstindustrial.com under the Investor Relations tab. Since this call may be accessed via replay for a period of time, it is important to know that today’s call includes time-sensitive information that may be accurate only as of today’s date, July 28, 2011.

Our call will begin with remarks by Bruce Duncan, our President and CEO; to be followed by Scott Musil, our Chief Financial Officer, who will discuss our results, capital position, and guidance, after which we will open it up for your questions.

Also on the call today are Jojo Yap, our Chief Investment Officer; Chris Schneider, Senior Vice President of Operations; and, Bob Walter, Senior Vice President of Capital Markets.

With that, let me turn the call over to Bruce.

Bruce W. Duncan

Thanks, Art and thank you to everyone for joining us today. The industrial real estate market continued its recovery with positive net absorption for the fourth consecutive quarter. Demand for industrial facilities continues to improve as the overall economy recovers even if at a slower rate than many economists originally projected.

The second quarter was another milestone for our company. As shown by our leasing results, our progress on our balance sheet, as well as our return to investing. I thank our team across the platform for their hard work and contributions. And I know, our entire organization is exited about the opportunities that lie ahead.

Given our strong performance in the quarter, we are maintaining our FFO guidance range before one-time items for 2011, as our projected performance for the year is offsetting the impact of our June equity rates. First and foremost, our focus in on leasing. This improving NOI is the key to driving the value of our company. Improving cash flow from our portfolio will also further strengthen our capital position and financial ratios. And also that will position us to be at dividend paying REITs in the future.

We achieved quarter end occupancy of 86.1% up 140 basis points, from 84.7% last quarter, and up 400 basis points from a year ago. Occupancy was driven by customer demand and activity across our markets, including the Diapers.com expansion in Central Pennsylvania, which contributed approximately 70 basis points. Our acquisition in Houston, which I will talk more about in a minute, also provided a 13 basis point pick up.

Sales accounted for just 2% of the increase, two basis points.

In the leasing market, demand continues to be broad-based across regions and customers types. We are seeing good activity on our vacancies, including in some more challenged markets like Atlanta and Dallas. But our job remains to convert this activity in the designed places.

Market rents and concessions have stabilized, but remains competitive. However as we have noted in prior calls, since the leasing cycle in our business is typically five years, we continue to roll off leases signed in better years. Reflective of that our rental rate change came in at negative 15.1% for the quarter. Our rates for the quarter were impacted by a due transactions, where we needed to meet the market.

Year-to-date rental rate changes were negative 12.4%. Until rates recover further we expect new supply to remain constrained in the vast majority of markets. This should help the market observe the existing vacancy over time.

Regarding our balance sheet, through our $101 million common equity offering in June, we achieved the higher end of our targeted debt-to-EBITDA range of 6.5 to 7.5 times. At the end of the second quarter, we were at a debt-to-EBITDA of 7.4 times when applying a normalized G&A expense run rate of about $6 million per quarter.

Factoring in our preferred stocks, we were still a levered company, but we have made great progress in leveraging the balance sheet and because of that progress we are now positioned to look for new investments to continuously upgrade our portfolio and grow the bottom line.

As we noted on prior calls, our strategy for new investments is to target high quality distribution facilities and higher rate growth markets and in store locations to generate long-term cash flow growth. Consistent with that we’re applying our joint-venture partners 85% interest in a 664,000 square foot distribution centre in Houston, Texas, 100% leased to Michelin until 2016.

Our investment was $30.6 million. We assumed the first mortgage of $24.4 million, and made an incremental cash investment of 5.3 million. The in place leverage cap rate was 8.4%.

In the third quarter, we have started development on our first inland logistics center, which is located in Moreno Valley, in the Inland Empire in Southern California. We are building a 692,000 square foot distribution center to be leased or to buy with an adjacent 10 acre trailing yard, which is an unique feature in this market.

The market for building 600,000 square foot or larger has been very strong and rates are recovered more than 40% from their levels 18 months ago. Because we worked on entitlements throughout the downturn, we are ready to break ground as market conditions rebounded giving us an early move or advantage.

