-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UuysGP88Aq5HE80xnWrMLzNwcbhtrlvK1Dw83ga82+80to0gEM4g2hCMWYOpuYIp RrGDDdmpI0I52hcmJF2jNg== 0000950137-07-003122.txt : 20070301 0000950137-07-003122.hdr.sgml : 20070301 20070301161851 ACCESSION NUMBER: 0000950137-07-003122 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20061231 FILED AS OF DATE: 20070301 DATE AS OF CHANGE: 20070301 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST INDUSTRIAL LP CENTRAL INDEX KEY: 0001033128 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 363924586 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-21873 FILM NUMBER: 07663606 BUSINESS ADDRESS: STREET 1: 311 S WACKER DR STREET 2: STE 4000 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3123444300 MAIL ADDRESS: STREET 1: 150 N WACKER DR STREET 2: STE 150 CITY: CHICAGO STATE: IL ZIP: 60606 10-K 1 c12588e10vk.htm ANNUAL REPORT e10vk
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-K
 
     
þ
  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
    For the fiscal year ended December 31, 2006
or
o
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
    For the transition period from          to          .
 
Commission File Number 333-21873
 
FIRST INDUSTRIAL, L.P.
(Exact name of Registrant as specified in its Charter)
 
     
Delaware   36-3924586
(State or other jurisdiction of
  (I.R.S. Employer
incorporation or organization)
  Identification No.)
311 S. Wacker Drive, Suite 4000,
  60606
Chicago, Illinois
  (Zip Code)
(Address of principal executive offices)    
 
(Registrant’s telephone number, including area code)
(312) 344-4300
 
Securities registered pursuant to Section 12(b) of the Act:
None
 
Securities registered pursuant to Section 12(g) of the Act:
None
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes þ     No o
 
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.  Yes o     No þ
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No o
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  þ
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ     Accelerated filer o          Non-accelerated filer o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o     No þ
 

 

 
FIRST INDUSTRIAL, L.P.
 
TABLE OF CONTENTS
 
                 
       
Page
 
  Business   4
  Risk Factors   10
  Unresolved SEC Comments   17
  Properties   17
  Legal Proceedings   28
  Submission of Matters to a Vote of Security Holders   28
 
  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities   28
  Selected Financial Data   29
  Management’s Discussion and Analysis of Financial Condition and Results of Operations   31
  Quantitative and Qualitative Disclosures About Market Risk   49
  Financial Statements and Supplementary Data   49
  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure   49
  Controls and Procedures   49
  Other Information   50
 
  Directors, Executive Officers and Corporate Governance   50
Item 11.
  Executive Compensation   50
Item 12.
  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters   50
Item 13.
  Certain Relationships and Related Transactions and Director Independence   50
Item 14.
  Principal Accountant Fees and Services   50
 
  Exhibits and Financial Statement Schedules   50
  S-26
 Computation of Ratios of Earnings to Fixed Charges
 Consent of PricewaterhouseCoopers LLP
 Certification of Principal Executive Officer
 Certification of Principal Financial Officer
 Section 906 Certification


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This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. First Industrial, L.P. (the “Operating Partnership”) intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of complying with those safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Operating Partnership, are generally identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar expressions. The Operating Partnership’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on the operations and future prospects of the Operating Partnership on a consolidated basis include, but are not limited to, 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 Operating Partnership’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. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Further information concerning the Operating Partnership and its business, including additional factors that could materially affect the Operating Partnership’s financial results, is included herein in Item 1A, “Risk Factors” and in the Operating Partnership’s other filings with the Securities and Exchange Commission.


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PART I
 
THE COMPANY
 
Item 1.   Business
 
General
 
First Industrial, L.P. (the “Operating Partnership”) was organized as a limited partnership in the state of Delaware on November 23, 1993. The sole general partner is First Industrial Realty Trust, Inc. (the “Company”) with an approximate 87.3% ownership interest at December 31, 2006. The Company also owns a preferred general partnership interest in the Operating Partnership (“Preferred Units”) with an aggregate liquidation priority of $325 million. The Company is a real estate investment trust (“REIT”) as defined in the Internal Revenue Code. The Company’s operations are conducted primarily through the Operating Partnership. The limited partners of the Operating Partnership owned, in the aggregate, approximately a 12.7% interest in the Operating Partnership at December 31, 2006.
 
The Operating Partnership is the sole member of several limited liability companies (the “L.L.C.s”) and the sole stockholder of First Industrial Investment, Inc., (together with the Operating Partnership and the L.L.C.’s, the “Consolidated Operating Partnership”), the operating data of which is consolidated with that of the Operating Partnership as presented herein. The Operating Partnership also holds at least a 99% limited partnership interest in First Industrial Financing Partnership, L.P. (the “Financing Partnership”), First Industrial Securities, L.P. (the “Securities Partnership”), First Industrial Mortgage Partnership, (the “Mortgage Partnership”), L.P. First Industrial Pennsylvania, L.P. (the “Pennsylvania Partnership”), First Industrial Harrisburg, L.P. (the “Harrisburg Partnership”), First Industrial Indianapolis, L.P. (the “Indianapolis Partnership”), TK-SV, LTD., and FI Development Services L.P. and wholly owned LLC’s (together, the “Other Real Estate Partnerships”). The Other Real Estate Partnerships’ operating data is presented herein on a combined basis, separate from that of the Consolidated Operating Partnership. The general partners of the Other Real Estate Partnerships are separate corporations, each with at least a .01% general partnership interest in the Other Real Estate Partnerships for which it acts as a general partner. Each general partner of the Other Real Estate Partnerships is a wholly-owned subsidiary of the Company. The Operating Partnership or First Industrial Investment, Inc., through separate wholly-owned limited liability companies in which it is the sole member, also owns minority equity interests in, and provides various services to, six joint ventures which invest in industrial properties (the “September 1998 Joint Venture,” the “May 2003 Joint Venture,” the “March 2005 Joint Venture,” the “September 2005 Joint Venture,” the “March 2006 Co-Investment Program” and the “July 2006 Joint Venture”). The Operating Partnership, through a separate, wholly-owned limited liability company of which the Operating Partnership is also the sole member, also owned a minority interest in, and provided property management services to, a seventh joint venture which invested in industrial properties (the “December 2001 Joint Venture”; together with the September 1998 Joint Venture, the May 2003 Joint Venture, the March 2005 Joint Venture, the September 2005 Joint Venture, the March 2006 Co-Investment Program and the July 2006 Joint Venture, the “Joint Ventures”). During the year ended December 31, 2004, the December 2001 Joint Venture sold all of its industrial properties. On January 31, 2007, the Consolidated Operating Partnership purchased the 90% equity interest from the institutional investor in the September 1998 Joint Venture. The operating data of the Joint Ventures is not consolidated with that of the Consolidated Operating Partnership as presented herein. The Other Real Estate Partnerships and the Joint Ventures are accounted for under the equity method of accounting.
 
As of December 31, 2006, the Consolidated Operating Partnership owned 764 in-service industrial properties, containing an aggregate of approximately 60.3 million square feet of gross leasable area (“GLA”). On a combined basis, as of December 31, 2006, the Other Real Estate Partnerships owned 94 in-service industrial properties, containing an aggregate of approximately 8.3 million square feet of GLA. Of the 94 industrial properties owned by the Other Real Estate Partnerships at December 31, 2006, ten are held by the Mortgage Partnership, 34 are held by the Pennsylvania Partnership, 13 are held by the Securities Partnership, 22 are held by the Financing Partnership, nine are held by the Harrisburg Partnership, four are held by the Indianapolis Partnership, one is held by TK-SV, LTD. and one is held by FI Development Services, L.P. The


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Consolidated Operating Partnership’s and Other Real Estate Partnerships’ in-service properties include all properties other than developed, redeveloped and acquired properties that have not yet reached stabilized occupancy (generally defined as properties that are 90% leased).
 
The Consolidated Operating Partnership utilizes an operating approach which combines the effectiveness of decentralized, locally based property management, acquisition, sales and development functions with the cost efficiencies of centralized acquisition, sales and development support, capital markets expertise, asset management and financial control systems. At February 22, 2007, the Consolidated Operating Partnership had approximately 500 employees.
 
The Consolidated Operating Partnership has grown and will seek to continue to grow through the development and acquisition of additional industrial properties, through additional joint venture investments, and through its corporate services program.
 
The Company maintains a website at www.firstindustrial.com. Copies of the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such reports are available without charge on the Company’s website as soon as reasonably practicable after such reports are filed with or furnished to the Securities and Exchange Commission (the “SEC”). In addition, the Company’s Corporate Governance Guidelines, Code of Business Conduct and Ethics, Audit Committee Charter, Compensation Committee Charter, Nominating/Corporate Governance Committee Charter, along with supplemental financial and operating information prepared by the Company, are all available without charge on the Company’s website or upon request to the Company. Amendments to, or waivers from, the Company’s Code of Business Conduct and Ethics that apply to the Company’s executive officers or directors will be posted to the Company’s website at www.firstindustrial.com. Please direct requests as follows:
First Industrial Realty Trust, Inc.
311 S. Wacker, Suite 4000
Chicago, IL 60606
Attention: Investor Relations
 
Business Objectives and Growth Plans
 
The Consolidated Operating Partnership’s fundamental business objective is to maximize the total return to its partners through increases in per unit distributions and increases in the value of the Consolidated Operating Partnership’s properties and operations. The Consolidated Operating Partnership’s growth plans include the following elements:
 
  •  Internal Growth.  The Consolidated Operating Partnership seeks to grow internally by (i) increasing revenues by renewing or re-leasing spaces subject to expiring leases at higher rental levels; (ii) increasing occupancy levels at properties where vacancy exists and maintaining occupancy elsewhere; (iii) controlling and minimizing property operating and general and administrative expenses; (iv) renovating existing properties; and (v) increasing ancillary revenues from non-real estate sources.
 
  •  External Growth.  The Consolidated Operating Partnership seeks to grow externally through (i) the development of industrial properties; (ii) the acquisition of portfolios of industrial properties, industrial property businesses or individual properties which meet the Consolidated Operating Partnership’s investment parameters and target markets; (iii) additional joint venture investments; and (iv) the expansion of its properties.
 
  •  Corporate Services.  Through its corporate services program, the Consolidated Operating Partnership builds for, purchases from, and leases and sells industrial properties to companies that need industrial facilities. The Consolidated Operating Partnership seeks to grow this business by targeting both large and middle-market public and private companies.


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Business Strategies
 
The Consolidated Operating Partnership utilizes the following six strategies in connection with the operation of its business:
 
  •  Organization Strategy.  The Consolidated Operating Partnership implements its decentralized property operations strategy through the deployment of experienced regional management teams and local property managers. Each operating region is headed by a managing director who is a senior executive officer of, and has an equity interest in, the Company. The Consolidated Operating Partnership provides acquisition, development and financing assistance, asset management oversight and financial reporting functions from its headquarters in Chicago, Illinois to support its regional operations. The Consolidated Operating Partnership believes the size of its portfolio enables it to realize operating efficiencies by spreading overhead among many properties and by negotiating purchasing discounts.
 
  •  Market Strategy.  The Consolidated Operating Partnership’s market strategy is to concentrate on the top industrial real estate markets in the United States. These top markets have one or more of the following characteristics: (i) strong industrial real estate fundamentals, including increased industrial demand expectations; (ii) a history of and outlook for continued economic growth and industry diversity; and (iii) a minimum market size of 75 million square feet of industrial space. The Consolidated Operating Partnership is currently evaluating industrial real estate investments outside of the United States, including in Canada.
 
  •  Leasing and Marketing Strategy.  The Consolidated Operating Partnership has an operational management strategy designed to enhance tenant satisfaction and portfolio performance. The Consolidated Operating Partnership pursues an active leasing strategy, which includes broadly marketing available space, seeking to renew existing leases at higher rents per square foot and seeking leases which provide for the pass-through of property-related expenses to the tenant. The Consolidated Operating Partnership also has local and national marketing programs which focus on the business and real estate brokerage communities and national tenants.
 
  •  Acquisition/Development Strategy.  The Consolidated Operating Partnership’s acquisition/development strategy is to invest in properties and other assets with higher yield potential in the top industrial real estate markets in the United States. Of the 858 industrial properties in the Consolidated Operating Partnership’s and Other Real Estate Partnerships’ combined in-service portfolios at December 31, 2006, 128 properties have been developed by the Consolidated Operating Partnership, the Other Real Estate Partnerships, or its former management. The Consolidated Operating Partnership will continue to leverage the development capabilities of its management, many of whom are leading industrial property developers in their respective markets. The Consolidated Operating Partnership is currently evaluating industrial real estate investments outside of the United States, including Canada.
 
  •  Disposition Strategy.  The Consolidated Operating Partnership continuously evaluates local market conditions and property-related factors in all of its markets for purposes of identifying assets suitable for disposition.
 
  •  Financing Strategy.  The Consolidated Operating Partnership plans on utilizing a portion of net sales proceeds from property sales, borrowings under its unsecured line of credit and proceeds from the issuance, when and as warranted, of additional debt and equity securities to finance future acquisitions and developments. The Company also continually evaluates joint venture arrangements as another source of capital. As of February 22, 2007, the Consolidated Operating Partnership had approximately $210.6 million available in additional borrowings under its unsecured line of credit.
 
Recent Developments
 
In 2006, the Consolidated Operating Partnership acquired or placed in-service developments totaling 95 industrial properties and acquired several parcels of land for a total investment of approximately $723.2 million. The Consolidated Operating Partnership also sold 109 industrial properties and several parcels of land for a gross sales price of approximately $895.0 million. At December 31, 2006, the Consolidated Operating


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Partnership owned 764 in-service industrial properties containing approximately 60.3 million square feet of GLA.
 
During 2006, in conjunction with the acquisition of several industrial properties, the Consolidated Operating Partnership assumed mortgages in the aggregate of $34.0 million. During 2006, the Consolidated Operating Partnership paid off and retired $8.0 million of mortgage loans payable. The Other Real Estate Partnerships paid off and retired $2.4 million of mortgage loans payable.
 
On January 10, 2006, the Consolidated Operating Partnership, through the Operating Partnership, issued $200.0 million of senior unsecured debt which matures on January 15, 2016 and bears interest at a rate of 5.75% (the “2016 Notes”). The issue price of the 2016 Notes was 99.653%. In December 2005, the Consolidated Operating Partnership also entered into interest rate protection agreements which were used to fix the interest rate on the 2016 Notes prior to issuance. The Consolidated Operating Partnership settled the interest rate protection agreements on January 9, 2006 for a payment of approximately $1.7 million, which is included in other comprehensive income.
 
In December 2005, the Consolidated Operating Partnership, through the Operating Partnership, entered into a non-revolving unsecured line of credit (the “Unsecured Line of Credit II”). The Unsecured Line of Credit II had a borrowing capacity of $125.0 million and matured on March 15, 2006. The Unsecured Line of Credit II provided for interest only payments at LIBOR plus .625% or at Prime, at the Consolidated Operating Partnership’s election. On January 10, 2006, the Consolidated Operating Partnership, through the Operating Partnership, paid off and retired the Unsecured Line of Credit II.
 
On September 25, 2006, the Consolidated Operating Partnership, through the Operating Partnership, issued $175.0 million of senior unsecured debt which bears interest at a rate of 4.625% (the “2011 Exchangeable Notes”). Under certain circumstances, the holders of the 2011 Exchangeable Notes may exchange their notes for cash up to their principal amount and shares of the Company’s common stock for the remainder of the exchange value in excess of the principal amount. The Consolidated Operating Partnership also granted the initial purchasers of the 2011 Exchangeable Notes an option exercisable until October 4, 2006 to purchase up to an additional $25.0 million principal amount of the 2011 Exchangeable Notes to cover over-allotments, if any (the “Over-Allotment Option”). On October 3, 2006, the initial purchasers of the 2011 Exchangeable Notes exercised their Over-Allotment Option with respect to $25.0 million in principal amount of the 2011 Exchangeable Notes. With the exercise of the Over-Allotment Option, the aggregate principal amount of 2011 Exchangeable Notes issued and outstanding is $200.0 million. In connection with the offering of the Exchangeable Notes, the Operating Partnership entered into capped call transactions in order to increase the effective exchange price. The aggregate cost of the capped call transactions was approximately $6.8 million.
 
On December 1, 2006, the Consolidated Operating Partnership paid off and retired its 7.0% 2006 Unsecured Notes in the amount of $150.0 million.
 
On November 8, 2005 and November 18, 2005, the Company issued 600 and 150 Shares, respectively, of $.01 par value, Series I Flexible Cumulative Redeemable Preferred Stock, (the “Series I Preferred Stock”), in a private placement at an initial offering price of $250,000 per share for an aggregate initial offering price of $187.5 million. Net of offering costs, the Company received proceeds of $181.5 million from the issuance of Series I Preferred Stock which were contributed to the Operating Partnership in exchange for Series I Cumulative Preferred Units (the “Series I Preferred Units”). The Company redeemed the Series I Preferred Stock on January 13, 2006 for $242,875.00 per share, and paid a prorated first quarter dividend of $470.667 per share, totaling approximately $0.4 million. The Operating Partnership redeemed the Series I Preferred Units as well. In accordance with EITF D-42, due to the redemption of the Series I Preferred Units, the difference between the redemption cost and the carrying value of the Series I Preferred Units of approximately $0.7 million is reflected as a deduction from net income to arrive at net income available to Unitholders in determining earnings per unit for the year ended December 31, 2006.
 
On January 13, 2006, the Company issued 6,000,000 Depositary Shares, each representing 1/10,000th of a share of the Company’s 7.25%, $.01 par value, Series J Cumulative Redeemable Preferred Stock (the


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“Series J Preferred Stock”), at an initial offering price of $25.00 per Depositary Share. The net proceeds from the issuance of the Series J Preferred Stock were contributed to the Operating Partnership in exchange for Series J Cumulative Preferred Units (the “Series J Preferred Units”) and are reflected in the Consolidated Operating Partnership’s financial statements as a general partner preferred unit contribution.
 
On August 21, 2006, the Company issued 2,000,000 Depositary Shares, each representing 1/10,000th of a share of the Company’s 7.25%, $.01 par value, Series K Flexible Cumulative Redeemable Preferred Stock (the “Series K Preferred Stock”), at an initial offering price of $25.00 per Depositary Share. The net proceeds from the issuance of the Series K Preferred Stock were contributed to the Operating Partnership in exchange for Series K Cumulative Preferred Units (the “Series K Preferred Units”) and are reflected in the Consolidated Operating Partnership’s financial statements as a general partner preferred unit contribution.
 
On March 21, 2006, the Consolidated Operating Partnership, through separate wholly-owned limited liability companies of which the Operating Partnership is the sole member, entered into a co-investment arrangement with an institutional investor to invest in industrial properties (the “March 2006 Co-Investment Program”). The Consolidated Operating Partnership, through separate wholly-owned limited liability companies of which the Operating Partnership or First Industrial Investment, Inc. is the sole member, owns a 15% equity interest in and provides property management, leasing, disposition and portfolio management services to the March 2006 Co-Investment Program.
 
On July 21, 2006, the Consolidated Operating Partnership, through a wholly-owned limited liability company of First Industrial Investment, Inc., entered into a joint venture arrangement with an institutional investor to invest in land and vertical development (the “July 2006 Joint Venture”). The Consolidated Operating Partnership, through wholly-owned limited liability companies in which First Industrial Investment, Inc. is the sole member, owns a 10% equity interest in and provides property management, leasing, development, disposition and portfolio management services to the July 2006 Joint Venture.
 
