First Industrial Realty Trust, Inc. (FR), a real estate investment trust (REIT), has recently priced the secondary offering of 8.9 million common shares at $11.40 each. UBS Securities LLC, an indirect wholly-owned subsidiary of UBS AG (UBS) is acting as the sole book-running manager for the offering.
First Industrial anticipates raising net proceeds of $100 million from the equity offer. The company intends to utilize the proceeds from the offering to repay its debt. At the same time, the company declared first quarter 2011 dividend of $0.45313 per depositary share on its 7.25% Series J Cumulative Redeemable Preferred Stock.
The latest equity offer is part of the long-term strategy of the company to de-lever its balance sheet and attain a debt to EBITDA (earnings before interest, tax, depreciation and amortization) target of 6.5x to 7.5x. By the end of fourth quarter 2010, First Industrial had a debt to EBITDA of 8.3x.
Earlier, the company had reported strong fourth quarter 2010 results with a 140 bps increase in occupancy for overall portfolio occupancy of 85%. In comparison, the overall national industrial market improved a meager 30 bps to 85.7% at the end of the fourth quarter 2010 according to data by CB Richard Ellis Group, Inc. (CBG).
Having outperformed the broader industrial market in the last reported quarter on the basis of occupancy, First Industrial expects to maintain its bull run in the coming quarters as well, with stabilization in market fundamentals.
First Industrial owns and operates industrial real estate assets and provides supply chain solutions to multinational corporations and regional customers that range from 1,000 square feet to over 1 million square feet in leading industrial markets.
Since its inception in 1994, the company has developed a niche in offering premier industrial space across major markets in North America, including bulk and regional distribution centers, light industrial and other industrial facility types.
We presently have a ‘Neutral’ rating on First Industrial, which currently has a Zacks #3 Rank that translates into a short-term ‘Hold’ recommendation and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1–3 months.
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