Our all-in investment is expected to be approximately $44 million including our regional land bases. Our projected yields are incremental investment of $29 million is approximately 10% and our projected yield on all-in non-written down values is approximately 6.6%. We view this property as a long-term hold but for you information, I would note that cap rates on recent transactions in the Inland Empire have been 76%.

In addition to using new investments to advance our goal of upgrading the portfolio, we continue our discipline sale of non-strategic assets. Again our objective for sales are to achieve appropriate pricing, and value and to cover assets that are consistent with our long-term vision for the portfolio.

In the second quarter, we sold four properties totaling 354,000 square feet for $12.4 million or $34 per square foot at in-place cap rate of 8.3%. Three buildings in Detroit were sold to users and we also sold the manufacturing building in Sandwich, Ontario to local investors.

In the third quarter to date we saw one building totaling 204,000 square foot to $3.1 million. As an indicator of our efforts to get appropriate value, total proceeds on sales during the quarter exceeded the written down book value of these assets by about 40%.

Although, year-to-date our sales of $34 million are behind pace. We continue to maintain our goal of $100 million of sales for the year based on activity we have today.

So in sum, we continue to make good progress. Leasing is our biggest opportunity to drive cash flow and value and continues to be our reluctant focus of the FR team. And with the work we’ve done to strengthen our balance sheet we are positioned for new investments to upgrade our portfolio and grow our company.

Now, let me turn it over to Scott. Scott?

Scott Musil

Thanks Bruce. First let me walk through our results for the quarter. Earnings from operations were $0.23 per share compared to $0.16 per share in the year ago quarter. FFO per share results were impacted by a few one-time items during the quarter. These were a $0.04 loss on early retirement of debt, a $0.06 net impairment reversal primarily related to recent offer activity at one of our land parcels that are non-strategic portfolio.

Comparing second quarter 2011, the second quarter 2010 before one-time items, such as balance sheet impairment, losses from early retirement of debt and restructuring costs, funds from operations were $0.21 per share versus $0.24 per share in the year ago quarter. Note that second quarter results also included a $0.01 per share reserve reversal related a franchised tax matter that has been resolved, this item flow through our G&A line item in our income statement. EPS for the quarter was a loss of $0.06 per share versus a loss of $0.29 per share in the year ago quarter.

Moving onto the portfolio. As Bruce discussed, our occupancy for in service portfolio were 86.1% upward 140 basis points from 84.7% last quarter and up 400 basis points from 82.1% a year ago. In the second quarter, we commenced 4.6 million square feet of leases on our balance sheet. Of these 1.7 million square feet were renewed 1.8 million were renewals and 1.1 million were short-term.

Tenant retention was inline with our guidance at 67%. Same store NOI on a cash basis was down 2.7% excluding lease termination fees. These results reflected new leasing, offset by rental rate declines and same store NOI for the year ago quarter benefited from one time items primarily bankruptcy settlements and real estate tax appeals. Without these items same store would be approximately negative 0.7%

Rental rates were down at 15.1% cash-on-cash reflected with a competitive leasing market and impacted by a handful of deals where we face particularly strong competition on rate. On a GAAP basis, rental rates were down 9.9%. Leasing costs were $2.77 per square foot for the quarter, as there was a higher mix of new leasing versus renewals compared to the first first-quarter.

For the first half of 2011 lease costs were $2.34 per square-foot. For 2011, we now expect leasing costs to be approximately $2.30 to $2.60 per square foot an increase in both ends of the range by $0.10 based upon unanticipated costs for new leases in our pipeline. Lease termination fees totaled $534,000 in the quarter.

Moving on to our capital market activities and capital position. Bruce already mentioned over June equity rates of $101 million in which we sold 8.4 million shares. We also raised about $1 million through our ATM program in the quarter, so virtually all of our $100 million capacity under this program remains intact. You will also recall that we completed our $178 million secured financing in May.

This loan carries a 4.45% interest rate, 70% loan-to-value, a seven year term, and a 30 year amortization. We also continued our efforts to repay some of our higher interest rate debt prior to maturity. During the quarter we paid off a $27.4 million mortgage loan with an interest rate of 7.5%. We also repurchased $49.6 million of our 7.6% senior notes due 2028 and $7.5 million of our 7.15% senior notes due 2027. After quarter end, we repurchased another $9.4 million of the 7.6% notes due in 2028.