From January 1, 2007 to February 22, 2007, the Consolidated Operating Partnership acquired 53 industrial properties (including 41 properties in connection with the purchase of the 90% equity interest from the institutional investor in the September 1998 Joint Venture on January 31, 2007) and several land parcels for a total estimated investment of approximately $110.8 million. In connection with these, the Consolidated Operating Partnership also sold 14 industrial properties for approximately $74.4 million of gross proceeds during this period.
 
On February 28, 2007, the Company declared a first quarter 2007 distribution of $.710 per Unit on its Units which is payable on April 16, 2007. The Company also declared a first quarter 2007 dividend of $53.91 per Unit, on its Series C Preferred Units, totaling, in the aggregate, approximately $1.1 million, which is payable on April 2, 2007; a semi-annual dividend of $3,118.00 per Unit on its Series F Preferred Units, totaling, in the aggregate, approximately $1.6 million, which is payable on April 2, 2007; a semi-annual dividend of $3,618.00 per Unit on its Series G Preferred Units, totaling, in the aggregate, approximately $0.9 million, which is payable on April 2, 2007; a dividend of $4,531.30 per Unit on its Series J Preferred Units, totaling, in the aggregate approximately $2.7 million, which is payable on April 2, 2007 and a dividend of $4,531.30 per Unit on its Series K Preferred Units, totaling, in the aggregate, approximately $0.9 million, which is payable on April 2, 2007.
 
Future Property Acquisitions, Developments and Property Sales
 
The Consolidated Operating Partnership has an active acquisition and development program through which it is continually engaged in identifying, negotiating and consummating portfolio and individual industrial property acquisitions and developments. As a result, the Consolidated Operating Partnership is currently engaged in negotiations relating to the possible acquisition and development of certain industrial properties.
 
The Consolidated Operating Partnership also sells properties based on market conditions and property related factors. As a result, the Consolidated Operating Partnership is engaged in negotiations relating to the possible sales of certain industrial properties in the Consolidated Operating Partnership’s portfolio.


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When evaluating potential industrial property acquisitions and developments, as well as potential industrial property sales, the Consolidated Operating Partnership will consider such factors as: (i) the geographic area and type of property; (ii) the location, construction quality, condition and design of the property; (iii) the potential for capital appreciation of the property; (iv) the ability of the Consolidated Operating Partnership to improve the property’s performance through renovation; (v) the terms of tenant leases, including the potential for rent increases; (vi) the potential for economic growth and the tax and regulatory environment of the area in which the property is located; (vii) the potential for expansion of the physical layout of the property and/or the number of sites; (viii) the occupancy and demand by tenants for properties of a similar type in the vicinity; and (ix) competition from existing properties and the potential for the construction of new properties in the area.
 
INDUSTRY
 
Industrial properties are typically used for the design, assembly, packaging, storage and distribution of goods and/or the provision of services. As a result, the demand for industrial space in the United States is related to the level of economic output. Historically, occupancy rates for industrial property in the United States have been higher than those for other types of commercial property. The Consolidated Operating Partnership believes that the higher occupancy rate in the industrial property sector is a result of the construction-on-demand nature of, and the comparatively short development time required for, industrial property. For the five years ended December 31, 2006, the occupancy rates for industrial properties in the United States have ranged from 88.1%* to 90.6%*, with an occupancy rate of 90.6%*( at December 31, 2006.
 
 
(* Source: Torto Wheaton Research


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Item 1A.   Risk Factors
 
Risk Factors
 
The Consolidated Operating Partnership’s operations involve various risks that could adversely affect its financial condition, results of operations, cash flow, ability to pay distributions on its Units and the market value of its Units. These risks, among others contained in the Consolidated Operating Partnership’s other filings with the SEC, include:
 
Real estate investments’ value fluctuates depending on conditions in the general economy and the real estate business. These conditions may limit the Consolidated Operating Partnership’s revenues and available cash.
 
The factors that affect the value of the Consolidated Operating Partnership’s real estate and the revenues the Consolidated Operating Partnership derives from its properties include, among other things:
 
  •  general economic conditions;
 
  •  local conditions such as oversupply or a reduction in demand in an area;
 
  •  the attractiveness of the properties to tenants;
 
  •  tenant defaults;
 
  •  zoning or other regulatory restrictions;
 
  •  competition from other available real estate;
 
  •  our ability to provide adequate maintenance and insurance; and
 
  •  increased operating costs, including insurance premiums and real estate taxes.
 
Many real estate costs are fixed, even if income from properties decreases.
 
The Consolidated Operating Partnership’s financial results depend on leasing space to tenants on terms favorable to the Consolidated Operating Partnership. The Consolidated Operating Partnership’s income and funds available for distribution to its unitholders will decrease if a significant number of the Consolidated Operating Partnership’s tenants cannot pay their rent or the Consolidated Operating Partnership is unable to lease properties on favorable terms. In addition, if a tenant does not pay its rent, the Consolidated Operating Partnership might not be able to enforce its rights as landlord without delays and the Consolidated Operating Partnership might incur substantial legal costs. Costs associated with real estate investment, such as real estate taxes and maintenance costs, generally are not reduced when circumstances cause a reduction in income from the investment. For the year ended December 31, 2006, approximately 67.8% of the Consolidated Operating Partnership’s gross revenues from continuing operations came from rentals of real property.
 
The Consolidated Operating Partnership may be unable to sell properties when appropriate because real estate investments are not as liquid as certain other types of assets.
 
Real estate investments generally cannot be sold quickly and, therefore, will tend to limit the Consolidated Operating Partnership’s ability to adjust its property portfolio promptly in response to changes in economic or other conditions. The inability to respond promptly to changes in the performance of the Consolidated Operating Partnership’s property portfolio could adversely affect the Consolidated Operating Partnership’s financial condition and ability to service debt and make distributions to its unitholders. In addition, like other companies qualifying as REITs under the Internal Revenue Code, the Company must comply with the safe harbor rules relating to the number of properties disposed of in a year, their tax basis and the cost of improvements made to the properties, or meet other tests which enable a REIT to avoid punitive taxation on the sale of assets. Thus, the Consolidated Operating Partnership’s ability at any time to sell assets may be restricted.


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The Consolidated Operating Partnership may be unable to sell or contribute properties on advantageous terms.
 
The Consolidated Operating Partnership has sold to third parties a significant number of properties in recent years and, as part of its business, the Consolidated Operating Partnership intends to continue to sell properties to third parties. The Consolidated Operating Partnership’s ability to sell properties on advantageous terms depends on factors beyond the Consolidated Operating Partnership’s control, including competition from other sellers and the availability of attractive financing for potential buyers of the Consolidated Operating Partnership’s properties. If the Consolidated Operating Partnership is unable to sell properties on favorable terms or redeploy the proceeds of property sales in accordance with the Consolidated Operating Partnership’s business strategy, then the Consolidated Operating Partnership’s financial condition, results of operations, cash flow and ability to pay distributions on, and the market value of, the Consolidated Operating Partnership’s Units could be adversely affected.
 
The Consolidated Operating Partnership has also sold to its joint ventures a significant number of properties in recent years and, as part of its business, the Consolidated Operating Partnership intends to continue to sell properties to its joint ventures as opportunities arise. If the Consolidated Operating Partnership does not have sufficient properties available that meet the investment criteria of current or future joint ventures, or if the joint ventures have reduced or do not have access to capital on favorable terms, then such sales could be delayed or prevented, adversely affecting the Consolidated Operating Partnership’s financial condition, results of operations, cash flow and ability to pay distributions on, and the market value of, the Consolidated Operating Partnership’s Units.
 
The Consolidated Operating Partnership may be unable to acquire properties on advantageous terms or acquisitions may not perform as the Consolidated Operating Partnership expects.
 
The Consolidated Operating Partnership acquires and intends to continue to acquire primarily industrial properties. The acquisition of properties entails various risks, including the risks that the Consolidated Operating Partnership’s investments may not perform as expected and that the Consolidated Operating Partnership’s cost estimates for bringing an acquired property up to market standards may prove inaccurate. Further, the Consolidated Operating Partnership faces significant competition for attractive investment opportunities from other well-capitalized real estate investors, including both publicly-traded REITs and private investors. This competition increases as investments in real estate become attractive relative to other forms of investment. As a result of competition, the Consolidated Operating Partnership may be unable to acquire additional properties as it desires or the purchase price may be elevated. In addition, the Consolidated Operating Partnership expects to finance future acquisitions through a combination of borrowings under the Consolidated Operating Partnership’s revolving line of credit (“Unsecured Line of Credit I”), proceeds from equity or debt offerings by the Consolidated Operating Partnership and proceeds from property sales, which may not be available and which could adversely affect the Consolidated Operating Partnership’s cash flow. Any of the above risks could adversely affect the Consolidated Operating Partnership’s financial condition, results of operations, cash flow and ability to pay distributions on, and the market value of, the Consolidated Operating Partnership’s Units.
 
The Consolidated Operating Partnership may be unable to complete development and re-development projects on advantageous terms.
 
As part of its business, the Consolidated Operating Partnership develops new and re-develops existing properties. In addition, the Consolidated Operating Partnership has sold to third parties or sold to the Company’s joint ventures a significant number of development and re-development properties in recent years, and the Consolidated Operating Partnership intends to continue to sell such properties to third parties or to sell such properties to the Consolidated Operating Partnership’s joint ventures as opportunities arise. The real estate development and re-development business involves significant risks that could adversely affect the


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Consolidated Operating Partnership’s financial condition, results of operations, cash flow and ability to pay distributions on, and the market value of, the Consolidated Operating Partnership’s Units, which include:
 
  •  the Consolidated Operating Partnership may not be able to obtain financing for development projects on favorable terms and complete construction on schedule or within budget, resulting in increased debt service expense and construction costs and delays in leasing the properties and generating cash flow;
 
  •  the Consolidated Operating Partnership may not be able to obtain, or may experience delays in obtaining, all necessary zoning, land-use, building, occupancy and other governmental permits and authorizations;
 
  •  the properties may perform below anticipated levels, producing cash flow below budgeted amounts and limiting the Consolidated Operating Partnership’s ability to sell such properties to third parties or to sell or contribute such properties to the Consolidated Operating Partnership’s joint ventures.
 
The Consolidated Operating Partnership may be unable to renew leases or find other lessees.
 
The Consolidated Operating Partnership is subject to the risks that, upon expiration, leases may not be renewed, the space subject to such leases may not be relet or the terms of renewal or reletting, including the cost of required renovations, may be less favorable than expiring lease terms. If the Consolidated Operating Partnership were unable to promptly renew a significant number of expiring leases or to promptly relet the space covered by such leases, or if the rental rates upon renewal or reletting were significantly lower than the current rates, the Consolidated Operating Partnership’s cash funds from operations and ability to make expected distributions to stockholders might be adversely affected. As of December 31, 2006, leases with respect to approximately 10.6 million, 10.4 million and 8.8 million square feet of GLA, representing 19%, 18% and 16% of GLA, expire in the remainder of 2007, 2008 and 2009, respectively.
 
The Consolidated Operating Partnership might fail to qualify or remain qualified as a REIT.
 
The Company intends to operate so as to qualify as a REIT under the Code although the Company believes that it is organized and will operate in a manner so as to qualify as a REIT, qualification as a REIT involves the satisfaction of numerous requirements, some of which must be met on a recurring basis. These requirements are established under highly technical and complex Code provisions of which there are only limited judicial or administrative interpretations and involve the determination of various factual matters and circumstances not entirely within the Consolidated Operating Partnership’s control.
 
The Consolidated Operating Partnership (through one of its subsidiary partnerships) entered into certain development agreements in 2000 through 2003, the performance of which has been completed. Under these agreements, the Consolidated Operating Partnership provided services to unrelated third parties and certain payments were made by the unrelated third parties for services provided by certain contractors hired by the Consolidated Operating Partnership. The Consolidated Operating Partnership believes that these payments were properly characterized by it as reimbursements for costs incurred by it on behalf of the third parties and do not constitute gross income and did not prevent the Consolidated Operating Partnership from satisfying the gross income requirements of the REIT provisions (the “gross income tests”). The Consolidated Operating Partnership has brought this matter to the attention of the Internal Revenue Service, (the “IRS”). The IRS has not challenged or expressed any interest in challenging the Consolidated Operating Partnership’s view on this matter.
 
Employees of the Operating Partnership, a subsidiary partnership of the Company (the “Service Employees”), have been providing certain acquisition and disposition services since 2004 and certain leasing and property management services since 1997 to one of the Consolidated Operating Partnership’s taxable REIT subsidiaries (the “TRS”), and have also been providing certain of these services (or similar services) to joint ventures in which the Operating Partnership owns a minority interest or to unrelated parties. In determining whether it satisfied the gross income tests for certain years, the Consolidated Operating Partnership has taken and intends to take the position that the costs of the Service Employees should be shared between the Operating Partnership and the TRS and that no fee income should be imputed to the Consolidated


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Operating Partnership as a result of such arrangement. However, because certain of these services (or similar services) have also been performed for the joint ventures or unrelated parties described above, there can be no assurance that the IRS will not successfully challenge this position. The Operating Partnership has taken and intends to continue to take appropriate steps to address this issue going forward, but there can be no assurance that any such steps will adequately resolve this issue.
 
If the IRS were to challenge either of the positions described in the two preceding paragraphs and were successful, the Company could be found not to have satisfied the gross income tests in one or more of its taxable years. If the Company were found not to have satisfied the gross income tests, it could be subject to a penalty tax. However, such noncompliance should not adversely affect the Company’s status as a REIT as long as such noncompliance was due to reasonable cause and not to willful neglect and certain other requirements were met. The Consolidated Operating Partnership believes that, in both situations, any such noncompliance was due to reasonable cause and not willful neglect and that such other requirements were met.
 
If the Company were to fail to qualify as a REIT in any taxable year, it would be subject to federal income tax, including any applicable alternative minimum tax, on its taxable income at corporate rates. This could result in a discontinuation or substantial reduction in dividends to stockholders and in cash to pay interest and principal on debt securities that the Consolidated Operating Partnership issues. Unless entitled to relief under certain statutory provisions, the Company would be disqualified from electing treatment as a REIT for the four taxable years following the year during which it failed to qualify as a REIT.
 
Certain property transfers may generate prohibited transaction income, resulting in a penalty tax on the gain attributable to the transaction.
 
As part of its business, the Consolidated Operating Partnership sells properties to third parties or sells properties to the Consolidated Operating Partnership’s joint ventures as opportunities arise. Under the Code, a 100% penalty tax could be assessed on the gain resulting from sales of properties that are deemed to be prohibited transactions. The question of what constitutes a prohibited transaction is based on the facts and circumstances surrounding each transaction. The IRS could contend that certain sales of properties by the Company are prohibited transactions. While the Consolidated Operating Partnership’s management does not believe that the IRS, would prevail in such a dispute, if the matter were successfully argued by the IRS, the 100% penalty tax could be assessed against the profits from these transactions. In addition, any income from a prohibited transaction may adversely affect the Company’s ability to satisfy the income tests for qualification as a REIT.
 
The REIT distribution requirements may require the Company to turn to external financing sources.
 
The Company in certain instances, have taxable income without sufficient cash to enable it to meet the distribution requirements of the REIT provisions of the Code. In that situation, the Company could be required to borrow funds or sell properties on adverse terms in order to meet those distribution requirements. In addition, because the Company must distribute to its stockholders at least 90% of the Company’s REIT taxable income each year, the Company’s ability to accumulate capital may be limited. Thus, in connection with future acquisitions, the Company may be more dependent on outside sources of financing, such as debt financing or issuances of additional capital stock, which may or may not be available on favorable terms. Additional debt financings may substantially increase the Consolidated Operating Partnership’s leverage and additional equity offerings may result in substantial dilution of unitholders’ interests.
 
Debt financing, the degree of leverage and rising interest rates could reduce the Consolidated Operating Partnership’s cash flow.
 
Where possible, the Consolidated Operating Partnership intends to continue to use leverage to increase the rate of return on the Consolidated Operating Partnership’s investments and to allow the Consolidated Operating Partnership to make more investments than it otherwise could. The Consolidated Operating Partnership’s use of leverage presents an additional element of risk in the event that the cash flow from the Consolidated Operating Partnership’s properties is insufficient to meet both debt payment obligations and the


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Company’s distribution requirements of the REIT provisions of the Code. In addition, rising interest rates would reduce the Consolidated Operating Partnership’s cash flow by increasing the amount of interest due on its floating rate debt and on its fixed rate debt as it matures and is refinanced.
 
Cross-collateralization of mortgage loans could result in foreclosure on substantially all of the Consolidated Operating Partnership’s properties if the Consolidated Operating Partnership is unable to service its indebtedness.
 
If the Operating Partnership decides to obtain additional debt financing in the future, it may do so through mortgages on some or all of its properties. These mortgages may be issued on a recourse, non-recourse or cross-collateralized basis. Cross-collateralization makes all of the subject properties available to the lender in order to satisfy the Consolidated Operating Partnership’s debt. Holders of indebtedness that is so secured will have a claim against these properties. To the extent indebtedness is cross collateralized, lenders may seek to foreclose upon properties that are not the primary collateral for their loan, which may, in turn, result in acceleration of other indebtedness secured by properties. Foreclosure of properties would result in a loss of income and asset value to the Consolidated Operating Partnership, making it difficult for it to meet both debt payment obligations and the Company’s distribution requirements of the REIT provisions of the Code. As of December 31, 2006, none of the Consolidated Operating Partnership’s current indebtedness was cross-collateralized.
 
The Consolidated Operating Partnership may have to make lump-sum payments on its existing indebtedness.
 
The Consolidated Operating Partnership is required to make the following lump-sum or “balloon” payments under the terms of some of its indebtedness, including:
 
  •  $50 million aggregate principal amount of 7.75% Notes due 2032 (the “2032 Notes”)
 
  •  $200 million aggregate principal amount of 7.60% Notes due 2028 (the “2028 Notes”)
 
  •  approximately $15 million aggregate principal amount of 7.15% Notes due 2027 (the “2027 Notes”)
 
  •  $100 million aggregate principal amount of 7.50% Notes due 2017 (the “2017 Notes”)
 
  •  $200 million aggregate principal amount of 5.75% Notes due 2016 (the “2016 Notes”)
 
  •  $125 million aggregate principal amount of 6.42% Notes due 2014 (the “2014 Notes”)
 
  •  $200 million aggregate principal amount of 6.875% Notes due 2012 (the “2012 Notes”)
 
  •  $200 million aggregate principal amount of 4.625% Notes due 2011 (the “2011 Exchangeable Notes”)
 
  •  $200 million aggregate principal amount of 7.375% Notes due 2011(the “2011 Notes”)
 
  •  $125 million aggregate principal amount of 5.25% Notes due 2009 (the “2009 Notes”)
 
  •  $150 million aggregate principal amount of 7.60% Notes due 2007 (the “2007 Notes”)
 
  •  a $500 million unsecured revolving credit facility (the “Unsecured Line of Credit I”) under which the Consolidated Operating Partnership may borrow to finance the acquisition of additional properties and for other corporate purposes, including working capital.
 
The Unsecured Line of Credit I provides for the repayment of principal in a lump-sum or “balloon” payment at maturity in 2008. The Operating Partnership has the right, subject to certain conditions, to increase the aggregate commitment under the Unsecured Line of Credit I by up to $100.0 million. As of December 31, 2006, $207.0 million was outstanding under the Unsecured Line of Credit I at a weighted average interest rate of 6.058%.
 
