J.P Morgan Comments On First Industrial Realty Trust Following Earnings

While there were still a lot of moving parts in the quarter, J.P Morgan's initial take is that First Industrial Realty Trust's FR ‘clean' Q4 FFO came in about $0.04+ ahead of its comparable estimate. As discussed below, lower G&A costs and higher gross NOI were the primary contributors. From a core operations perspective, portfolio occupancy increased 140 bps from 9/30 to 85.0% at YE and looks to have been positively influenced by more aggressive pricing as Q4 rents spreads widened out to -17%. On the balance sheet front, the company continued to chip away at the stone with some asset sales, debt repayments and sale of stock via its ATM program. J.P Morgan expects all of these activities to continue in 2011 and to be a focus of Thursday's call. Additionally, it thinks the Street will look for more color on G&A trends. This line item came in well below expectations in Q4 and 2011 guidance has this continuing to trend down. In J.P Morgan's initial review of the numbers, it thinks the bulk of the upside related to NOI and G&A. With respect to NOI, the YE 85% occupancy mark was higher than where it pegged it, despite the weaker roll-downs. Additionally, JPM assumed a greater level of asset sales in the quarter than actually materialized which likely contributed to some of the variance. J.P Morgan has an Underweight rating and $8 PT on FR FR closed Wednesday at $11.22