In the second quarter, we also modified an existing 23.3 million mortgage loan lowering the weighted average interest rate from 5.83% to 4.83% over a new five year term. Because of the capital we have raised, we are well positioned for our maturities through 2013. We have capacity under our existing credit facility to pay off at maturity a substantial portion of the $129 million of the 4.625% September 2011 converts and $62 million of the 6.875% April 2012 notes outstanding.

Next up on the capital front is our credit facility, which matures at September 2012. We expect to replace this credit facility by the end of the first quarter of next year. Delivering is still a significant focus but as Bruce noted we are prepared to deploy some capital on new investments if we can find opportunities that meet our portfolio objectives. Investments would likely be funded by sales proceeds and potentially additional equity depending upon market conditions.

Quickly summarizing our capital structure and current capital position. Our weighted average maturity of our unsecured notes and mortgages is 6.6 years with a weighted average interest rate of 6.78%. These figures exclude our credit facility. Our cash position today is approximately $23 million. Currently we just have a $5 million balance outstanding on the $200 million revolving portion of our credit facility with the capacity available to retire substantially all of our 2011 and 2012 senior notes maturities. We have $100 million outstanding on the term loan portion of our facility, and our debt to EBITDA ratio approximately 7.4 times using our normalized G&A expenses run rate of approximately $6 million per quarter.

Moving on to our guidance, before our press release, our FFO guidance range for 2011 is now $0.82 to $0.92 per share. Key components of the guidance are largely unchanged from last quarter. We expect average occupancy of 85% to 87%. Same-store NOI on a cash basis for the year is projected to be negative 1% to positive 1%. G&A up $22.5 million to $23.5 million, and 0.5 million reduction of the range at both ends due to the one time franchise tax matter reserve reversal I discussed earlier.

JV FFO of $1.5 million primarily related to our Net Lease Joint Venture.

This is $0.2 million increase from a prior guidance primarily due to the impact of additional economics from our JVs concluded in 2010. Our JV FFO guidance assumes no property sales in this joint venture or additional economics from the concluded JVs. For your modeling our run rate for JV FFO for our Net Lease joint venture is approximately $250, 000 for quarter.

Despite the full year net dilution of $0.02 per share from our June equity offering we were able to keep our guidance range for 2011 before one-time items such as restructuring costs, loses from retirement of debt, and balance sheet impairment unchanged at $0.83 to $0.93 per share.

Our 2011 guidance does not reflect the impact of any further debt issuance’s, our repurchases prior to maturity other than the $9.4 million a 20 28 notes that we repurchased in the third quarter that I noted earlier.

Guidance also does not reflect future property sales or acquisitions or any Non-NAREIT Compliant Gains, or any potential additional equity issuance.

With that let me turn it back over to Bruce.

Bruce W. Duncan

Thanks Scott. Before we open it up to questions, let me offer a few final comments. We are focused on four key drivers to enhance value for our shareholders. First, leasing, and improving cash flow, second discipline expense management. Third executing our asset management strategy, and finally select disciplined investment. Our job is to execute these four drivers. We also like to help you better understand the underlying value of our property and our platform, by doing so we believe we can demonstrate that we represent good value compared to our peers especially on an inside cap rate and price per pound basis, and to help you get First Industrial better we asked you to please mark your calendars for our Investor Day on November 9th in New York City. And plan to join us for a property tour of portion of our central Pennsylvania, a New Jersey portfolio the following day November 10th.

We hope to see many of you there for a product discussion of our plan and our portfolio and to give you an opportunity to meet some of our talented team. Additional details will be forthcoming.

And with that we’ll now be happy to take your question, as a courtesy to other callers, we ask that you limit your questions to one plus a follow up in order to give other participants a chance to get their questions answered. Of course you are welcome to get back in the queue. And so now operator can we please open it up to questions.

Question-And-Answer-Session

Operator

(Operator Instructions) Your first question comes from the line of Ki Bin Kim with Macquarie.

Ki Bin Kim – Macquarie

Thank you. I just reconcile the negative 2.7 cash (inaudible) this quarter especially in light of the 140 basis points increase in occupancy. Was there one-time items in there or can you just walk me through that.