The Consolidated Operating Partnership’s ability to make required payments of principal on outstanding indebtedness, whether at maturity or otherwise, may depend on its ability either to refinance the applicable indebtedness or to sell properties. The Consolidated Operating Partnership has no commitments to refinance


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the 2007 Notes, the 2009 Notes, the 2011 Notes, the 2011 Exchangeable Notes, the 2012 Notes, the 2014 Notes, the 2016 Notes, the 2017 Notes, the 2027 Notes, the 2028 Notes, the 2032 Notes or the Unsecured Line of Credit I. Some of the existing debt obligations, other than those discussed above, of the Consolidated Operating Partnership, are secured by the Consolidated Operating Partnership’s properties, and therefore such obligations will permit the lender to foreclose on those properties in the event of a default.
 
There is no limitation on debt in the Consolidated Operating Partnership’s organizational documents.
 
As of December 31, 2006, the Company’s ratio of debt to its total market capitalization was 40.1%. The organizational documents of the Company, however, do not contain any limitation on the amount or percentage of indebtedness the Company may incur. Accordingly, the Consolidated Operating Partnership could become more highly leveraged, resulting in an increase in debt service that could adversely affect the Consolidated Operating Partnership’s ability to make expected distributions to Unitholders and in an increased risk of default on the Consolidated Operating Partnership’s obligations.
 
The Company computes that percentage by calculating its total consolidated debt as a percentage of the aggregate market value of all outstanding shares of the Company’s common stock, assuming the exchange of all limited partnership units of the Operating Partnership for common stock, plus the aggregate stated value of all outstanding shares of preferred stock and total consolidated debt.
 
Rising interest rates on the Consolidated Operating Partnership’s Unsecured Line of Credit could decrease the Consolidated Operating Partnership’s available cash.
 
The Consolidated Operating Partnership’s Unsecured Line of Credit I bears interest at a floating rate. As of December 31, 2006, the Company’s Unsecured Line of Credit I had an outstanding balance of $207.0 million at a weighted average interest rate of 6.058%. The Consolidated Operating Partnership’s Unsecured Line of Credit I bears interest at the Prime Rate or at the LIBOR plus .625%. Based on an outstanding balance on our Unsecured Line of Credit I as of December 31, 2006, a 10% increase in interest rates would increase interest expense by $1.3 million on an annual basis. Increases in the interest rate payable on balances outstanding under the Unsecured Line of Credit I would decrease the Consolidated Operating Partnership’s cash available for distribution to unitholders.
 
Earnings and cash dividends, asset value and market interest rates affect the price of the Company’s common stock.
 
As a real estate investment trust, the market value of the Company’s common stock, in general, is based primarily upon the market’s perception of the Company’s growth potential and its current and potential future earnings and cash dividends. The market value of the Company’s common stock is based secondarily upon the market value of the Company’s underlying real estate assets. For this reason, shares of the Company’s common stock may trade at prices that are higher or lower than the Company’s net asset value per share. To the extent that the Company retains operating cash flow for investment purposes, working capital reserves, or other purposes, these retained funds, while increasing the value of the Company’s underlying assets, may not correspondingly increase the market price of the Company’s common stock. The Company’s failure to meet the market’s expectations with regard to future earnings and cash dividends likely would adversely affect the market price of the Company’s common stock. Further, the distribution yield on the common stock (as a percentage of the price of the common stock) relative to market interest rates may also influence the price of the Company’s common stock. An increase in market interest rates might lead prospective purchasers of the Company’s common stock to expect a higher distribution yield, which would adversely affect the market price of the Company’s common stock. Additionally, if the market price of the Company’s common stock declines significantly, then the Company might breach certain covenants with respect to its debt obligations, which could adversely affect the Company’s liquidity and ability to make future acquisitions and the Company’s ability to pay dividends to its stockholders.


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The Consolidated Operating Partnership may incur unanticipated costs and liabilities due to environmental problems.
 
Under various federal, state and local laws, ordinances and regulations, an owner or operator of real estate may be liable for the costs of clean-up of certain conditions relating to the presence of hazardous or toxic materials on, in or emanating from a property, and any related damages to natural resources. Environmental laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of hazardous or toxic materials. The presence of such materials, or the failure to address those conditions properly, may adversely affect the ability to rent or sell the property or to borrow using the property as collateral. Persons who dispose of or arrange for the disposal or treatment of hazardous or toxic materials may also be liable for the costs of clean-up of such materials, or for related natural resource damages, at or from an off-site disposal or treatment facility, whether or not the facility is owned or operated by those persons. No assurance can be given that existing environmental assessments with respect to any of the Consolidated Operating Partnership’s properties reveal all environmental liabilities, that any prior owner or operator of any of the properties did not create any material environmental condition not known to the Consolidated Operating Partnership or that a material environmental condition does not otherwise exist as to any of the Consolidated Operating Partnership’s properties.
 
The Consolidated Operating Partnership’s insurance coverage does not include all potential losses.
 
The Consolidated Operating Partnership currently carries comprehensive insurance coverage including property, boiler & machinery, liability, fire, flood, terrorism, earthquake, extended coverage and rental loss as appropriate for the markets where each of the Consolidated Operating Partnership’s properties and their business operations are located. The insurance coverage contains policy specifications and insured limits customarily carried for similar properties and business activities. The Consolidated Operating Partnership believes its properties are adequately insured. However, there are certain losses, including losses from earthquakes, hurricanes, floods, pollution, acts of war, acts of terrorism or riots, that are not generally insured against or that are not generally fully insured against because it is not deemed to be economically feasible or prudent to do so. If an uninsured loss or a loss in excess of insured limits occurs with respect to one or more of the Consolidated Operating Partnership’s properties, the Consolidated Operating Partnership could experience a significant loss of capital invested and potential revenues from these properties, and could potentially remain obligated under any recourse debt associated with the property.
 
The Consolidated Operating Partnership is subject to risks and liabilities in connection with its investments in properties through joint ventures.
 
As of December 31, 2006, the Consolidated Operating Partnership’s six joint ventures owned approximately 26.0 million square feet of properties. As of December 31, 2006, the Consolidated Operating Partnership’s investment in joint ventures exceeded $55 million in the aggregate, and for the year ended December 31, 2006, the Consolidated Operating Partnership’s equity in income of joint ventures exceeded $30 million. The Consolidated Operating Partnership’s organizational documents do not limit the amount of available funds that the Consolidated Operating Partnership may invest in joint ventures and the Consolidated Operating Partnership intends to continue to develop and acquire properties through joint ventures with other persons or entities when warranted by the circumstances. Joint venture investments, in general, involve certain risks, including:
 
  •  co-members or joint venturers may share certain approval rights over major decisions;
 
  •  co-members or joint venturers might fail to fund their share of any required capital commitments;
 
  •  co-members or joint venturers might have economic or other business interests or goals that are inconsistent with the Consolidated Operating Partnership’s business interests or goals that would affect its ability to operate the property;


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  •  co-members or joint venturers may have the power to act contrary to the Consolidated Operating Partnership’s instructions, requests, policies or objectives, including our current policy with respect to maintaining our qualification as a real estate investment trust;
 
  •  the joint venture agreements often restrict the transfer of a member’s or joint venturer’s interest or “buy-sell” or may otherwise restrict our ability to sell the interest when we desire or on advantageous terms;
 
  •  disputes between the Consolidated Operating Partnership and our co-members or joint venturers may result in litigation or arbitration that would increase the Consolidated Operating Partnership’s expenses and prevent its officers and directors from focusing their time and effort on the Consolidated Operating Partnership’s business and subject the properties owned by the applicable joint venture to additional risk; and
 
  •  the Consolidated Operating Partnership may in certain circumstances be liable for the actions of our co-members or joint venturers.
 
The occurrence of one or more of the events described above could adversely affect the Company’s financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, its common stock.
 
In addition, joint venture investments in real estate involve all of the risks related to the ownership, acquisition, development, sale and financing of real estate discussed in the risk factors above. To the extent the Company’s investments in joint ventures are adversely affected by such risks, the Company’s financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, its common stock could be adversely affected.
 
Item 1B.   Unresolved SEC Comments
 
None.
 
Item 2.   Properties
 
General
 
At December 31, 2006, the Consolidated Operating Partnership and the Other Real Estate Partnerships owned 858 in-service industrial properties (764 of which were owned by the Consolidated Operating Partnership and 94 of which were owned by the Other Real Estate Partnerships) containing an aggregate of approximately 68.6 million square feet of GLA (60.3 million square feet of which comprised the properties owned by the Consolidated Operating Partnership and 8.3 million square feet of which comprised the properties owned by the Other Real Estate Partnerships) in 28 states in the United States and one province in Canada, with a diverse base of more than 2,500 tenants engaged in a wide variety of businesses, including manufacturing, retail, wholesale trade, distribution and professional services. The properties are generally located in business parks that have convenient access to interstate highways and/or rail and air transportation. The weighted average age of the Consolidated Operating Partnership’s and the Other Real Estate Partnerships’ properties on a combined basis as of December 31, 2006 was approximately 19 years. The Consolidated Operating Partnership and Other Real Estate Partnerships maintain insurance on their respective properties that the Consolidated Operating Partnership and Other Real Estate Partnerships believe is adequate.
 
The Consolidated Operating Partnership and the Other Real Estate Partnerships classify their properties into five industrial categories: light industrial, bulk warehouse, R&D/flex, regional warehouse and manufacturing. While some properties may have characteristics which fall under more than one property type, the Consolidated Operating Partnership and the Other Real Estate Partnerships have used what they believe is the most dominant characteristic to categorize the property.


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The following describes the different industrial categories:
 
  •  Light industrial properties generally are of less than 100,000 square feet, have a ceiling height of 16-21 feet, are comprised of 5% — 50% of office space, contain less than 50% of manufacturing space and have a land use ratio of 4:1. The land use ratio is the ratio of the total property area to the area occupied by the building.
 
  •  Bulk warehouse buildings generally are of more than 100,000 square feet, have a ceiling height of at least 22 feet, are comprised of 5% — 15% of office space, contain less than 25% of manufacturing space and have a land use ratio of 2:1.
 
  •  R&D/flex buildings generally are of less than 100,000 square feet, have a ceiling height of less than 16 feet, are comprised of 50% or more of office space, contain less than 25% of manufacturing space and have a land use ratio of 4:1.
 
  •  Regional warehouses generally are of less than 100,000 square feet, have a ceiling height of at least 22 feet, are comprised of 5% — 15% of office space, contain less than 25% of manufacturing space and have a land use ratio of 2:1.
 
  •  Manufacturing properties are a diverse category of buildings that generally have a ceiling height of 10 — 18 feet, are comprised of 5% — 15% of office space, contain at least 50% of manufacturing space and have a land use ratio of 4:1.


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The following tables summarize certain information as of December 31, 2006, with respect to the in-service properties owned by the Consolidated Operating Partnership, each of which is wholly-owned.
 
Consolidated Operating Partnership
Property Summary
 
                                                                                 
    Light Industrial     R&D/Flex     Bulk Warehouse     Regional Warehouse     Manufacturing  
          Number of
 		          Number of
 		          Number of
 		          Number of
 		          Number of
 		 
Metropolitan Area
  GLA     Properties     GLA     Properties     GLA     Properties     GLA     Properties     GLA     Properties  
 
Atlanta, GA(a)
    789,082       13       140,538       3       2,493,621       11       365,646       5       747,950       3  
Baltimore, MD
    765,158       13       87,415       3       910,735       4       —       —       171,000       1  
Central PA(b)
    146,990       2       —       —       597,000       2       —       —       —       —  
Chicago, IL
    996,198       17       174,198       3       2,373,652       12       148,122       3       421,000       2  
Cincinnati, OH
    436,389       4       —       —       1,765,130       8       —       —       —       —  
Cleveland, OH
    —       —       —       —       608,740       4       —       —       —       —  
Columbus, OH(c)
    217,612       2       —       —       2,442,967       7       —       —       —       —  
Dallas, TX
    1,811,665       45       454,963       18       2,637,371       18       677,433       10       128,478       1  
Denver, CO
    1,543,666       29       1,527,480       37       1,389,576       8       471,696       7       126,384       1  
Des Moines, IA
    —       —       —       —       150,444       1       —       —       —       —  
Detroit, MI
    2,051,597       81       508,984       15       370,808       4       759,851       18       116,250       1  
Grand Rapids, MI
    61,250       1       —       —       —       —       —       —       —       —  
Houston, TX
    449,325       6       —       —       2,233,064       13       437,088       6       —       —  
Indianapolis, IN (d,e,f,g)
    889,600       18       108,200       4       2,201,294       10       263,610       7       71,600       2  
Los Angeles, CA
    451,760       6       —       —       329,664       3       120,162       2       —       —  
Louisville, KY
    —       —       —       —       443,500       2       —       —       —       —  
Milwaukee, WI
    263,567       6       —       —       737,609       5       90,089       1       —       —  
Minneapolis/St. Paul, MN (h,i,j)
    1,565,707       19       524,265       7       1,902,386       9       321,805       4       461,958       6  
Nashville, TN
    273,843       5       —       —       1,428,152       6       —       —       109,058       1  
N. New Jersey
    1,006,699       18       413,167       7       555,205       4       58,585       1       —       —  
Philadelphia, PA
    —       —       —       —       —       —       21,512       1       —       —  
Phoenix, AZ
    135,415       6       —       —       131,000       1       526,740       7       —       —  
Salt Lake City, UT
    479,301       32       146,937       6       714,549       4       82,704       1       —       —  
San Diego, CA
    112,773       5       —       —       397,967       2       274,042       7       —       —  
S. New Jersey(k)
    1,340,807       20       23,050       1       —       —       118,496       2       22,738       1  
St. Louis, MO(l)
    545,747       7       —       —       1,642,790       6       96,392       1       —       —  
Tampa, FL(m)
    493,029       12       714,901       30       209,500       1       —       —       —       —  
Other(n)
    593,837       5       —       —       2,098,214       9       50,000       1       36,000       1  
                                                                                 
Total
    17,421,017       372       4,824,098       134       30,764,938       154       4,883,973       84       2,412,416       20  
                                                                                 
 
 
(a) One property collateralizes a $3.0 million mortgage loan which matures on May 1, 2016.
 
(b) One property collateralizes a $15.2 million mortgage loan which matures on December 1, 2010.
 
(c) One property collateralizes a $5.1 million mortgage loan which matures on December 1, 2019.
 
(d) Twelve properties collateralize a $1.8 million mortgage loan which matures on September 1, 2009.
 
(e) One property collateralizes a $1.6 million mortgage loan which matures on January 1, 2013.
 
(f) One property collateralizes a $2.4 million mortgage loan which matures on January 1, 2012.
 
(g) One property collateralizes a $1.9 million mortgage loan which matures on June 1, 2014.
 
(h) One property collateralizes a $0.8 million mortgage loan which matures on February 1, 2017.


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(i) One property collateralizes a $5.3 million mortgage loan which matures on December 1, 2019.
 
(j) One property collateralizes a $1.9 million mortgage loan which matures on September 30, 2024.
 
(k) One property collateralizes a $6.7 million mortgage loan which matures on March 1, 2011.
 
(l) One property collateralizes a $14.2 million mortgage loan and a $12.0 million mortgage loan which both mature on January 1, 2014.
 
(m) Six properties collateralize a $6.0 million mortgage loan which matures on July 1, 2009.
 
(n) Properties are located in Wichita, KS, McAllen, TX, Orlando, FL, Horn Lake, MS, Shreveport, LA, Kansas City, MO, San Antonio, TX, Birmingham, AL, Portland, OR, Cambridge, ON, Stratford, ON, Omaha, NE and Ajax, ON.
 
Consolidated Operating Partnership
Property Summary Totals
 
                                 
    Totals  
                Average
 		    GLA as a %
 		 
          Number of
 		    Occupancy at
 		    of Total
 		 
Metropolitan Area
  GLA     Properties(b)     12/31/06(b)     Portfolio(b)  
 
Atlanta, GA
    4,536,837       35       94 %     7.5 %
Baltimore, MD
    1,934,308       21       98 %     3.2 %
Central PA
    743,990       4       97 %     1.2 %
Chicago, IL
    4,113,170       37       90 %     6.8 %
Cincinnati, OH
    2,201,519       12       89 %     3.7 %
Cleveland, OH
    608,740       4       100 %     1.0 %
Columbus, OH
    2,660,579       9       90 %     4.4 %
Dallas, TX
    5,709,910       92       93 %     9.5 %
Denver, CO
    5,058,802       82       90 %     8.4 %
Des Moines, IA
    150,444       1       100 %     0.2 %
Detroit, MI
    3,807,490       119       86 %     6.3 %
Grand Rapids, MI
    61,250       1       100 %     0.1 %
Houston, TX
    3,119,477       25       94 %     5.2 %
Indianapolis, IN
    3,534,304       41       98 %     5.9 %
Los Angeles, CA
    901,586       11       100 %     1.5 %
Louisville, KY
    443,500       2       100 %     0.7 %
Milwaukee, WI
    1,091,265       12       94 %     1.8 %
Minneapolis/St. Paul, MN
    4,776,121       45       95 %     7.9 %
Nashville, TN
    1,811,053       12       99 %     3.0 %
N. New Jersey
    2,033,656       30       96 %     3.4 %
Philadelphia, PA
    21,512       1       100 %     0.0 %
Phoenix, AZ
    793,155       14       93 %     1.3 %
Salt Lake City, UT
    1,423,491       43       97 %     2.4 %
San Diego, CA
    784,782       14       83 %     1.3 %
S. New Jersey
    1,505,091       24       98 %     2.5 %
St. Louis, MO
    2,284,929       14       98 %     3.8 %
Tampa, FL
    1,417,430       43       92 %     2.4 %
Other(a)
    2,778,051       16       100 %     4.6 %
                                 
Total or Average
    60,306,442       764       94 %     100.0 %
                                 


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(a) Properties are located in Wichita, KS, McAllen, TX, Orlando, FL, Horn Lake, MS, Shreveport, LA, Kansas City, MO, San Antonio, TX, Birmingham, AL, Portland, OR, Cambridge, ON, Stratford, ON, Omaha, NE and Ajax, ON.
 
(b) Includes only in-service properties.
 
Other Real Estate Partnerships
Property Summary
 
The following tables summarize certain information as of December 31, 2006 with respect to the in-service properties owned by the Other Real Estate Partnerships, each of which is wholly-owned.
 
Property Summary
 
                                                                                 
    Light Industrial     R&D/Flex     Bulk Warehouse     Regional Warehouse     Manufacturing  
          Number of
 		          Number of
 		          Number of
 		          Number of
 		          Number of
 		 
Metropolitan Area
  GLA     Properties     GLA     Properties     GLA     Properties     GLA     Properties     GLA     Properties  
 
Atlanta, GA
    —       —       66,288       2       127,338       1       90,289       1       —       —  
Baltimore, MD
    152,904       2       82,245       2       —       —       —       —       —       —  
Central, PA
    776,252       7       —       —       300,000       1       117,599       3       —       —  
Chicago, IL
    108,692       2       —       —       525,009       3       50,009       1       —       —  
Cincinnati, OH
    —       —       —       —       —       —       79,800       1       —       —  
Cleveland, OH
    64,000       1       —       —       —       —       —       —       —       —  
Columbus, OH
    —       —       —       —       —       —       98,800       1       —       —  
Denver, CO
    —       —       —       —       110,400       1       49,968       1       —       —  
Des Moines, IA
    —       —       —       —       —       —       88,000       1       —       —  
Detroit, MI
    329,297       5       23,392       1       160,035       1       —       —       —       —  
Indianapolis, IN
    —       —       —       —       1,527,127       5       60,000       1       —       —  
Milwaukee, WI
    —       —       93,705       2       100,520       1       39,468       1       —       —  
Minneapolis/St. Paul, MN
    60,597       1       —       —       —       —       —       —       532,119       3  
Nashville, TN
    —       —       —       —       160,661       1       —       —       —       —  
N. New Jersey
    194,157       3       —       —       —       —       —       —       —       —  
Philadelphia, PA
    878,456       18       127,802       5       221,937       2       139,316       2       30,000       1  
Phoenix, AZ
    —       —       —       —       —       —       61,780       1       —       —  
Salt Lake City, UT
    121,750       1       —       —       120,144       1       —       —       —       —  
S. New Jersey
    45,770       1       —       —       —       —       —       —       —       —  
St. Louis, MO
    —       —       —       —       245,000       2       —       —       —       —  
Tampa, FL
    —       —       44,427       1       —       —       —       —       —       —  
Other(a)
    99,000       3       —       —       —       —       —       —       —       —  
                                                                                 
Total
    2,830,875       44       437,859       13       3,598,171       19       875,029       14       562,119       4  
                                                                                 
 
 
(a) Properties are located in Austin, TX.


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Other Real Estate Partnerships
Property Summary Totals
 
                                 
    Totals  
                Average
 		    GLA as a %
 		 
          Number of
 		    Occupancy at
 		    of Total
 		 
Metropolitan Area
  GLA     Properties(b)     12/31/06(b)     Portfolio(b)  
 
Atlanta, GA
    283,915       4       100 %     3.4 %
Baltimore, MD
    235,149       4       97 %     2.8 %
Central, PA
    1,193,851       11       99 %     14.4 %
Chicago, IL
    683,710       6       100 %     8.2 %
Cincinnati, OH
    79,800       1       100 %     1.0 %
Cleveland, OH
    64,000       1       100 %     0.8 %
Columbus, OH
    98,800       1       100 %     1.2 %
Denver, CO
    160,368       2       100 %     1.9 %
Des Moines, IA
    88,000       1       65 %     1.1 %
Detroit, MI
    512,724       7       87 %     6.2 %
Indianapolis, IN
    1,587,127       6       98 %     19.1 %
Milwaukee, WI
    233,693       4       4 %     2.8 %
Minneapolis/St. Paul, MN
    592,716       4       98 %     7.1 %
Nashville, TN
    160,661       1       100 %     1.9 %
N. New Jersey
    194,157       3       100 %     2.3 %
Philadelphia, PA
    1,397,511       28       96 %     16.8 %
Phoenix, AZ
    61,780       1       100 %     0.7 %
Salt Lake City, UT
    241,894       2       99 %     2.9 %
S. New Jersey
    45,770       1       88 %     0.6 %
St. Louis, MO
    245,000       2       100 %     3.0 %
Tampa, FL
    44,427       1       100 %     0.5 %
Other(a)
    99,000       3       100 %     1.2 %
                                 
Total or Average
    8,304,053       94       97 %     100.0 %
                                 
 
 
(a) Properties are located in Austin, TX.
 
(b) Includes only in-service properties.


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Property Acquisition Activity
 
During 2006, the Consolidated Operating Partnership acquired 79 industrial properties totaling approximately 9.7 million square feet of GLA at a total purchase price of approximately $528.4 million, or approximately $54.47 per square foot. The Consolidated Operating Partnership also purchased several land parcels for an aggregate purchase price of approximately $35.0 million. The 79 industrial properties acquired have the following characteristics
 
                             
                    Average
 		 
    Number
 		              Occupancy
 		 
Metropolitan Area
  of Properties     GLA    
Property Type
  at 12/31/2006(b)  
 
Atlanta, GA
    2       192,000     Bulk/Regional Warehouse     71 %
Chicago, IL(a)
    1       25,313     Bulk Warehouse     N/A  
Chicago, IL
    4       652,944     Bulk Warehouse/Lt. Ind.     96 %
Cleveland, OH
    6       1,060,799     Bulk Warehouse/Lt. Ind.     85 %
Cleveland, OH(a)
    4       788,292     Bulk Warehouse     N/A  
Columbus, OH(a)
    1       744,800     Bulk Warehouse     N/A  
Columbus, OH
    1       207,827     Bulk/ Regional Warehouse     100 %
Dallas, TX
    2       628,243     Lt. Ind./Bulk Warehouse     100 %
Denver, CO
    3       300,638     Bulk Warehouse     97 %
Detroit, MI
    3       168,962     Manufacturing/Regional Warehouse     100 %
Indianapolis, IN
    1       209,380     Bulk Warehouse     100 %
Los Angeles, CA
    7       698,991     Light Industrial     63 %
Milwaukee, WI
    1       90,089     Regional Warehouse     100 %
Minneapolis/St. Paul, MN
    2       119,992     Lt. Ind./Regional Warehouse     100 %
Philadelphia, PA(a)
    1       87,000     Light Industrial     N/A  
Phoenix, AZ
    2       210,417     Bulk/Regional Warehouse     27 %
Phoenix, AZ(a)
    2       217,496     Bulk/Light Industrial     N/A  
San Diego, CA
    8       186,787     Lt. Ind./Regional Warehouse     45 %
S. New Jersey
    2       128,026     Light Industrial     51 %
S. New Jersey(a)
    1       37,875     R&D/Flex     N/A  
Salt Lake City, UT
    3       472,685     Lt. Ind. /Bulk/Regional Warehouse     100 %
San Francisco, CA
    1       143,750     Bulk Warehouse     100 %
St. Louis, MO
    2       1,186,423     Lt. Ind./Bulk Warehouse     100 %
Tampa, FL
    17       395,922     R&D/Flex     67 %
Other(c)
    2       698,794     Bulk Warehouse     100 %
                             
Total
    79       9,653,445              
                             
 
 
(a) Property was sold in 2006.
 
(b) Includes only in-service properties.
 
(c) Property is located in Omaha, NE, and Ajax, ON.


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During 2006, the Other Real Estate Partnerships acquired 12 industrial properties and a land parcel totaling approximately 0.8 million square feet of GLA at a total purchase price of approximately $47.3 million, or $59.13 per square foot. The 12 industrial properties acquired have the following characteristics:
 
                             
                    Average
 		 
    Number
 		              Occupancy
 		 
Metropolitan Area
  of Properties     GLA    
Property Type
  at 12/31/2006(a)  
 
Central, PA
    2       81,200     Light Industrial     100 %
Cincinnati, OH
    1       79,800     Regional Warehouse     100 %
Cleveland, OH
    1       64,000     Light Industrial     100 %
Columbus, OH
    1       98,800     Regional Warehouse     100 %
Denver, CO
    1       49,968     Regional Warehouse     100 %
Minneapolis/St. Paul, MN
    1       60,597     Light Industrial     100 %
Phoenix, AZ
    1       61,780     Regional Warehouse     100 %
Salt Lake City, UT
    2       242,588     Bulk Warehouse/Light Industrial     98 %
Tampa, FL
    2       101,613     R&D/Flex     65 %
                             
Total
    12       840,346              
                             
 
 
(a) Includes only in-service properties.
 
Property Development Activity
 
During 2006, the Consolidated Operating Partnership placed in-service 16 developments totaling approximately 5.0 million square feet of GLA at a total cost of approximately $194.8 million, or approximately $38.96 per square foot. The placed in-service developments have the following characteristics:
 
                     
              Average
 		 
              Occupancy
 		 
Metropolitan Area
  GLA    
Property Type
  at 12/31/06  
 
Chicago, IL
    134,905     Bulk Warehouse     100 %
Seattle, WA(a)
    451,151     Bulk Warehouse     N/A  
Atlanta, GA(a)
    399,695     Regional Warehouse     N/A  
Chicago, IL
    167,556     Bulk Warehouse     100 %
Indianapolis, IN(a)
    158,928     Bulk Warehouse     N/A  
Dallas, TX
    201,500     Bulk Warehouse     100 %
Flint, MI
    80,000     R&D/Flex     100 %
Byhalia, MS(a)
    400,000     Bulk Warehouse     N/A  
Atlanta, GA(a)
    1,300,716     Bulk Warehouse     N/A  
Shreveport, TX
    646,000     Bulk Warehouse     100 %
Houston, TX(a)
    210,000     Bulk Warehouse     N/A  
Houston, TX(a)
    80,000     Regional Warehouse     N/A  
Nashville, TN
    300,000     Bulk Warehouse     100 %
Detroit, MI
    116,250     Manufacturing     100 %
Chicago, IL
    120,000     Bulk Warehouse     100 %
Nashville, TN
    275,000     Bulk Warehouse     100 %
                     
Total
    5,041,701              
                     
 
 
(a) Property was sold in 2006.
 
At December 31, 2006, the Consolidated Operating Partnership had 15 development projects not placed in service, totaling an estimated 2.5 million square feet and with an estimated completion cost of approximately $141.4 million. The Consolidated Operating Partnership estimates it will place in service 15 of the 15 projects in fiscal year 2007. There can be no assurance that the Consolidated Operating Partnership will


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place these projects in service in 2007 or that the actual completion cost will not exceed the estimated completion cost stated above.
 
At December 31, 2006, the Other Real Estate Partnerships had one development project not placed in service, totaling an estimated 0.3 million square feet and with an estimated completion cost of approximately $13.3 million. The Consolidated Operating Partnership estimates it will place in service the project in fiscal year 2007. There can be no assurance that the Consolidated Operating Partnership will place this project in service in 2007 or that the actual completion cost will not exceed the estimated completion cost stated above.
 
Property Sales
 
During 2006, the Consolidated Operating Partnership sold 109 industrial properties totaling approximately 16.0 million square feet of GLA and several land parcels. Total gross sales proceeds approximated $895.0 million. The 109 industrial properties sold have the following characteristics:
 
                     
    Number of
 		           
Metropolitan Area
 
Properties
    GLA     Property Type
 
Atlanta, GA
    3       2,017,366     R&D/Flex/Bulk Warehouse/Manufacturing
Baltimore, MD
    5       636,073     Light Industrial/Bulk Warehouse
Central, PA
    2       206,931     Bulk Warehouse
Chicago, IL
    7       922,983     Bulk/Regional Warehouse/Manufacturing
Cincinnati, OH
    11       913,041     Regional/Bulk Warehouse/Lt. Ind.
Cleveland, OH
    5       1,250,292     Bulk Warehouse/Manufacturing
Columbus, OH
    1       744,800     Bulk Warehouse
Dallas, TX
    14       1,060,054     Bulk/Lt. Ind. Man/R&D/Flex/Regional
Denver, CO
    2       63,287     Light Industrial
Detroit, MI
    4       167,892     Bulk/Lt Ind./Regional Warehouse
Houston, TX
    7       783,080     Bulk/Lt. Ind./R&D/Flex/Regional Warehouse
Indianapolis, IN
    6       682,629     R&D/Flex/Bulk Warehouse/Lt. Ind. Warehouse
Los Angeles, CA
    4       713,357     Bulk Warehouse /Lt. Ind.
Milwaukee, WI
    5       1,000,263     Bulk/Regional Warehouse/Lt. Ind.
Minneapolis/St. Paul, MN
    5       276,881     Manufacturing/R&D/Flex
N. New Jersey
    1       92,400     Regional Warehouse
Nashville, TN
    3       467,041     Bulk/Regional Warehouse/Manufacturing
Philadelphia, PA
    2       99,038     Light Industrial
Phoenix, AZ
    6       1,102,179     Bulk Warehouse/Lt. Ind.
Raleigh, NC
    2       397,120     Bulk Warehouse/Manufacturing
S. New Jersey
    2       58,883     R&D/Flex/Lt. Ind.
San Diego, CA
    5       155,984     Bulk/Regional Warehouse
San Francisco, CA
    1       143,750     Bulk Warehouse
Seattle, WA
    1       451,151     Bulk Warehouse
St. Louis, MO
    1       281,105     Bulk Warehouse
Tampa, FL
    1       14,914     R&D/Flex
Other(a)
    3       1,337,446     Bulk Warehouse
                     
Total
    109       16,039,940     Bulk Warehouse/Manufacturing
                     
 
 
(a) Properties are located in Malvern, AR, Sparks, NV, Byhalia, MS and Greenville, SC.


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During 2006, the Other Real Estate Partnerships sold 16 industrial properties totaling approximately 1.1 million square feet of GLA. Total gross sales proceeds approximated $51.8 million. The 16 properties sold have the following characteristics:
 
                     
    Number of
 		           
Metropolitan Area
  Properties     GLA    
Property Type
 
Atlanta, GA
    2       153,006     R&D/Flex/Bulk Warehouse
Detroit, MI
    1       11,050     Light Industrial
Indianapolis, IN
    3       173,577     Bulk/Regional Warehouse
Los Angeles, CA
    7       105,005     R&D/Flex/Light Industrial
Philadelphia, PA
    2       140,000     Light Industrial
Other(a)
    1       490,500     Bulk Warehouse
                     
      16       1,073,138      
                     
 
 
(a) Property is located in Sparks, NV.
 
Property Acquisitions, Developments and Sales Subsequent to Year End
 
From January 1, 2007 to February 22, 2007, the Consolidated Operating Partnership acquired 53 industrial properties (including 41 properties in connection with the purchase of the 90% equity interest from the institutional investor in the September 1998 Joint Venture on January 31, 2007) and several land parcels for a total estimated investment of approximately $110.8 million. The Consolidated Operating Partnership also sold 14 industrial properties for approximately $74.4 million of gross proceeds during this period.
 
During the period January 1, 2007 through February 22, 2007, the Other Real Estate Partnerships acquired two industrial properties for a total estimated investment of approximately $25.1 million.
 
Tenant and Lease Information
 
The Consolidated Operating Partnership has a diverse base of over 2,300 tenants engaged in a wide variety of businesses including manufacturing, retail, wholesale trade, distribution and professional services. Most leases have an initial term of between three and six years and provide for periodic rent increases that are either fixed or based on changes in the Consumer Price Index. Industrial tenants typically have net or semi-net leases and pay as additional rent their percentage of the property’s operating costs, including the costs of common area maintenance, property taxes and insurance. As of December 31, 2006, approximately 94% of the GLA of the Consolidated Operating Partnership’s in-service properties was leased, and no single tenant or group of related tenants accounted for more than 2.2% of the Consolidated Operating Partnerships’ and Other Real Estate Partnerships’ combined rent revenues, nor did any single tenant or group of related tenants occupy more than 1.6% of the Consolidated Operating Partnership’s and Other Real Estate Partnership’s combined total GLA as of December 31, 2006.


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The following table shows scheduled lease expirations for all leases for the Consolidated Operating Partnership’s in service properties as of December 31, 2006.
 
                                         
    Number of
 		          Percentage of
 		    Annual Base Rent
 		    Percentage of Total
 		 
    Leases
 		          GLA
 		    Under Expiring
 		    Annual Base Rent
 		 
Year of Expiration(1)
  Expiring     GLA Expiring(2)     Expiring     Leases     Expiring(2)  
                      (In thousands)        
 
2007
    646       10,602,435       19 %     46,399       19 %
2008
    517       10,356,794       18 %     43,865       18 %
2009
    470       8,827,704       16 %     39,923       16 %
2010
    264       6,152,216       11 %     28,468       11 %
2011
    228       5,393,224       10 %     27,071       11 %
2012
    73       1,922,365       3 %     9,356       4 %
2013
    44       3,167,767       6 %     12,525       5 %
2014
    20       968,820       2 %     4,885       2 %
2015
    26       1,796,541       3 %     5,169       2 %
2016
    27       2,250,640       4 %     8,036       3 %
Thereafter
    27       5,083,055       8 %     22,674       9 %
                                         
Total
    2,342       56,521,561       100 %   $ 248,371       100.0 %
                                         
 
 
(1) Lease expirations as of December 31, 2006 assume tenants do not exercise existing renewal, termination or purchase options.
 
(2) Does not include existing vacancies of 3,784,881 aggregate square feet.
 
The Other Real Estate Partnerships have a diverse base of more than 250 tenants engaged in a wide variety of businesses including manufacturing, retail, wholesale trade, distribution and professional services. Most leases have an initial term of between three and six years and provide for periodic rent increases that are either fixed or based on changes in the Consumer Price Index. Industrial tenants typically have net or semi-net leases and pay as additional rent their percentage of the property’s operating costs, including the costs of common area maintenance, property taxes and insurance. As of December 31, 2006, approximately 97% of the GLA of the Other Real Estate Partnerships’ in-service properties was leased.
 
The following table shows scheduled lease expirations for all leases for the Other Real Estate Partnerships’ properties in — service as of December 31, 2006.
 
                                         
    Number of
 		          Percentage of
 		    Annual Base Rent
 		    Percentage of Total
 		 
    Leases
 		          GLA
 		    Under Expiring
 		    Annual Base Rent
 		 
Year of Expiration(1)
  Expiring     GLA Expiring(2)     Expiring     Leases     Expiring(2)  
                      (In thousands)        
 
2007
    70       1,975,323       24.5 %     8,550       23 %
2008
    49       1,972,781       24.4 %     8,742       23 %
2009
    47       1,211,447       15.0 %     6,266       17 %
2010
    36       908,391       11.2 %     4,075       11 %
2011
    26       830,743       10.3 %     4,708       12 %
2012
    8       255,026       3.2 %     1,202       3 %
2013
    7       333,599       4.1 %     1,503       4 %
2014
    3       173,697       2.2 %     563       1 %
2015
    4       379,708       4.7 %     1,828       5 %
2016
    NA       NA       NA       NA       NA  
Thereafter
    1       37,765       0.5 %     252       1 %
                                         
Total
    251       8,078,480       100.0 %   $ 37,689       100.0 %
                                         
 
 
(1) Lease expirations as of December 31, 2006 assume tenants do not exercise existing renewal, termination, or purchase options.
 
(2) Does not include existing vacancies of 225,573 aggregate square feet.


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Item 3.   Legal Proceedings
 
The Consolidated Operating Partnership is involved in legal proceedings arising in the ordinary course of business. All such proceedings, taken together, are not expected to have a material impact on the results of operations, financial position or liquidity of the Consolidated Operating Partnership.
 
Item 4.   Submission of Matters to a Vote of Security Holders
 
None.
 
PART II
 
Item 5.   Market for Registrant’s Partners’ Capital, Related Partner Matters and Issuer Purchases of Equity Securities
 
There is no established public trading market for the general partner and limited partner units. As of February 22, 2007, there were 244 holders of record of general partner and limited partner units (“Unit”).
 
Beginning with the third quarter of 1994, the Operating Partnership has made consecutive quarterly distributions to its partners with respect to general partner and limited partner units since the initial public offering of the Company in June 1994. The current indicated annual distribution rate with respect to general partner and limited partner units is $2.84 per Unit ($.7100 per Unit per quarter). The Operating Partnership’s ability to make distributions depends on a number of factors, including its net cash provided by operating activities, capital commitments and debt repayment schedules. Holders of general partner and limited partner units are entitled to receive distributions when, as and if declared by the Board of Directors of the Company, its general partner, after the priority distributions required under the Operating Partnership’s partnership agreement have been made with respect to Preferred Units out of any funds legally available for that purpose.
 
The following table sets forth the distributions per Unit paid or declared by the Operating Partnership during the periods noted:
 
         
    Distribution
 		 
Quarter Ended
  Declared  
 
December 31, 2006
  $ 0.7100  
September 30, 2006
  $ 0.7000  
June 30, 2006
  $ 0.7000  
March 31, 2006
  $ 0.7000  
December 31, 2005
  $ 0.7000  
September 30, 2005
  $ 0.6950  
June 30, 2005
  $ 0.6950  
March 31, 2005
  $ 0.6950  
 
For the year ended December 31, 2006, the Operating Partnership issued 31,473 Units valued, in the aggregate, at $1.3 million in exchange for interests in certain properties.
 
All of the above Units were issued in private placements in reliance on Section 4(2) of the Securities Act of 1933, as amended, including Regulation D promulgated thereunder, to individuals or entities holding real property or interests therein. No underwriters were used in connection with such issuances.
 