Scott Musil

Sure, Ki Bin, this is Scott Musil. As we’ve mentioned in our remarks if you factor out one-time items that occurred in the second quarter of 2010 that were some bankruptcy settlement payments that we received and some lower real estate taxes that occurred in the second quarter of 2011 due to some tax appeals that were finalized, if you get rid of those items we were at a negative 0.7% same store decline 2Q of ’11 to 2Q of ’10, so a large portion of that 2.7% decline was made up of a couple of one-time items.

Ki Bin Kim – Macquarie

So, I guess the guidance of negative one, the final one is still I’m tracking you expected to turn, I guess you will have to turn positive in the second half?

Scott Musil

That’s correct Ki Bin.

Ki Bin Kim – Macquarie

All right thanks.

Operator

Your next question comes from the line of Suzanne Kim with Credit Suisse.

Suzanne Kim – Credit Suisse

Hi, good morning, a couple of questions about the Inland Empire and you’ve broken, have you broken ground there and who else has broken ground there and what are the ones sort of projected to be at this point and the concession packages for the Inland Empire.

Scott Musil

We have broken ground there. We got ability to permit that we are doing great right now on site in terms of new buildings, there are couple of plans in Watson’s got one under construction right now. Joe, do you want to add any more color?

Johannson Yap

Great, correct big 30,000 square foot under construction and then under a few plan and so far the rental rates we will report to you once we’ve completed next quarter, next year, when we will lease that. I am just going to give me a data point, the most recent large new lease that were signed in that June, about June 15 was signed by 600,000 quarter in real so for 10-year lease at $0.325 per month, so this is about 390 net per square foot with average escalation annual escalation of 2% per year. So that's the most recent talk that is available.

Suzanne Kim – Credit Suisse

Great, and just one more follow-up question regarding the leases that you're signing right now, I mean the rental rates are down, but what's the average lease links terms that you are sort of signing now and then let the concessions have they started decreasing or they still up the shorter links lease terms.

Scott Musil

Chris Schneider will give an update.

Chris Schneider

Sure for the quarter our lease term was about 4.6 years and if you factor in the deals there are about 3.5 years. So we are still seeing that the leasing activities that is shorter natured, I mean your concessions are starting to level off in most of the markets we are sitting (inaudible).

Johannson Yap

In the end it will bumps to…

Chris Schneider

And then for this quarter the annual bumps for certain leases that commenced in 2011 the annual bumps were about 4.3%, so again it’s the annualized bumps. So again we’re seeing those a little bit higher, we’re still have in the little bit with the starting rates are lower though we being in the bumps built (inaudible).

Suzanne Kim – Credit Suisse

Great thank you so much.

Scott Musil

You are welcome.

Operator

Your next question comes from the line of Steve Frankel with Green Street Advisors.

Steve Frankel – Green Street Advisors

Well, thank you. The essential PA has been pointed out as the stronger development market by Liberty early this week and it sounds like you made some progress with Diapers.com this quarter. When you know we can start Breaking Ground there with the (inaudible) took out of your Empire bucket last quarter?

Scott Musil

We’re working on tight amends there, it will be a little bit my guess we’ll not be yet start at 2011 start but a it’s a fast full start for 2012.

Steve Frankel – Green Street Advisors

So the economic. I'm sorry, did the economic justified to that.

Scott Musil

On Investor Day we’ll see. Got, Steve.

Steve Frankel – Green Street Advisors

Is it to the economic fair justify development right now for spec.

Scott Musil

My guess is we wouldn't do a spec development. We would wait and get if one possibility we have is one tenant shown we would capitalize a portion of the building of over here two building complex and they will take a portion of it. But again we are still in the approval stage and it’s too early to really talk about anything.

Steve Frankel – Green Street Advisors

And understood and then last question before I jump back in the queue. You guys were able again this quarter to generate sales prices well in excess of your impaired basis. It is kind of like Bruce you mentioned it was about 40%, I think in your prepared remarks, but the sales pace has started to slowdown, and do you think you guys wrote down your impaired values much too early at this point.