Subject to lock-up periods and certain adjustments, Units are convertible into common stock, par value $0.01 per share, of the Company on a one-for-one basis or cash at the option of the Company.


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Item 6.   Selected Financial Data
 
The following sets forth selected financial and operating data for the Consolidated Operating Partnership on a historical consolidated basis. The following data should be read in conjunction with the financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this Form 10-K. The historical statements of operations for the years ended December 31, 2006, 2005, 2004, 2003 and 2002 include the results of operations of the Consolidated Operating Partnership as derived from the Consolidated Operating Partnership’s audited financial statements. The results of operations of properties sold are presented in discontinued operations if such properties met both of the following criteria: (a) the operations and cash flows of the property have been (or will be) eliminated from the ongoing operations of the Consolidated Operating Partnership as a result of the disposition and (b) the Consolidated Operating Partnership will not have any significant involvement in the operations of the property after the disposal transaction. The historical balance sheet data and other data as of December 31, 2006, 2005, 2004, 2003 and 2002 include the balances of the Consolidated Operating Partnership as derived from the Consolidated Operating Partnership’s audited financial statements.
 
                                         
    Year
 		    Year
 		    Year
 		    Year
 		    Year
 		 
    Ended
 		    Ended
 		    Ended
 		    Ended
 		    Ended
 		 
    12/31/06     12/31/05     12/31/04     12/31/03     12/31/02  
    (In thousands, except per unit and property data)  
 
Statement of Operations Data:
                                       
Total Revenues
  $ 346,489     $ 286,653     $ 234,902     $ 210,460     $ 198,189  
Interest Income
    947       1,075       2,025       1,698       121  
Mark-to-Market/(Loss) Gain on Settlement of Interest Rate Protection Agreement
    (3,112 )     811       1,583       —       —  
Property Expenses
    (115,644 )     (96,283 )     (78,859 )     (72,701 )     (65,409 )
Expenses from Build to Suit Development for Sale
    (10,263 )     (15,574 )     —       —       —  
General and Administrative Expense
    (76,631 )     (54,846 )     (38,912 )     (25,607 )     (19,230 )
Interest Expense
    (121,130 )     (108,164 )     (98,458 )     (94,637 )     (87,069 )
Amortization of Deferred Financing Costs
    (2,664 )     (2,122 )     (1,928 )     (1,761 )     (1,858 )
Depreciation and Other Amortization
    (126,264 )     (92,853 )     (70,369 )     (54,158 )     (44,637 )
Gain (Loss) from Early Retirement of Debt(a)
    —       82       (515 )     —       (888 )
Equity in Income of Other Real Estate Partnerships
    33,531       48,212       29,203       43,332       53,038  
Equity in Income of Joint Ventures
    30,671       3,698       35,840       539       463  
Income Tax Benefit
    8,920       14,022       7,937       5,495       2,125  
                                         
(Loss) Income from Continuing Operations
    (35,150 )     (15,289 )     22,449       12,660       34,845  
Income from Discontinued Operations
                                       
(Including Gain on Sale of Real Estate of $196,622, $102,926 $81,806, $74,797 and $37,106 for the Years Ended December 31, 2006, 2005, 2004, 2003 and 2002 respectively)
    207,184       120,273       103,969       114,899       90,956  
Provision for Income Taxes Allocable to Discontinued Operations (Including $47,511, $20,529, $8,659, $2,154 and $1,538 allocable to Gain on Sale of Real Estate for the Years ended December 31, 2006, 2005, 2004, 2003 and 2002, respectively)
    (50,140 )     (23,583 )     (11,005 )     (3,689 )     (2,680 )
Gain on Sale of Real Estate
    6,195       28,686       15,112       9,594       16,408  
Provision for Income Taxes Allocable to Gain on Sale of Real Estate
    (2,119 )     (10,871 )     (5,371 )     (2,408 )     (3,111 )
                                         
Net Income
    125,970       99,216       125,154       131,056       136,418  
Redemption of Preferred Units
    (672 )     —       (7,959 )     —       (3,707 )
Preferred Unit Distributions
    (21,424 )     (10,688 )     (14,488 )     (20,176 )     (23,432 )
                                         
Net Income Available to Unitholders
  $ 103,874     $ 88,528     $ 102,707     $ 110,880     $ 109,279  
                                         


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    Year
 		    Year
 		    Year
 		    Year
 		    Year
 		 
    Ended
 		    Ended
 		    Ended
 		    Ended
 		    Ended
 		 
    12/31/06     12/31/05     12/31/04     12/31/03     12/31/02  
    (In thousands, except per unit and property data)  
 
(Loss) Income from Continuing Operations Available to Unitholders Per Weighted Average Unit Outstanding:
                                       
Basic
  $ (1.05 )   $ (0.17 )   $ 0.21     $ (0.01 )   $ 0.46  
                                         
Diluted
  $ (1.05 )   $ (0.17 )   $ 0.21     $ (0.01 )   $ 0.46  
                                         
Net Income Available to Unitholders Per Weighted Average Unit Outstanding:
                                       
Basic
  $ 2.05     $ 1.81     $ 2.18     $ 2.45     $ 2.38  
                                         
Diluted
  $ 2.05     $ 1.81     $ 2.16     $ 2.44     $ 2.37  
                                         
Distributions Per Unit
  $ 2.8100     $ 2.7850     $ 2.7500     $ 2.7400     $ 2.7250  
                                         
Weighted Average Number of Units Outstanding:
                                       
Basic
    50,703       48,968       47,136       45,322       45,841  
                                         
Diluted
    50,703       48,968       47,467       45,443       46,079  
                                         
Net Income
  $ 125,970     $ 99,216     $ 125,154     $ 131,056     $ 136,418  
Other Comprehensive (Loss) Income:
                                       
Settlement of Interest Rate Protection
                                       
Agreements
    (1,729 )     —       6,816       —       1,772  
Reclassification of Settlement of Interest Rate Protection Agreements to Net Income
    —       (159 )     —       —       —  
Mark-to-Market of Interest Rate Protection Agreements and Interest Rate Swap Agreements
    (2,800 )     (1,414 )     106       251       (126 )
Amortization of Interest Rate Protection Agreements
    (912 )     (1,085 )     (512 )     198       176  
                                         
Comprehensive Income
  $ 120,529     $ 96,558     $ 131,564     $ 131,505     $ 138,240  
                                         
Balance Sheet Data (End of Period):
                                       
Real Estate, Before Accumulated Depreciation
  $ 2,826,588     $ 2,896,937     $ 2,486,414     $ 2,352,026     $ 2,316,970  
Real Estate, After Accumulated Depreciation
    2,424,091       2,541,182       2,165,411       2,056,338       2,055,595  
Real Estate Held for Sale, Net
    115,961       16,840       50,286       —       7,040  
Investment in and Advances to Other Real Estate Partnerships
    371,390       378,864       339,967       374,906       377,776  
Total Assets
    3,235,366       3,230,465       2,721,151       2,633,262       2,585,805  
Mortgage Loans Payable, Net, Unsecured Lines of Credit and Senior Unsecured Debt, Net
    1,834,658       1,811,322       1,572,473       1,451,269       1,402,069  
Total Liabilities
    2,051,706       2,016,827       1,711,429       1,570,195       1,525,587  
Partners’ Capital
    1,183,660       1,213,638       1,009,722       1,063,067       1,060,218  
Other Data:
                                       
Cash Flow From Operating Activities
  $ 66,898     $ 82,831     $ 81,015     $ 91,266     $ 138,453  
Cash Flow From Investing Activities
    119,866       (404,742 )     5,570       18,115       11,007  
Cash Flow From Financing Activities
    (178,451 )     325,653       (83,516 )     (109,381 )     (149,460 )
Total In-Service Properties
    764       786       726       729       798  
Total In-Service GLA, in Square Feet
    60,306,452       61,674,426       52,330,335       48,527,601       49,867,755  
In-Service Occupancy Percentage
    94 %     92 %     91 %     90 %     89 %
 
 
(a) In 2005, the Consolidated Operating Partnership wrote off $.05 million of financing fees related to the Consolidated Operating Partnership’s previous line of credit agreement, which was amended and restated on August 23, 2005. In addition, the Consolidated Operating Partnership paid $.3 million of finance fees and wrote off a loan premium of $.4 million on a mortgage loan payable which was assumed by the

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buyers of the related properties on July 13, 2005. In 2004, the Consolidated Operating Partnership paid off and retired a mortgage loan. The Consolidated Operating Partnership recorded a loss from the early retirement of debt of approximately $0.5 million, which is comprised of the write-off of unamortized deferred financing costs and a prepayment penalty. In 2002, the Consolidated Operating Partnership paid off and retired certain senior unsecured debt. The Consolidated Operating Partnership recorded a loss from the early retirement of debt of approximately $0.9 million, which is comprised of the amount paid above the carrying amount of the senior unsecured debt and the write-off of pro rata unamortized deferred financing costs and legal costs.
 
Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
The following discussion should be read in conjunction with “Selected Financial Data” and the Consolidated Financial Statements and Notes thereto appearing elsewhere in this Form 10-K.
 
This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Operating Partnership intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of complying with those safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Operating Partnership, are generally identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar expressions. The Operating Partnership’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on the operations and future prospects of the Operating Partnership on a consolidated basis include, but are not limited to, 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 rates, competition, supply and demand for industrial properties in the Operating Partnership’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. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Further information concerning the Operating Partnership and its business, including additional factors that could materially affect the Operating Partnership’s financial results, is included herein in Item 1A, “Risk Factors” and in the Operating Partnership’s other filings with the SEC.
 
The Operating Partnership was organized as a limited partnership in the state of Delaware on November 23, 1993. The sole general partner is the Company with an approximate 87.3% ownership interest at December 31, 2006. The Company also owns a preferred general partnership interest in the Operating Partnership (“Preferred Units”) with an aggregate liquidation priority of $325 million. The Company is a REIT as defined in the Code. The Company’s operations are conducted primarily through the Operating Partnership. The limited partners of the Operating Partnership own, in the aggregate, approximately a 12.7% interest in the Operating Partnership at December 31, 2006.
 
The Operating Partnership or First Industrial Investment, Inc. is the sole member of several limited liability companies (the “L.L.C.s”) and the sole stockholder of First Industrial Investment, Inc., (together with the Operating Partnership and the L.L.C.’s, the “Consolidated Operating Partnership”), the operating data of which is consolidated with that of the Operating Partnership. The Operating Partnership also holds at least a 99% limited partnership interest in First Industrial Financing Partnership, L.P. (the “Financing Partnership”), First Industrial Securities, L.P. (the “Securities Partnership”), First Industrial Mortgage Partnership, L.P. (the “Mortgage Partnership”), First Industrial Pennsylvania, L.P. (the “Pennsylvania Partnership”), First Industrial Harrisburg, L.P. (the “Harrisburg Partnership”), First Industrial Indianapolis, L.P. (the “Indianapolis Partnership”), TK-SV, LTD., and FI Development Services, L.P. (together, the “Other Real Estate Partnerships”). The Other Real Estate Partnerships’ operating data is presented on a combined basis, separate from that of the Consolidated Operating Partnership. The Operating Partnership or First Industrial Investment, Inc., through separate wholly-owned limited liability companies in which it is the sole member, also owns minority equity


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interests in, and provides asset and property management services to, six joint ventures which invest in industrial properties (the “September 1998 Joint Venture,” the “May 2003 Joint Venture,” the “March 2005 Joint Venture,” the “September 2005 Joint Venture,” the “March 2006 Co-Investment Program” and the “July 2006 Joint Venture”). The Operating Partnership, through a separate, wholly-owned limited liability company of which the Operating Partnership is also the sole member, also owned a minority interest in, and provided property management services to, a seventh joint venture which invested in industrial properties (the “December 2001 Joint Venture”; together with the September 1998 Joint Venture, the May 2003 Joint Venture, the March 2005 Joint Venture, the September 2005 Joint venture, the March 2006 Co-Investment Program and the July 2006 Joint Venture; the “Joint Ventures”). During the year ended December 31, 2004, the December 2001 Joint Venture sold all of its industrial properties. On January 31, 2007, the Consolidated Operating Partnership purchased the 90% equity interest from the institutional investor in the September 1998 Joint Venture. The operating data of the Joint Ventures is not consolidated with that of the Consolidated Operating Partnership as presented herein.
 
The general partners of the Other Real Estate Partnerships are separate corporations, each with at least a .01% general partnership interest in the Other Real Estate Partnerships for which it acts as a general partner. Each general partner of the Other Real Estate Partnerships is a wholly-owned subsidiary of the Company.
 
The financial statements of the Operating Partnership report the L.L.C.s and First Industrial Investment, Inc. on a consolidated basis and the Other Real Estate Partnerships and the Joint Ventures are accounted for under the equity method of accounting. Profits, losses and distributions of the Operating Partnership, the L.L.C.s and the Other Real Estate Partnerships are allocated to the general partner and the limited partners, or members, as applicable, in accordance with the provisions contained in the partnership agreements or operating agreements, as applicable, of the Operating Partnership, the L.L.C.s and the Other Real Estate Partnerships.
 
As of December 31, 2006, the Consolidated Operating Partnership owned 764 in-service industrial properties, containing an aggregate of approximately 60.3 million square feet of GLA. On a combined basis, as of December 31, 2006, the Other Real Estate Partnerships owned 94 in-service industrial properties, containing an aggregate of approximately 8.3 million square feet of GLA. Of the 94 industrial properties owned by the Other Real Estate Partnerships at December 31, 2006, 22 are held by the Financing Partnership, 13 are held by the Securities Partnership, ten are held by the Mortgage Partnership, 34 are held by the Pennsylvania Partnership, nine are held by the Harrisburg Partnership, four are held by the Indianapolis Partnership, one is held by TK-SV, LTD. and one is held by FI Development Services, L.P.
 
Management believes the Consolidated Operating Partnership’s financial condition and results of operations are, primarily, a function of the Consolidated Operating Partnership’s and its joint ventures’ performance in four key areas: leasing of industrial properties, acquisition and development of additional industrial properties, redeployment of internal capital and access to external capital.
 
The Consolidated Operating Partnership generates revenue primarily from rental income and tenant recoveries from long-term (generally three to six years) operating leases of its and its joint ventures’ industrial properties. Such revenue is offset by certain property specific operating expenses, such as real estate taxes, repairs and maintenance, property management, utilities and insurance expenses, along with certain other costs and expenses, such as depreciation and amortization costs and general and administrative and interest expenses. The Consolidated Operating Partnership’s revenue growth is dependent, in part, on its ability to (i) increase rental income, through increasing either or both occupancy rates and rental rates at the Consolidated Operating Partnership’s and its joint ventures’ properties, (ii) maximize tenant recoveries and (iii) minimize operating and certain other expenses. Revenues generated from rental income and tenant recoveries are a significant source of funds, in addition to income generated from gains/losses on the sale of the Consolidated Operating Partnership’s and its joint ventures’ properties (as discussed below), for the Consolidated Operating Partnership’s distributions. The leasing of property, in general, and occupancy rates, rental rates, operating expenses and certain non-operating expenses, in particular, are impacted, variously, by property specific, market specific, general economic and other conditions, many of which are beyond the control of the Consolidated Operating Partnership. The leasing of property also entails various risks, including the risk of tenant default. If the Consolidated Operating Partnership were unable to maintain or increase


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occupancy rates and rental rates at the Consolidated Operating Partnership’s and its joint ventures’ properties or to maintain tenant recoveries and operating and certain other expenses consistent with historical levels and proportions, the Consolidated Operating Partnership’s revenue growth would be limited. Further, if a significant number of the Consolidated Operating Partnership’s or its joint ventures’ tenants were unable to pay rent (including tenant recoveries) or if the Consolidated Operating Partnership or its joint ventures were unable to rent their properties on favorable terms, the Consolidated Operating Partnership’s financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, the Company’s common stock would be adversely affected.
 
The Consolidated Operating Partnership’s revenue growth is also dependent, in part, on its and its joint ventures’ ability to acquire existing, and acquire and develop new, additional industrial properties on favorable terms. The Consolidated Operating Partnership itself, and through its various joint ventures, continually seeks to acquire existing industrial properties on favorable terms, and, when conditions permit, also seeks to acquire and develop new industrial properties on favorable terms. Existing properties, as they are acquired, and acquired and developed properties, as they lease-up, generate revenue from rental income, tenant recoveries and fees, income from which, as discussed above, is a source of funds for the Consolidated Operating Partnership’s distributions. The acquisition and development of properties is impacted, variously, by property specific, market specific, general economic and other conditions, many of which are beyond the control of the Consolidated Operating Partnership. The acquisition and development of properties also entails various risks, including the risk that the Consolidated Operating Partnership’s and its joint ventures’ investments may not perform as expected. For example, acquired existing and acquired and developed new properties may not sustain and/or achieve anticipated occupancy and rental rate levels. With respect to acquired and developed new properties, the Consolidated Operating Partnership may not be able to complete construction on schedule or within budget, resulting in increased debt service expense and construction costs and delays in leasing the properties. Also, the Consolidated Operating Partnership and its joint ventures face significant competition for attractive acquisition and development opportunities from other well-capitalized real estate investors, including both publicly-traded REITs and private investors. Further, as discussed below, the Consolidated Operating Partnership and its joint ventures may not be able to finance the acquisition and development opportunities they identify. If the Consolidated Operating Partnership and its joint ventures were unable to acquire and develop sufficient additional properties on favorable terms or if such investments did not perform as expected, the Consolidated Operating Partnership’s revenue growth would be limited and its financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, the Company’s common stock would be adversely affected.
 
The Consolidated Operating Partnership also generates income from the sale of its and its joint ventures’ properties (including existing buildings, buildings which the Consolidated Operating Partnership or its joint ventures have developed or re-developed on a merchant basis and land). The Consolidated Operating Partnership itself, and through its various joint ventures, is continually engaged in, and its income growth is dependent, in part, on systematically redeploying capital from properties and other assets with lower yield potential into properties and other assets with higher yield potential. As part of that process, the Consolidated Operating Partnership and its joint ventures sell, on an ongoing basis, select stabilized properties or land or properties offering lower potential returns relative to their market value. The gain/loss on, and fees from, the sale of such properties are included in the Consolidated Operating Partnership’s income and are a significant source of funds, in addition to revenues generated from rental income and tenant recoveries, for the Consolidated Operating Partnership’s distributions. Also, a significant portion of the Consolidated Operating Partnership’s proceeds from such sales is used to fund the Consolidated Operating Partnership’s acquisition of existing, and the acquisition and development of new, industrial properties. The sale of properties is impacted, variously, by property specific, market specific, general economic and other conditions, many of which are beyond the control of the Consolidated Operating Partnership. The sale of properties also entails various risks, including competition from other sellers and the availability of attractive financing for potential buyers of the Consolidated Operating Partnership’s properties. Further, the Consolidated Operating Partnership’s ability to sell properties is limited by safe harbor rules applying to REITs under the Code which relate to the number of properties that may be disposed of in a year, their tax bases and the cost of improvements made to the properties, along with other tests which enable a REIT to avoid punitive taxation on the sale of assets. If the


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Consolidated Operating Partnership and its joint ventures were unable to sell properties on favorable terms, the Consolidated Operating Partnership’s income growth would be limited and its financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, the Company’s common stock would be adversely affected.
 
Currently, the Consolidated Operating Partnership utilizes a portion of the net sales proceeds from property sales, borrowings under its unsecured line of credit and proceeds from the issuance, when and as warranted, of additional equity securities to finance future acquisitions and developments, and to fund its equity commitments to its joint ventures. Access to external capital on favorable terms plays a key role in the Consolidated Operating Partnership’s financial condition and results of operations, as it impacts the Consolidated Operating Partnership’s cost of capital and its ability and cost to refinance existing indebtedness as it matures and to fund acquisitions, developments and contributions to its joint ventures or through the issuance, when and as warranted, of additional equity securities. The Company’s ability to access external capital on favorable terms is dependent on various factors, including general market conditions, interest rates, credit ratings on the Company’s capital stock and debt, the market’s perception of the Company’s growth potential, the Company’s current and potential future earnings and cash distributions and the market price of the Company’s capital stock. If the Company were unable to access external capital on favorable terms, the Company’s financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, the Company’s common stock would be adversely affected.
 
CRITICAL ACCOUNTING POLICIES
 
The Consolidated Operating Partnership’s significant accounting policies are described in more detail in Note 3 to the consolidated financial statements. The Consolidated Operating Partnership believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.
 
  •  The Consolidated Operating Partnership maintains an allowance for doubtful accounts which is based on estimates of potential losses which could result from the inability of the Consolidated Operating Partnership’s tenants to satisfy outstanding billings with the Consolidated Operating Partnership. The allowance for doubtful accounts is an estimate based on the Consolidated Operating Partnership’s assessment of the creditworthiness of its tenants.
 
  •  Properties are classified as held for sale when management of the Consolidated Operating Partnership has approved the sales of such properties. When properties are classified as held for sale, the Consolidated Operating Partnership ceases depreciating the properties and estimates the values of such properties and measures them at the lower of depreciated cost or fair value, less costs to dispose. If circumstances arise that were previously considered unlikely, and, as a result, the Consolidated Operating Partnership decides not to sell a property previously classified as held for sale, the Consolidated Operating Partnership will reclassify such property as held and used. The Consolidated Operating Partnership estimates the value of such property and measures it at the lower of its carrying amount (adjusted for any depreciation and amortization expense that would have been recognized had the property been continuously classified as held and used) or fair value at the date of the subsequent decision not to sell. Fair value is determined by deducting from the estimated sales price of the property the estimated costs to close the sale.
 
  •  The Consolidated Operating Partnership reviews its properties on a quarterly basis for possible impairment and provides a provision if impairments are determined. The Consolidated Operating Partnership utilizes the guidelines established under Financial Accounting Standards Board’s Statement of Financial Accounting Standards (“FAS”) No. 144, “Accounting for the Impairment or Disposal of Long Lived Assets” (“FAS 144”) to determine if impairment conditions exist. The Consolidated Operating Partnership reviews the expected undiscounted cash flows of each property to determine if there are any indications of impairment. If the expected undiscounted cash flows of a particular property are less than the net book basis of the property, the Consolidated Operating Partnership will recognize an impairment charge equal to the amount of carrying value of the property that exceeds the


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  fair value of the property. Fair value is determined by discounting the future expected cash flows of the property. The calculation of the fair value involves subjective assumptions such as estimated occupancy, rental rates, ultimate residual value and the discount rate used to present value the cash flows.
 
  •  The Consolidated Operating Partnership analyzes its investments in joint ventures to determine whether the joint venture should be accounted for under the equity method of accounting or consolidated into the Consolidated Operating Partnership’s financial statements based on standards set forth under Financial Accounting Standards Board (“FASB”) Interpretation No. 46(R), Consolidation of Variable Interest Entities, EITF 96-16, Investor’s Accounting for an Investee When the Investor Has a Majority of the Voting Interest but the Minority Shareholder or Shareholders Have Certain Approval or Veto Rights and Statement of Position 78-9, Accounting for Investments in Real Estate Ventures. Based on the guidance set forth in these pronouncements, the Consolidated Operating Partnership does not consolidate any of its joint venture investments because either the joint venture has been determined not to be a variable interest entity or it has been determined the Consolidated Operating Partnership is not the primary beneficiary. The Consolidated Operating Partnership’s assessment of whether they are the primary beneficiary of a variable interest involves the consideration of various factors including the form of our ownership interest, the Company’s representation on the entity’s governing body, the size of the Consolidated Operating Partnership’s investment and future cash flows of the entity.
 
  •  The Consolidated Operating Partnership capitalizes (direct and certain indirect) costs incurred in developing, renovating, acquiring and rehabilitating real estate assets as part of the investment basis. Costs incurred in making certain other improvements are also capitalized. During the land development and construction periods, we capitalize interest costs, real estate taxes and certain general and administrative costs of the personnel performing development, renovations or rehabilitation up to the time the property is substantially complete. The determination and calculation of certain indirect costs requires estimates by the Consolidated Operating Partnership. Amounts included in capitalized costs are included in the investment basis of real estate assets.
 
  •  The Consolidated Operating Partnership is engaged in the acquisition of individual properties as well as multi-property portfolios. In accordance with FAS No. 141, “Business Combinations” (“FAS 141”), the Consolidated Operating Partnership is required to allocate purchase price between land, building, tenant improvements, leasing commissions, intangible assets and above and below market leases. Above-market and below-market lease values for acquired properties are recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rents for each corresponding in-place lease. Acquired above and below market leases are amortized over the remaining non-cancelable terms of the respective leases as an adjustment to rental income. The Consolidated Operating Partnership also must allocate purchase price on multi-property portfolios to individual properties. The allocation of purchase price is based on the Consolidated Operating Partnership’s assessment of various characteristics of the markets where the property is located and the expected cash flows of the property.
 
RESULTS OF OPERATIONS
 
Comparison of Year Ended December 31, 2006 to Year Ended December 31, 2005
 
The Consolidated Operating Partnership’s net income available to unitholders was $103.9 million and $88.5 million for the years ended December 31, 2006 and December 31, 2005, respectively. Basic and diluted net income available to unitholders was $2.05 and $2.05 per unit, respectively, for the year ended December 31, 2006, and $1.81 and $1.81 per unit, respectively, for the year ended December 31, 2005.
 
The tables below summarize the Consolidated Operating Partnership’s revenues, property expenses and depreciation and other amortization by various categories for the years ended December 31, 2006 and December 31, 2005. Same store properties are in service properties owned prior to January 1, 2005. Acquired properties are properties that were acquired subsequent to December 31, 2004. Sold properties are properties


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that were sold subsequent to December 31, 2004. Properties that are not in service are properties that are under construction that have not reached stabilized occupancy or were placed in service after December 31, 2004 or acquisitions made prior to January 1, 2005 that were not placed in service as of December 31, 2004. These properties are placed in service as they reach stabilized occupancy (generally defined as properties that are 90% leased). Other revenues are derived from the operations of the Consolidated Operating Partnership’s maintenance company, fees earned from the Consolidated Operating Partnership’s joint ventures, fees earned for developing properties for third parties and other miscellaneous revenues. Other expenses are derived from the operations of the Consolidated Operating Partnership’s maintenance company and other miscellaneous regional expenses.
 
The Consolidated Operating Partnership’s future financial condition and results of operations, including rental revenues, may be impacted by the future acquisition and sale of properties. The future revenues and expenses may vary materially from historical rates.
 
At December 31, 2006 and 2005, the occupancy rates of the Consolidated Operating Partnership’s same store properties were 92.0% and 91.2%, respectively.
 
                                 
    2006     2005     $ Change     % Change  
    ($ in 000’s)  
 
REVENUES
                               
Same Store Properties
  $ 222,703     $ 222,283     $ 420       0.2 %
Acquired Properties
    82,876       15,578       67,298       432.0 %
Sold Properties
    25,475       69,769       (44,294 )     (63.5 )%
Properties Not In-service
    20,528       16,526       4,002       24.2 %
Other
    30,048       19,098       10,950       57.3 %
                                 
      381,630       343,254       38,376       11.2 %
Discontinued Operations
    (35,141 )     (56,601 )     21,460       (37.9 )%
                                 
Total Revenues
  $ 346,489     $ 286,653     $ 59,836       20.9 %
                                 
 
Revenues from same store properties remained relatively unchanged. Revenues from acquired properties increased $67.3 million due to the 228 properties totaling approximately 28.1 million square feet of GLA acquired subsequent to December 31, 2004. Revenues from sold properties decreased $44.3 million due to the 191 industrial properties totaling approximately 26.7 million square feet of GLA sold subsequent to December 31, 2004. Revenues from properties not in service increased by approximately $4.0 million due primarily to an increase in properties placed in service during 2006 and 2005. Other revenues increased by approximately $11.0 million due primarily to an increase in joint venture fees, partially offset by a decrease in assignment fees.
 
                                 
    2006     2005     $ Change     % Change  
    ($ in 000’s)  
 
PROPERTY EXPENSES
                               
Same Store Properties
  $ 76,080     $ 74,077     $ 2,003       2.7 %
Acquired Properties
    28,380       5,184       23,196       447.5 %
Sold Properties
    7,799       32,368       (24,569 )     (75.9 )%
Properties Not In-service
    8,805       8,242       563       6.8 %
Other
    15,429       11,324       4,105       36.3 %
                                 
      136,493       131,195       5,298       4.0 %
Discontinued Operations
    (10,586 )     (19,338 )     8,752       (45.3 )%
                                 
Total Property Expenses
  $ 125,907     $ 111,857     $ 14,050       12.6 %
                                 
 
Property expenses include real estate taxes, repairs and maintenance, property management, utilities, insurance, other property related expenses and expenses from build to suit development for sale. Property


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expenses from same store properties increased $2.0 million or 2.7% primarily due to an increase of $1.4 million in utility expense attributable to increases in gas and electric costs, an increase of $0.4 million in real estate tax expense, and an increase of $0.4 million in repair and maintenance. Property expenses from acquired properties increased by $23.2 million due to properties acquired subsequent to December 31, 2004 and due to an increase in build-to-suit-for-sale expenses of $10.3 million. Property expenses from sold properties decreased by $24.6 million due to properties sold subsequent to December 31, 2004, and due to a decrease in build-to-suit-for-sale expenses of $15.6 million. Property expenses from properties not in service increased $0.5 million due primarily to an increase in properties placed in service in 2006 and 2005. Other expense increased by $4.1 million due primarily to increases in employee compensation.
 
General and administrative expense increased by approximately $21.8 million, or 39.7%, due primarily to increases in employee compensation related to compensation for new employees as well as an increase in incentive compensation.
 
                                 
    2006     2005     $ Change     % Change  
    ($ in 000’s)  
 
DEPRECIATION AND OTHER AMORTIZATION
                               
Same Store Properties
  $ 72,578     $ 73,599     $ (1,021 )     (1.4 )%
Acquired Properties
    42,875       9,929       32,946       331.8 %
Sold Properties
    9,189       17,895       (8,706 )     (48.7 )%
Properties Not In-service and Other
    13,702       9,602       4,100       42.7 %
Corporate Furniture, Fixtures and Equipment
    1,913       1,371       542       39.5 %
                                 
      140,257       112,396       27,861       24.8 %
Discontinued Operations
    (13,993 )     (19,543 )     5,550       (28.4 )%
                                 
Total Depreciation and Other Amortization
  $ 126,264     $ 92,853     $ 33,411       36.0 %
                                 
 
Depreciation and other amortization for same store properties remained relatively unchanged. Depreciation and other amortization from acquired properties increased by $32.9 million due to properties acquired subsequent to December 31, 2004. Depreciation and other amortization from sold properties decreased by $8.7 million due to properties sold subsequent to December 31, 2004. Depreciation and other amortization for properties not in service and other increased by $4.1 million due primarily to accelerated depreciation on one property in Columbus, OH which was razed during the year ended December 31, 2006. Amortization of corporate furniture, fixtures and equipment increased $0.5 million due primarily to expansion and improvement to corporate offices.
 
Interest income remained relatively unchanged.
 
In April 2006, the Consolidated Operating Partnership entered into interest rate protection agreements which it designated as cash flow hedges. Each of the interest rate protection agreements had a notional value of $74.8 million, were effective from May 10, 2007 through May 10, 2012, and fixed the LIBOR rate at 5.42%. In September 2006, the interest rate protection agreements failed to qualify for hedge accounting. The Consolidated Operating Partnership settled the interest rate protection agreements and paid the counterparties $2.9 million. In October 2005, the Consolidated Operating Partnership, through First Industrial Investment, Inc., entered into an interest rate protection agreement which hedged the change in value of a build-to-suit development project the Consolidated Operating Partnership was constructing. This interest rate protection agreement did not qualify for hedge accounting. The Consolidated Operating Partnership recognized a loss of $0.2 million related to this interest rate protection agreement for the year ended December 31, 2006. Both transactions are recognized in the mark-to-market/(loss) gain on settlement of interest rate protection agreements caption on the consolidated statement of operations.
 
The Consolidated Operating Partnership recognized a $0.6 million gain related to the settlement/mark-to-market of two interest rate protection agreements the Consolidated Operating Partnership entered into during 2005 in order to hedge the change in value of a build to suit development project as well as $0.2 million in


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deferred gain that was reclassified out of other comprehensive income relating to a settled interest rate protection agreement that no longer qualified for hedge accounting.
 
Interest expense increased by $13.0 million due primarily to an increase in the weighted average debt balance outstanding for the year ended December 31, 2006 ($1,879.9 million), as compared to the year ended December 31, 2005 ($1,687.8 million) and an increase in the weighted average interest rate for the year ended December 31, 2006 (6.72%), as compared to the year ended December 31, 2005 (6.62%). This was partially offset by an increase in capitalized interest for the year ended December 31, 2006 due to an increase in development activities.
 
Amortization of deferred financing costs increased by approximately $0.5 million, or 25.5%, due primarily to financing fees incurred associated with the amendment and restatement of the Consolidated Operating Partnership’s Unsecured Line of Credit I in August 2005, the issuance of the 2016 Notes in January 2006 and the issuance of the 2011 Exchangeable Notes in September 2006.
 
The Consolidated Operating Partnership recognized approximately $0.08 million of gain on the early retirement of debt for the year ended December 31, 2005, comprised of $0.05 million write-off of financing fees associated with the Consolidated Operating Partnership’s previous line of credit agreement which was amended and restated on August 23, 2005. The gain on early retirement of debt also includes a payment of $0.3 million of fees and a write-off of loan premium of $0.4 million on a $13.7 million mortgage loan which was assumed by the buyers of the related properties on July 13, 2005.
 
Equity in income of Other Real Estate Partnerships decreased by $14.7 million primarily due to a decrease in gain on sale of real estate.
 
Equity in income of joint ventures increased by approximately $27.0 million due primarily to the Consolidated Operating Partnership’s economic share of the gains and earn outs on property sales from the March 2005 Joint Venture and the September 2005 Joint Venture during the year ended December 31, 2006.
 
The income tax provision (included in continuing operations, discontinued operations and gain on sale) increased by $22.9 million in the aggregate, due primarily to an increase in the gain on sale of real estate, joint venture fees, equity in net income of joint ventures, partially offset by an increase in interest expense and an increase in general and administrative expense within the Consolidated Operating Partnership’s taxable REIT subsidiary.
 
The $6.2 million gain on sale of real estate for the year ended December 31, 2006 resulted from the sale of several land parcels that do not meet the criteria established by FAS 144 for inclusion in discontinued operations. The $28.7 million gain on sale of real estate for the year ended December 31, 2005 resulted from the sale of nine industrial properties and several land parcels that do not meet the criteria established by FAS 144 for inclusion in discontinued operations.


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The following table summarizes certain information regarding the industrial properties included in discontinued operations by the Consolidated Operating Partnership for the years ended December 31, 2006 and December 31, 2005.
 
                 
    Year Ended
 		 
    December 31,  
    2006     2005  
 
Total Revenues
  $ 35,141     $ 56,601  
Property Expenses
    (10,586 )     (19,338 )
Interest Expense
    —       (373 )
Depreciation and Amortization
    (13,993 )     (19,543 )
Provision for Income Taxes Allocable to Operations
    (2,629 )     (3,054 )
Gain on Sale of Real Estate
    196,622       102,926  
Provision for Income Taxes Allocable to Gain on Sale
    (47,511 )     (20,529 )
                 
Income from Discontinued Operations
  $ 157,044     $ 96,690  
                 
 
Income from discontinued operations, net of income taxes, for the year ended December 31, 2006 reflects the results of operations and gain on sale of real estate of $196.6 million relating to 109 industrial properties that were sold during the year ended December 31, 2006 and the results of operations from 25 properties identified as held for sale at December 31, 2006.
 
Income from discontinued operations, net of income taxes, for the year ended December 31, 2005 reflects the results of operations of industrial properties that were sold during the year ended December 31, 2006, 25 properties identified as held for sale at December 31, 2006, the results of operations and gain on sale of real estate of $102.9 million from the 73 industrial properties which were sold during the year ended December 31, 2005.
 
Comparison of Year Ended December 31, 2005 to Year Ended December 31, 2004
 
The Consolidated Operating Partnership’s net income available to unitholders was $88.5 million and $102.7 million for the years ended December 31, 2005 and December 31, 2004, respectively. Basic and diluted net income available to unitholders was $1.81 and $1.81 per unit, respectively, for the year ended December 31, 2005, and $2.18 and $2.16 per unit, respectively, for the year ended December 31, 2004.


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The tables below summarize the Consolidated Operating Partnership’s revenues, property expenses and depreciation and other amortization by various categories for the years ended December 31, 2005 and December 31, 2004. Same store properties are in service properties owned prior to January 1, 2004. Acquired properties are properties that were acquired subsequent to December 31, 2003. Sold properties are properties that were sold subsequent to December 31, 2003. Properties that are not in service are properties that are under construction that have not reached stabilized occupancy or were placed in service after December 31, 2003 or acquisitions made prior to January 1, 2004 that were not placed in service as of December 31, 2003. These properties are placed in service as they reach stabilized occupancy (generally defined as properties that are 90% leased). Other revenues are derived from the operations of the Consolidated Operating Partnership’s maintenance company, fees earned from the Consolidated Operating Partnership’s joint ventures, fees earned for developing properties for third parties and other miscellaneous revenues. Other expenses are derived from the operations of the Consolidated Operating Partnership’s maintenance company and other miscellaneous regional expenses.
 
The Consolidated Operating Partnership’s future financial condition and results of operations, including rental revenues, may be impacted by the future acquisition and sale of properties. The future revenues and expenses may vary materially from historical rates.
 
At December 31, 2005 and 2004, the occupancy rates of the Consolidated Operating Partnership’s same store properties were 89.1% and 90.1%, respectively.
 
                                 
    2005     2004     $ Change     % Change  
    ($ in 000’s)  
 
REVENUES
                               
Same Store Properties
  $ 212,949     $ 213,742     $ (793 )     (0.4 )%
Acquired Properties
    50,864       11,613       39,251       338.0 %
Sold Properties
    19,273       40,725       (21,452 )     (52.7 )%
Properties Not In-service
    40,779       22,159       18,620       84.0 %
Other
    19,389       8,768       10,621       121.1 %
                                 
      343,254       297,007       46,247       15.6 %
Discontinued Operations
    (56,601 )     (62,105 )     5,504       (8.9 )%
                                 
Total Revenues
  $ 286,653     $ 234,902     $ 51,751       22.0 %
                                 
 
Revenues from same store properties remained relatively unchanged. Revenues from acquired properties increased $39.3 million due to properties acquired subsequent to December 31, 2003. Revenues from sold properties decreased $21.5 million due to properties sold subsequent to December 31, 2003. Revenues from properties not in service increased by approximately $18.6 million due primarily to build-to-suit-for-sale revenues of $16.2 million. Other revenues increased by approximately $10.6 million due primarily to an increase in joint venture fees due to new joint ventures and assignment fees.
 