Bruce W. Duncan

Well we'll wait and see in terms of, we are pleased with the progress we made to date on sales, but there's work to be done in terms of you continue to do get our goal of the $100 million, but we’ll see, the market is definitely getting better.

Steve Frankel – Green Street Advisors

Great, thank you.

Operator

(Operator Instructions) The next question comes from the line of Michael Mueller with the JPMorgan.

Michael Mueller – JPMorgan

Hi, I have a question first just have a quick clarification question for Scott, on the basis that you presenting guidance for the $0.83 to $0.93 excluding charges et cetera. Where are you on a year-to-date basis because I know you had a couple of moving parts there, and I just want to make sure that we know what’s being included or excluded from that?

Scott Musil

What we’ve excluded from it Mike is restructuring costs, impairment charges and loss from retirement of debt. So those are three pieces that we’ve excluded from our guidance before one-time items. So those are the three pieces to exclude to get to that number.

Michael Mueller – JPMorgan

Okay. And then secondly it seems like you have been little more active on the new investment side both with the development as well as buy out of a JV partner. If you thinking about, I know you talked about still having confidence for about 100 million of dispositions this year, but if we’re thinking out ‘11, ’12, does it still feel like you’re going to be a net seller at this point or do you think there's a chance that even if you're, it’s going to be, it could be pretty nominal.

Bruce W. Duncan

I think it is going to depend on what the opportunities are. If we find some good opportunities, we will be an investor and buy, but we’ll have to again focus on we’re going to continue to upgrade the portfolio and focus on pulling the portfolio of assets we want to close, but also buying assets in markets we feel like and high quality assets. So it depend on the opportunity.

Michael Mueller – JPMorgan

Okay. Great, thank you.

Bruce W. Duncan

Operator?

Operator

Your next question comes from the line of Dave Rodgers with RBC Capital Markets.

Unidentified Analyst

Hi, guys, its [Mike] here. I know that FR is in position to make new investment, where is the company’s focus? Are you guys looking more on developments on acquisitions and what markets looks more attractive to you today?

Bruce W. Duncan

Again our focus is to continue to upgrade the portfolio, and we’re doing that both by selling assets developed our strategic vision and also buy time or developing. As I mentioned in our remarks, I’m not sure you’re going to chill out our new development in the short term. We do in Southern California because that’s a very strong market and we have a very good site there. Central PA which Steve just talked about Steve Frankel is a very good site too, but in terms of markets where you’re going to see new construction and in the short-term, I’m not going to see that much of it. So our focus would probably be more on the acquisition side than development.

Unidentified Analyst

And then how much would you like to sell over the longer term to achieve your strategic goals?

Bruce W. Duncan

Well, as you know, we’ve got a portfolio that we’ve identified close to $400 million that we would like to call over time.

Unidentified Analyst

Okay, great. Thank you.

Bruce W. Duncan

Thank you.

Operator

The next question is a follow up from the line of Ki Bin Kim with Macquarie.

Ki Bin Kim – Macquarie

I might have missed this part, but do you have a tenant line up or working on tenant for that development project in FR?

Bruce W. Duncan

We’ll tell you when we get it done.

Ki Bin Kim – Macquarie

Okay. I just wanted to make sure I missed. And second…

Bruce W. Duncan

Okay, (inaudible) able to get one.

Ki Bin Kim – Macquarie

In 2012, it looks like you have a fair amount of lease expiration of about 20% is coming rolling over. Could you just give some color on how much of that you’ve start to working on and what the mark-to-market looks like?

Bruce W. Duncan

Ki, you as far as looking at 2012 and that you’re right around that 18% and 19% in number. And if you look back a year ago we’re about in the same position, so we feel that we’re still working on that. And then obviously we start talking to our tenants well in advance and we’re on progress with that. And so bottom line, we’re about the same position we were a year ago, so we feel okay about that.

Ki Bin Kim – Macquarie

I mean in terms of like mark-to-market color, does it seem like you’ll improve much more than what we’ve seen in 2011 or do you think at this point…

Bruce W. Duncan

Again, we think the market continues to improve. So we’ll keep you posted on progress but the market, almost all markets are strengthening.

Ki Bin Kim – Macquarie

Okay. Thank you.