                                 
    2005     2004     $ Change     % Change  
    ($ in 000’s)  
 
PROPERTY EXPENSES
                               
Same Store Properties
  $ 71,972     $ 68,842     $ 3,130       4.5 %
Acquired Properties
    15,079       3,668       11,411       311.1 %
Sold Properties
    7,051       13,812       (6,761 )     (49.0 )%
Properties Not In-service
    25,252       8,018       17,234       214.9 %
Other
    11,841       6,355       5,486       86.3 %
                                 
      131,195       100,695       30,500       30.3 %
Discontinued Operations
    (19,338 )     (21,836 )     2,498       (11.4 )%
                                 
Total Property Expenses
  $ 111,857     $ 78,859     $ 32,998       41.8 %
                                 


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Property expenses include real estate taxes, repairs and maintenance, property management, utilities, insurance, other property related expenses and expenses from build to suit development for sale. Property expenses from same store properties increased $3.1 million or 4.5% primarily due to an increase of $0.8 million in utility expense attributable to increases in water, gas and electric costs, an increase of $1.1 million in repair and maintenance attributable to increases in snow removal expense and an increase of $0.6 million in real estate tax expense. Property expenses from acquired properties increased by $11.4 million due to properties acquired subsequent to December 31, 2003. Property expenses from sold properties decreased by $6.8 million due to properties sold subsequent to December 31, 2003. Property expenses from properties not in service increased $17.2 million due primarily to build-to-suit-for-sale costs of $15.6 million. Other expense increased by $5.5 million due primarily to increases in employee compensation.
 
General and administrative expense increased by approximately $15.9 million, or 40.9%, due primarily to increases in employee compensation related to compensation for new employees as well as an increase in incentive compensation.
 
                                 
    2005     2004     $ Change     % Change  
    ($ in 000’s)  
 
DEPRECIATION AND OTHER AMORTIZATION
                               
Same Store Properties
  $ 66,785     $ 62,897     $ 3,888       6.2 %
Acquired Properties
    27,011       3,759       23,252       618.6 %
Sold Properties
    6,075       11,510       (5,435 )     (47.2 )%
Properties Not In-service and Other
    11,154       8,421       2,733       32.5 %
Corporate Furniture, Fixtures and Equipment
    1,371       1,279       92       7.2 %
                                 
      112,396       87,866       24,530       27.9 %
Discontinued Operations
    (19,543 )     (17,497 )     (2,046 )     11.7 %
                                 
Total Depreciation and Other Amortization
  $ 92,853     $ 70,369     $ 22,484       32.0 %
                                 
 
The increase in depreciation and other amortization for same store properties is due to an acceleration of depreciation and amortization on tenant improvements and leasing commissions for tenants who terminated leases early, an acceleration of amortization on in-place lease values related to leases for which the tenants did not renew and a net increase in leasing commissions and tenant improvements paid in 2005 and 2004. Depreciation and other amortization from acquired properties increased by $23.3 million due to properties acquired subsequent to December 31, 2003. Depreciation and other amortization from sold properties decreased by $5.4 million due to properties sold subsequent to December 31, 2003. Depreciation and other amortization for properties not in service and other increased by $2.7 million due primarily to depreciation expense being recognized in 2005 for developments that were substantially completed. Amortization of corporate furniture, fixtures and equipment remained relatively unchanged.
 
Interest income remained relatively unchanged.
 
During the year ended December 31, 2005. The Consolidated Operating Partnership recognized a $0.6 million gain related to the settlement/mark-to-market of two interest rate protection agreements that the Consolidated Operating Partnership entered into during 2005 in order to hedge the change in value of a build to suit development project as well as $0.2 million in deferred gain that was reclassified out of other comprehensive income relating to a settled interest rate protection agreement that no longer qualified for hedge accounting.
 
In March 2004, the Consolidated Operating Partnership entered into an interest rate protection agreement which fixed the interest rate on a forecasted offering of unsecured debt which it designated as a cash flow hedge. This interest rate protection agreement had a notional value of $73.5 million. In May 2004, the Consolidated Operating Partnership reduced the projected amount of the future debt offering and settled $24.5 million of this interest rate protection agreement for proceeds in the amount of $1.5 million which is recognized in net income for the year ended December 31, 2004. In November 2004, the Consolidated Operating Partnership settled an interest rate protection agreement for $0.3 million that had been designated as


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a cash flow hedge of $50.0 million of a forecasted debt issuance. Hedge ineffectiveness in the amount of $0.1 million, due to a mismatch in the forecasted debt issuance dates, was recognized in net income. The remaining $0.2 million is included in other comprehensive income and was reclassified into net income for the year ended December 31, 2005 as the hedge no longer qualified for hedge accounting.
 
Interest expense increased by $9.7 million due primarily to an increase in the weighted average debt balance outstanding for the year ended December 31, 2005 ($1,687.8 million), as compared to the year ended December 31, 2004 ($1,520.4 million) and an increase in the weighted average interest rate for the year ended December 31, 2005 (6.62%), as compared to the year ended December 31, 2004 (6.60%). This was partially offset by an increase in capitalized interest for the year ended December 31, 2005 due to an increase in development activities.
 
Amortization of deferred financing costs remained relatively unchanged.
 
The Consolidated Operating Partnership recognized a $0.08 million gain on the early retirement of debt for the year ended December 31, 2005. This includes $0.05 million write-off of financing fees associated with the Consolidated Operating Partnership’s previous line of credit agreement which was amended and restated on August 23, 2005. The gain on early retirement of debt also includes a payment of $0.3 million of fees and a write-off of loan premium of $0.4 million on a $13.7 million mortgage loan which was assumed by the buyers of the related properties on July 13, 2005. The loss on early retirement of debt of approximately $0.5 million for the year ended December 31, 2004 is comprised of the write-off of unamortized deferred financing costs, a loan premium and a prepayment penalty related to the early pay off and retirement of a $4.8 million mortgage loan.
 
Equity in income of Other Real Estate Partnerships increased by $19.0 million primarily due to an increase in gain on sale of real estate.
 
Equity in income of joint ventures decreased by $32.1 million due primarily to the Consolidated Operating Partnership’s allocation of gain and earn out from the sale of all the properties in December 2001 Joint Venture and the Consolidated Operating Partnership’s recognition of the deferred gain on its initial sale of certain properties to the December 2001 Joint Venture recognized in the year ended December 31, 2004.
 
The income tax provision (included in continuing operations, discontinued operations and gain on sale) increased by $12.0 million, in the aggregate, due primarily to an increase in the gain on sale of real estate and joint venture fees partially offset by an increase in general and administrative expense and interest expense in the Consolidated Operating Partnership’s taxable REIT subsidiary.
 
The $28.7 million gain on sale of real estate for the year ended December 31, 2005 resulted from the sale of nine industrial properties and several land parcels that do not meet the criteria established by FAS 144 for inclusion in discontinued operations. The $15.1 million gain on sale of real estate for the year ended December 31, 2004 resulted from the sale of four industrial properties and several land parcels that do not meet the criteria established by FAS 144 for inclusion in discontinued operations.


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The following table summarizes certain information regarding the industrial properties included in discontinued operations by the Consolidated Operating Partnership for the years ended December 31, 2005 and December 31, 2004.
 
                 
    Year Ended
 		 
    December 31,  
    2005     2004  
 
Total Revenues
  $ 56,601     $ 62,105  
Property Expenses
    (19,338 )     (21,836 )
Interest Expense
    (373 )     (609 )
Depreciation and Amortization
    (19,543 )     (17,497 )
Provision for Income Taxes Allocable to Operations
    (3,054 )     (2,346 )
Gain on Sale of Real Estate
    102,926       81,806  
Provision for Income Taxes Allocable to Gain on Sale
    (20,529 )     (8,659 )
                 
Income from Discontinued Operations
  $ 96,690     $ 92,964  
                 
 
Income from discontinued operations, net of income taxes, for the year ended December 31, 2005 reflects the results of operations of industrial properties that were sold during the year ended December 31, 2006, the results of operations and gain on sale of real estate of $102.9 million relating to 73 industrial properties that were sold during the year ended December 31, 2005 and the results of operations of 25 properties that were identified as held for sale at December 31, 2006.
 
Income from discontinued operations, net of income taxes, for the year ended December 31, 2004 reflects the results of operations of industrial properties that were sold during the year ended December 31, 2006 and 2005, 25 properties identified as held for sale at December 31, 2006, the results of operations of industrial properties that were sold during the year ended December 31, 2004 as well as the gain on sale of real estate of $81.8 million from the 86 industrial properties which were sold during the year ended December 31, 2004.
 
LIQUIDITY AND CAPITAL RESOURCES
 
At December 31, 2006, the Consolidated Operating Partnership’s cash and cash equivalents was approximately $15.1 and restricted cash was approximately $16.0 million. Restricted cash is comprised of gross proceeds from the sales of certain industrial properties. These sales proceeds will be disbursed as the Consolidated Operating Partnership exchanges industrial properties under Section 1031 of the Code.
 
The Consolidated Operating Partnership has considered its short-term (one year or less) liquidity needs and the adequacy of its estimated cash flow from operations and other expected liquidity sources to meet these needs. The Consolidated Operating Partnership’s 7.6% Notes due 2007, in the aggregate principal amount of $150.0 million, are due on May 15, 2007. The Company expects to satisfy the maturity of the 2007 Notes with the issuance of additional debt. With the exception of the 2007 Notes, the Consolidated Operating Partnership believes that its principal short-term liquidity needs are to fund normal recurring expenses, debt service requirements and the minimum distribution required by the Company to maintain the Company’s REIT qualification under the Code. The Consolidated Operating Partnership anticipates that these needs will be met with cash flows provided by operating activities.
 
The Consolidated Operating Partnership expects to meet long-term (greater than one year) liquidity requirements such as property acquisitions, developments, scheduled debt maturities, major renovations, expansions and other nonrecurring capital improvements through the disposition of select assets, the issuance of long-term unsecured indebtedness and additional Units and preferred Units. As of December 31, 2006 and February 22, 2007, approximately $300.0 million of debt securities were registered and unissued under the Securities Act of 1933, as amended. The Consolidated Operating Partnership also may finance the development or acquistion of additional properties through borrowings under the Unsecured Line of Credit I. At December 31, 2006, borrowings under the Unsecured Line of Credit I bore interest at a weighted average interest rate of 6.058%. As of February 22, 2007, the Consolidated Operating Partnership, through the


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Operating Partnership, had approximately $210.6 million available in additional borrowings under the Unsecured Line of Credit I. The Unsecured Line of Credit I bears interest at a floating rate of LIBOR plus .625% or the Prime Rate, at the Company’s election. The Unsecured Line of Credit I contains certain financial covenants relating to debt service coverage, market value net worth, dividend payout ratio and total funded indebtedness. The Consolidated Operating Partnership’s access to borrowings may be limited if it fails to meet any of these covenants. Also, the Consolidated Operating Partnership’s borrowing rate on its Unsecured Line of Credit I may increase in the event of a downgrade on the Consolidated Operating Partnership’s unsecured notes by the rating agencies.
 
The Consolidated Operating Partnership currently has credit ratings from Standard & Poor’s, Moody’s and Fitch Ratings of BBB/Baa2/BBB, respectively. The Consolidated Operating Partnership’s goal is to maintain its existing credit ratings. In the event of a downgrade, management believes the Consolidating Operating Partnership would continue to have access to sufficient capital; however, the Consolidated Operating Partnership’s cost of borrowing would increase and its ability to access certain financial markets may be limited.
 
Year Ended December 31, 2006
 
Net cash provided by operating activities of approximately $66.9 million for the year ended December 31, 2006 was comprised primarily of net income of approximately $126.0 million, the net change in operating assets and liabilities of approximately $4.4 million, and net distributions from joint ventures of $1.0 million, offset by adjustments for non-cash items of approximately $64.5 million. The adjustments for the non-cash items of approximately $64.5 million are primarily comprised of the gain on sale of real estate of approximately $202.8 million and the effect of the straight-lining of rental income of approximately $9.1 million, offset by depreciation and amortization of approximately $145.5 million and the provision for bad debt of $1.9 million.
 
Net cash provided by investing activities of approximately $119.9 million for the year ended December 31, 2006 was comprised primarily of the net proceeds from the sale of real estate, the repayment of mortgage loans receivable, distributions from the Other Real Estate Partnerships and distributions from the Consolidated Operating Partnership’s industrial real estate joint ventures, partially offset by the acquisition of real estate, development of real estate, capital expenditures related to the expansion and improvement of existing real estate, an increase in restricted cash that is held by an intermediary for Section 1031 exchange purposes, investments in and advances to the Other Real Estate Partnerships and contributions and investments in the Consolidated Operating Partnership’s joint ventures.
 
During the year ended December 31, 2006, the Consolidated Operating Partnership sold 109 industrial properties comprising approximately 16.0 million square feet of GLA and several land parcels. Gross proceeds from the sales of the 109 industrial properties and several land parcels were approximately $895.0 million.
 
During the year ended December 31, 2006, the Consolidated Operating Partnership acquired 79 industrial properties comprising approximately 9.7 million square feet of GLA and several land parcels. The purchase price for these acquisitions totaled approximately $563.4 million, excluding costs incurred in conjunction with the acquisition of the industrial properties and land parcels. The Consolidated Operating Partnership also substantially completed the development of 15 industrial properties comprising approximately 5.0 million square feet of GLA at an estimated cost of approximately $188.6 million.
 
The Consolidated Operating Partnership, through a wholly-owned limited liability company in which the Operating Partnership is the sole member, contributed approximately $50.6 million to, and received distributions of approximately $51.4 million from, the Operating Partnership’s industrial real estate joint ventures. As of December 31, 2006, the Operating Partnership’s industrial real estate joint ventures owned 255 industrial properties comprising approximately 26.0 million square feet of GLA.
 
Net cash used in financing activities of approximately $178.5 million for the year ended December 31, 2006 was derived primarily of the redemption of preferred units, general partnership and limited partnership units and preferred general partnership unit distributions, net repayments under the Consolidated Operating


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Partnership’s Unsecured Line of Credit I, the repurchase of restricted units and net repayments on mortgage loans payable, partially offset by the issuance of preferred units and senior unsecured debt and net proceeds from the exercise of stock options.
 
For the year ended December 31, 2006, certain directors and employees of the Company exercised 125,780 non-qualified employee stock options. Net proceeds to the Company were approximately $3.7 million. The Consolidated Operating Partnership, through the Operating Partnership, issued 125,780 Units to the Company.
 
During the year ended December 31, 2006, the Company awarded 303,142 shares of restricted common stock to certain employees and 16,232 shares of restricted common stock to certain directors. The Consolidated Operating Partnership, through the Operating Partnership, issued Units to the Company in the same amount. These shares of restricted common stock had a fair value of approximately $12.2 million on the date of grant. The restricted common stock vests over a period of three years for awards granted to employees and generally over a period of five years for awards granted to directors. Compensation expense will be charged to earnings over the respective vesting periods.
 
For the year ended December 31, 2006, the Operating Partnership issued 31,473 Units valued, in the aggregate, at $1.3 million in exchange for interests in certain properties. These contributions are reflected in the Consolidated Operating Partnership’s financial statements as limited partner contributions.
 
On January 10, 2006, the Company, through the Operating Partnership, paid off and retired the 2005 Unsecured Line of Credit II, which had a borrowing capacity of $125.0 million and matured on March 15, 2006.
 
On January 10, 2006, the Company, through the Operating Partnership, issued the 2016 Notes. Net of offering costs, the Company received net proceeds of $197.5 million from the issuance of 2016 Notes. In December 2005, the Company also entered into interest rate protection agreements which were used to fix the interest rate on the 2016 Notes prior to issuance. The Company settled the interest rate protection agreements on January 9, 2006 for a payment of approximately $1.7 million which is included in other comprehensive income.
 
On January 13, 2006, the Company redeemed the Series I Preferred Stock for $242,875.00 per share, and paid a prorated first quarter dividend of $470.667 per share, totaling approximately $0.4 million. The Operating Partnership also redeemed the Series I Preferred Units.
 
On January 13, 2006, the Company issued 6,000,000 Depositary Shares, each representing 1/10,000th of a share of the Company’s 7.25%, $.01 par value, Series J Cumulative Redeemable Preferred Stock (the “Series J Preferred Stock”), at an initial offering price of $25.00 per Depositary Share. Net proceeds were contributed to the Consolidated Operating Partnership in exchange for General Partner Preferred Units.
 
On August 21, 2006, the Company issued 2,000,000 Depositary Shares, each representing 1/10,000th of a share of the Company’s 7.25%, $.01 par value, Series K Flexible Cumulative Redeemable Preferred Stock (the “Series K Preferred Stock”), at an initial offering price of $25.00 per Depositary Share. Net proceeds were contributed to the Consolidated Operating Partnership in exchange for General Partner Preferred Units.
 
On September 25, 2006, the Consolidated Operating Partnership issued $175.0 million of senior unsecured debt which bears interest at 4.625% (the “Exchangeable Notes”). Under certain circumstances, the holders of the Exchangeable Notes may exchange their notes for cash up to their principal amount and shares of the Company’s common stock for the remainder of the exchange value in excess of the principal amount. The Consolidated Operating Partnership also granted the initial purchasers of the 2011 Exchangeable Notes an option exercisable until October 4, 2006 to purchase up to an additional $25,000 principal amount of the 2011 Exchangeable Notes to cover over-allotments, if any (the “Over-allotment Option”). On October 3, 2006, the initial purchasers of the 2011 Exchangeable Notes exercised their Over-Allotment Option with respect to $25,000 in principal amount of the 2011 Exchangeable Notes. With the exercise of the Over-Allotment Option, the aggregate principal amount of 2011 Exchangeable Notes issued and outstanding is $200,000. In connection with the offering of the Exchangeable Notes, the Operating Partnership entered into capped call transactions in order to increase the effective exchange price. The aggregate cost of the capped call transactions was approximately $6.8 million.


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Contractual Obligations and Commitments
 
The following table lists our contractual obligations and commitments as of December 31, 2006 (In thousands):
 
                                         
          Payments Due by Period  
          Less Than
 		                   
    Total     1 Year     1-3 Years     3-5 Years     Over 5 Years  
 
Operating and Ground Leases*
  $ 41,649     $ 2,561     $ 4,417     $ 3,504     $ 31,167  
Real Estate Development*
    92,740       92,740       —       —       —  
Long-term Debt
    1,847,077       152,884       343,112       422,905       928,176  
Interest Expense on Long Term Debt*
    921,160       100,967       189,078       162,359       468,756  
                                         
Total
  $ 2,902,626     $ 349,152     $ 536,607     $ 588,768     $ 1,428,099  
                                         
 
 
* Not on balance sheet.
 
Off-Balance Sheet Arrangements
 
Letters of credit are issued in most cases as pledges to governmental entities for development purposes or to support purchase obligations. At December 31, 2006, the Consolidated Operating Partnership has $9.0 million in outstanding letters of credit, none of which are reflected as liabilities on the Consolidated Operating Partnership’s balance sheet. The Consolidated Operating Partnership has no other off-balance sheet arrangements other than those disclosed on the Contractual Obligations and Commitments table above.
 
Environmental
 
The Consolidated Operating Partnership incurred environmental costs of approximately $0.4 million and $0.3 million in 2006 and 2005, respectively. The Consolidated Operating Partnership estimates 2007 costs of approximately $0.4 million. The Consolidated Operating Partnership estimates that the aggregate cost which needs to be expended in 2007 and beyond with regard to currently identified environmental issues will not exceed approximately $1.2 million, a substantial amount of which will be the primary responsibility of the tenant, the seller to the Consolidated Operating Partnership or another responsible party. This estimate was determined by a third party evaluation.
 