Operator

(Operator Instructions) Your next question is a follow-up from the line of Steven Frankel with Green Street Advisors.

Steven Frankel – Green Street Advisors

Just a follow-up on the same-store discussion from earlier, I think that was one of Ki Bin’s question, if you break the same-store down to even down 70 bps in the quarter, given the occupancy increase, the amount of bumps that you have in your releases, I’m still not sure even with the 15% roll down, how you could have negative same-store? Is there just a lot of free rent or something with free rents that’s coming on versus burning off this quarter? Is that function on a cash basis?

Bruce W. Duncan

Another factor in there was the year-over-year change in the free rent. And so the free rent went up above $300,000 from a quarter or a year ago, so you’ve factored that is in same-store it will be about that was the one-time items but flat for the year.

Steven Frankel – Green Street Advisors

Okay. And…

Scott Musil

Steve, just this is Scott Musil as well. In the end of the second quarter, we had quite a few leases that were signed as well, so you see it in our year end occupancy, which you are not quite seeing it in the second quarter of 2011 results. That will be lead through in the third quarter of 2011.

Steven Frankel – Green Street Advisors

Okay, that makes sense. That makes more sense. And then just in terms of the modification of loans, how much that loan due and what’s the new LTV on that loan.

Scott Musil

Bob do you want to answer that.

Robert Walter

That loan had about four years remaining on the term and it was a very flexible prepayment structure that the LTV on it was about 65%.

Steven Frankel – Green Street Advisors

Do you have any other ones that you could be dealing this with on unsecured mortgage type?

Robert Walter

We get a number of loans that are going to be opened to prepayment and starting in 2012 and we look at having those conversations as those dates approach.

Steven Frankel – Green Street Advisors

Great, thank you.

Scott Musil

Okay.

Operator

Your next question comes from the line of Daniel Donlan with Janney Montgomery Scott.

Daniel Donlan – Janney Montgomery Scott LLC

Thank you and good morning. Just a quick question on the NOI margins just curious as to how hard has been (inaudible) I think if you look at the same-store portfolio its, I think for the quarter it is about 67.5% look at some of the competitors in the industrial states and they run close to 70% margin, is that as you sell-off some of your non-core stuff, is that the level you think you guys can reach in two to three years.

Scott Musil

Dan this is Scott Musil. I think it's a function of two items. One is increasing our occupancy, we are at 86.1% at the end of the second quarter. So as we continue to increase occupancy in the poor portfolio that will drive and align our margins will get a little bit better. And you are correct as we continue to execute our non-strategic sales program that should help out margin as well. Our non-strategic portfolio this is excluding the land piece is in the mid 70% occupied. So to the extent we are able to sell off that portfolio at that average that will help increase our NOI margin as well.

Daniel Donlan – Janney Montgomery Scott LLC

Okay is there a certain like level of occupancy where you get the 70% or is it like 90% 91% or..

Scott Musil

Dan it really depends a lot on what the rental rates do over the next couple of years, so it's hard to project without looking at that assumption.

Daniel Donlan – Janney Montgomery Scott LLC

Okay. And then lastly as we look at your in the kind of what asset you leased, I don’t know if we can kind of quantify that on the average age or some of these properties, I guess my concern would be that some of these properties are little bit older and a form a new tenant in the market given (inaudible) you were talking about maybe you see better off (inaudible) in a nice brand new space, but that might 5 to 6, 10 years old.

Scott Musil

Dan we’re going to be, we have a thorough discussion of our vacancies on Investor Day November 9, but we are going to highlight the vacancies and show where they are and I think you’re going to be pleasantly surprised in terms of the quality assets and where they are. So coming to Investor Day we are going to go through it in detail, November 9th.

Operator

Thank you. And there are no further questions at this time. I’ll now turn the floor to Bruce Duncan for closing remarks.

Bruce W. Duncan

Thank you, operator. And thank you all for participating on our call today. Please feel free to call us if you have any questions and we look forward to seeing some of you in the coming month in our Investor Day on November 9, and 10th for the tour of Central PA, New Jersey. Thanks a lot.

Operator

Thank you for joining today’s conference call. You may now disconnect.

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