Inflation
 
For the last several years, inflation has not had a significant impact on the Consolidated Operating Partnership because of the relatively low inflation rates in the Consolidated Operating Partnership’s markets of operation. Most of the Consolidated Operating Partnership’s leases require the tenants to pay their share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing the Consolidated Operating Partnership’s exposure to increases in costs and operating expenses resulting from inflation. In addition, many of the outstanding leases expire within six years which may enable the Consolidated Operating Partnership to replace existing leases with new leases at higher base rentals if rents of existing leases are below the then-existing market rate.
 
Market Risk
 
The following discussion about the Consolidated Operating Partnership’s risk-management activities includes “forward-looking statements” that involve risk and uncertainties. Actual results could differ materially from those projected in the forward-looking statements.
 
This analysis presents the hypothetical gain or loss in earnings, cash flows or fair value of the financial instruments and derivative instruments which are held by the Consolidated Operating Partnership at December 31, 2006 that are sensitive to changes in the interest rates. While this analysis may have some use as a benchmark, it should not be viewed as a forecast.


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In the normal course of business, the Consolidated Operating Partnership also faces risks that are either non-financial or non-quantifiable. Such risks principally include credit risk and legal risk and are not represented in the following analysis.
 
At December 31, 2006, $1,627.7 million (approximately 88.7% of total debt at December 31, 2006) of the Consolidated Operating Partnership’s debt was fixed rate debt and $207.0 million (approximately 11.3% of total debt at December 31, 2006) of the Consolidated Operating Partnership’s debt was variable rate debt. Currently, the Consolidated Operating Partnership does not enter into financial instruments for trading or other speculative purposes.
 
For fixed rate debt, changes in interest rates generally affect the fair value of the debt, but not earnings or cash flows of the Consolidated Operating Partnership. Conversely, for variable rate debt, changes in the interest rate generally do not impact the fair value of the debt, but would affect the Consolidated Operating Partnership’s future earnings and cash flows. The interest rate risk and changes in fair market value of fixed rate debt generally do not have a significant impact on the Consolidated Operating Partnership until the Consolidated Operating Partnership is required to refinance such debt. See Note 6 to the consolidated financial statements for a discussion of the maturity dates of the Consolidated Operating Partnership’s various fixed rate debt.
 
Based upon the amount of variable rate debt outstanding at December 31, 2006, a 10% increase or decrease in the interest rate on the Consolidated Operating Partnership’s variable rate debt would decrease or increase, respectively, future net income and cash flows by approximately $1.3 million per year. A 10% increase in interest rates would decrease the fair value of the fixed rate debt at December 31, 2006 by approximately $55.2 million to $1,659.9 million. A 10% decrease in interest rates would increase the fair value of the fixed rate debt at December 31, 2006 by approximately $59.1 million to $1,774.2 million.
 
The use of derivative financial instruments allows the Consolidated Operating Partnership to manage risks of increases in interest rates with respect to the effect these fluctuations would have on our earnings and cash flows. As of December 31, 2006, we had two outstanding interest rate swaps with aggregate notional amount of $145.0 million which fix the interest rate on a forecasted offering of debt.
 
Subsequent Events
 
On January 2, 2007, the Operating Partnership paid fourth quarter 2006 distributions of $53.91 per Unit on its Series C Preferred Units, totaling, in the aggregate, approximately $1.1 million; a dividend of $4,531.30 per Unit on its Series J Preferred Units, totaling, in the aggregate, approximately $2.7 million; and a dividend of $4,531.30 per Unit on its Series K Preferred Units, totaling, in the aggregate, approximately $0.9 million.
 
On January 22, 2007, the Operating Partnership paid a fourth quarter 2006 distribution of $.7100 per Unit, totaling approximately $36.6 million.
 
On February 28, 2007, the Consolidated Operating Partnership declared a first quarter 2007 distribution of $.7100 per Unit which is payable on April 16, 2007. The Consolidated Operating Partnership also declared first quarter 2007 preferred unit distributions of $53.91 per Unit, on its Series C Preferred Units, totaling, in the aggregate, approximately $1.1 million, which is payable on April 2, 2007; semi-annual dividends of $3,118.00 per Unit on its Series F Preferred Units, totaling, in the aggregate, approximately $1.6 million, which is payable on April 2, 2007; semi-annual dividends of $3,618.00 per Unit on its Series G Preferred Units, totaling, in the aggregate, approximately $0.9 million, which is payable on April 2, 2007; a dividend of $4,531.30 per Unit on its Series J Preferred Units, totaling, in the aggregate, approximately $2.7, which is payable on April 2, 2007; and a dividend of $4,531.30 per Unit on its Series K Preferred Units, totaling, in the aggregate, approximately $0.9 million, which is payable on April 2, 2007.
 
From January 1, 2007 to February 22, 2007, the Company awarded 1,598 shares of restricted common stock to certain directors. The Operating Partnership issued Units to the Company in the same amount. These shares of restricted common stock had a fair value of approximately $0.1 million on the date of grant. The restricted common stock vests over a period of five years. Compensation expense will be charged to earnings over the respective vesting period.


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From January 1, 2007 to February 22, 2007, the Consolidated Operating Partnership acquired 53 industrial properties (including 41 properties in connection with the purchase of the 90% equity interest from the institutional investor in the September 1998 Joint Venture on January 31, 2007) and several land parcels for a total estimated investment of approximately $110.8 million. The Consolidated Operating Partnership also sold 14 industrial properties for approximately $74.4 million of gross proceeds during this period.
 
Related Party Transactions
 
The Consolidated Operating Partnership periodically engages in transactions for which CB Richard Ellis, Inc. acts as a broker. A relative of Michael W. Brennan, the President and Chief Executive Officer and a director of the Company, is an employee of CB Richard Ellis, Inc. For the years ended December 31, 2006, 2005 and 2004, this relative received approximately $0.3, $0.3 and $0.03 million in brokerage commissions.
 
Other
 
In February 2006, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 155, “Accounting for Certain Hybrid Financial Instruments” which amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This Statement resolves issues addressed in Statement 133 Implementation Issue No. D1, “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets.” This statement:
 
a. Permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation;
 
b. Clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133;
 
c. Establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation;
 
d. Clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives; and
 
e. Amends SFAS No. 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument.
 
This Statement is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. The Consolidated Operating Partnership does not expect that the implementation of this statement will have a material effect on the Consolidated Operating Partnership’s consolidated financial position or results of operations.
 
In March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets” which amends FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, (“FAS 140”) with respect to the accounting for separately recognized servicing assets and servicing liabilities. This statement was issued to simplify the accounting for servicing rights and reduce the volatility that results from the use of different measurements attributes for servicing rights and the related financial instruments used to economically hedge risks associated with those servicing rights. The statement clarifies when to separately account for servicing rights, requires separately recognized servicing rights to be initially measured at fair value, and provides the option to subsequently account for those servicing rights at either fair value or under the amortization method previously required under FAS 140. An entity should adopt this statement as of the beginning of its first fiscal year that begins after September 15, 2006. The Consolidated Operating Partnership does not expect that the implementation of this statement will have a material effect on the Consolidated Operating Partnership’s consolidated financial position or results of operations.


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In June 2006, the FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with SFAS No. 109, “Accounting for Income Taxes.” The evaluation of a tax position in accordance with FIN 48 is a two-step process. First, the Consolidated Operating Partnership determines whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position. Second, a tax position that meets the more-likely-than-not threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent reporting period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent reporting period in which the threshold is no longer met. The Consolidated Operating Partnership is required to apply the guidance of FIN 48 beginning January 1, 2007. The Consolidated Operating Partnership is currently evaluating what impact the application of FIN 48 will have on the consolidated financial statements.
 
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” which establishes a common definition of fair value establishes a framework for measuring fair value, and expands disclosure about such fair value measurements. This statement is effective for fiscal years beginning after November 15, 2007. The Consolidated Operating Partnership does not expect that the implementation of this statement will have a material effect on the Consolidated Operating Partnership’s consolidated financial position or results of operations.
 
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk
 
Response to this item is included in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” above.
 
Item 8.   Financial Statements and Supplementary Data
 
See Index to Financial Statements and Financial Statement Schedule on pages 56 to 57 included in Item 15.
 
Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
 
None.
 
Item 9A.   Controls and Procedures
 
Evaluation of Disclosure Controls and Procedures
 
The Consolidated Operating Partnership maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Consolidated Operating Partnership’s periodic reports pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Consolidated Operating Partnership’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required financial disclosure.
 
The Consolidated Operating Partnership carried out an evaluation, under the supervision and with the participation of the Consolidated Operating Partnership’s management, including the principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Consolidated Operating Partnership’s disclosure controls and procedures pursuant to Exchange Act Rule 15d-15(b) as of the end of the period covered by this report. Based upon this evaluation, the Consolidated Operating Partnership’s principal executive officer and principal financial officer concluded that the Consolidated Operating Partnership’s disclosure controls and procedures were effective as of the end of the period covered by this report.


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Management’s Report on Internal Control Over Financial Reporting
 
Management of the Consolidated Operating Partnership is responsible for establishing and maintaining adequate internal control over financial reporting. The Consolidated Operating Partnership’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
 
Management of the Consolidated Operating Partnership has assessed the effectiveness of the Consolidated Operating Partnership’s internal control over financial reporting as of December 31, 2006. In making its assessment of internal control over financial reporting, management used the criteria described in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
 
Management of the Consolidated Operating Partnership has concluded that, as of December 31, 2006, the Consolidated Operating Partnership’s internal control over financial reporting was effective.
 
Management’s assessment of the effectiveness of the Consolidated Operating Partnership’s internal control over financial reporting as of December 31, 2006 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein within Item 15. See Report of Independent Registered Public Accounting Firm on pages 56-57 of this Form 10-K.
 
Changes in Internal Control Over Financial Reporting
 
There has been no change in the Consolidated Operating Partnership’s internal control over financial reporting that occurred during the fourth quarter of 2006 that has materially affected, or is reasonably likely to materially affect, the Consolidated Operating Partnership’s internal control over financial reporting.
 
Item 9B.   Other Information
 
None.
 
PART III
 
Item 10, 11, 12, 13 and 14.   Directors, Executive Officers and Corporate Governance, Executive Compensation, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, Certain Relationships and Related Transactions and Director Independence and Principal Accountant Fees and Services
 
The Operating Partnership has no directors or executive officers; instead it is managed by its sole general partner, the Company. The information with respect to the sole general partner of the Operating Partnership required by Item 10, Item 11, Item 12, Item 13 and Item 14 is incorporated or furnished, solely to the extent required by such item, from the Company’s definitive proxy statement, which is expected to be filed with the SEC no later than 120 days after the end of the Company’s fiscal year. Information from the Company’s definitive proxy statement shall not be deemed to be “filed” or “soliciting material,” or subject to liability for purposes of Section 18 of the Exchange Act to the maximum extent permitted under the Exchange Act.
 
PART IV
 
Item 15.   Exhibits and Financial Statement Schedules
 
(a) Financial Statements, Financial Statement Schedule and Exhibits (1 & 2) See Index to Financial Statements and Financial Statement Schedule on page 55.


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(3) Exhibits:
 
         
Exhibit
 		   
No.
 
Description
 
  3 .1   Eleventh Amended and Restated Partnership Agreement of First Industrial, L.P. dated August 21, 2006 (the “LP Agreement”) (incorporated by reference to Exhibit 10.2 of the Form 8-K of the Company, filed August 22, 2006, File No. 1-13102)
  4 .1   Indenture, dated as of May 13, 1997, between First Industrial, L.P. and First Trust National Association, as Trustee (incorporated by reference to Exhibit 4.1 of the Form 10-Q of the Company for the fiscal quarter ended March 31, 1997, as amended by Form 10-Q/A No. 1 of the Company filed May 30, 1997, File No. 1-13102)
  4 .2   Supplemental Indenture No. 1, dated as of May 13, 1997, between First Industrial, L.P. and First Trust National Association as Trustee relating to $150 million of 7.60% Notes due 2007 and $100 million of 7.15% Notes due 2027 (incorporated by reference to Exhibit 4.2 of the Form 10-Q of the Company for the fiscal quarter ended March 31, 1997, as amended by Form 10-Q/A No. 1 of the Company filed May 30, 1997, File No. 1-13102)
  4 .3   Supplemental Indenture No. 2, dated as of May 22, 1997, between First Industrial, L.P. and First Trust National Association as Trustee relating to $100 million of 73/8% Notes due 2011 (incorporated by reference to Exhibit 4.4 of the Form 10-QT of the Operating Partnership for the fiscal quarter ended March 31, 1997, File No. 333-21873)
  4 .4   Supplemental Indenture No. 3 dated October 28, 1997 between First Industrial, L.P. and First Trust National Association providing for the issuance of Medium-Term Notes due Nine Months or more from Date of Issue (incorporated by reference to Exhibit 4.1 of Form 8-K of the Operating Partnership, dated November 3, 1997, as filed November 3, 1997, File No. 333-21873)
  4 .5   7.00% Medium-Term Note due 2006 in principal amount of $150 million issued by First Industrial, L.P. (incorporated by reference to Exhibit 4.18 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1997, File No. 1-13102)
  4 .6   7.50% Medium-Term Note due 2017 in principal amount of $100 million issued by First Industrial, L.P. (incorporated by reference to Exhibit 4.19 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1997, File No. 1-13102)
  4 .7   Trust Agreement, dated as of May 16, 1997, between First Industrial, L.P. and First Bank National Association, as Trustee (incorporated by reference to Exhibit 4.5 of the Form 10-QT of the Operating Partnership for the fiscal quarter ended March 31, 1997, File No. 333-21873)
  4 .8   7.60% Notes due 2028 in principal amount of $200 million issued by First Industrial, L.P. (incorporated by reference to Exhibit 4.2 of the Form 8-K of the Operating Partnership dated July 15, 1998, File No. 333-21873)
  4 .9   Supplemental Indenture No. 5, dated as of July 14, 1998, between First Industrial, L.P. and the U.S. Bank Trust National Association, relating to First Industrial, L.P.’s 7.60% Notes due July 15, 2028 (incorporated by reference to Exhibit 4.1 of the Form 8-K of the Operating Partnership dated July 15, 1998, File No. 333-21873)
  4 .10   7.375% Note due 2011 in principal amount of $200 million issued by First Industrial, L.P. (incorporated by reference to Exhibit 4.15 of the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2000, File No. 333-21873)
  4 .11   Supplemental Indenture No. 6, dated as of March 19, 2001, between First Industrial, L.P. and U.S. Bank Trust National Association, relating to First Industrial, L.P.’s 7.375% Notes due March 15, 2011(incorporated by reference to Exhibit 4.16 of the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2000, File No. 333-21873)
  4 .12   Registration Rights Agreement, dated as of March 19, 2001, among First Industrial, L.P. and Credit Suisse First Boston Corporation, Chase Securities, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney, Inc., Banc of America Securities LLC, Banc One Capital Markets, Inc. and UBS Warburg LLC (incorporated by reference to Exhibit 4.17 of the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2000, File No. 333-21873)


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Exhibit
 		   
No.
 
Description
 
  4 .13   Supplemental Indenture No. 7 dated as of April 15, 2002, between First Industrial, L.P. and U.S. Bank National Association, relating to First Industrial, L.P.’s 6.875% Notes due 2012 and 7.75% Notes due 2032 (incorporated by reference to Exhibit 4.1 of the Operating Partnership’s Form 8-K, dated April 4, 2002, File No. 333-21873)
  4 .14   Form of 6.875% Notes due in 2012 in the principal amount of $200 million issued by First Industrial, L.P. and 7.75% Notes due in 2032 in the principal amount of $50 million issued by First Industrial L.P. (incorporated by reference to Exhibit 4.2 of the Operating Partnership’s Form 8-K dated April 4, 2002, File No. 333-21873)
  4 .15   Form of 7.75% Notes due 2032 in the principal amount of $50 million issued by First Industrial, L.P. (incorporated by reference to Exhibit 4.3 of the Operating Partnership’s Form 8-K, dated April 4, 2002, File No. 333-21873)
  4 .16   Supplemental Indenture No. 8, dated as of May 17, relating to 6.42% Senior Notes due June 1, 2014, by and between First Industrial, L.P. and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of the Form 8-K of the Operating Partnership, dated May 27, 2004, File No. 333-21873)
  4 .17   Supplemental Indenture No. 9, dated as of June 14, 2004, relating to 5.25% Senior Notes due 2009, by and between the Operating Partnership and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of the Form 8-K of the Operating Partnership, dated June 17, 2004, File No. 333-21873)
  4 .18   Supplemental Indenture No. 10, dated as of January 10, 2006, relating to 5.75% Senior Notes due 2016, by and between the Operating Partnership and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of the Form 8-K of the Company, filed January 11, 2006, File No. 1-13102)
  4 .19   Indenture dated as of September 25, 2006 among First Industrial, L.P., as issuer, the Company, as guarantor, and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 of the current report on Form 8-K of the Operating Partnership, dated September 25, 2006, File No. 333-21873)
  4 .20   Form of 4.625% Exchangeable Senior Note due 2011 (incorporated by reference to Exhibit 4.2 of the current report on Form 8-K of the Operating Partnership, dated September 25, 2006, File No. 333-21873)
  4 .21   Registration Rights Agreement dated September 25, 2006 among the Company, First Industrial, L.P. and the Initial Purchasers named therein (incorporated by reference to Exhibit 10.1 of the current report on Form 8-K of the Operating Partnership, dated September 25, 2006, File No. 333-21873)
  10 .1   Sales Agreement by and among the Company, First Industrial, L.P. and Cantor Fitzgerald & Co. dated September 16, 2004 (incorporated by reference to Exhibit 1.1 of the Form 8-K of the Operating Partnership, dated September 16, 2004, File No. 333-21873)
  10 .2   Fourth Amended and Restated Unsecured Revolving Credit Agreement, dated as of August 23, 2005, among First Industrial, L.P., First Industrial Realty Trust, Inc., JP Morgan Chase Bank, NA and certain other banks (incorporated by reference to Exhibit 10.1 of the Form 8-K of the Company, filed August 25, 2005, File No. 1-13102)
  12 .1*   Computation of ratios of earnings to fixed charges of First Industrial, L.P.
  21 .1   Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, File No. [1-13102])
    23*     Consent of PricewaterhouseCoopers LLP
  31 .1*   Certification of Principal Executive Officer of First Industrial Realty Trust, Inc., registrant’s sole general partner, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended
   32**     Certification of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
*  Filed herewith.
 
** Furnished herewith.

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EXHIBIT INDEX
 
         
Exhibit
 		   
No.
 
Description
 
  3 .1   Eleventh Amended and Restated Partnership Agreement of First Industrial, L.P. dated August 21, 2006 (the “LP Agreement”) (incorporated by reference to Exhibit 10.2 of the Form 8-K of the Company, filed August 22, 2006, File No. 1-13102)
  4 .1   Indenture, dated as of May 13, 1997, between First Industrial, L.P. and First Trust National Association, as Trustee (incorporated by reference to Exhibit 4.1 of the Form 10-Q of the Company for the fiscal quarter ended March 31, 1997, as amended by Form 10-Q/A No. 1 of the Company filed May 30, 1997, File No. 1-13102)
  4 .2   Supplemental Indenture No. 1, dated as of May 13, 1997, between First Industrial, L.P. and First Trust National Association as Trustee relating to $150 million of 7.60% Notes due 2007 and $100 million of 7.15% Notes due 2027 (incorporated by reference to Exhibit 4.2 of the Form 10-Q of the Company for the fiscal quarter ended March 31, 1997, as amended by Form 10-Q/A No. 1 of the Company filed May 30, 1997, File No. 1-13102)
  4 .3   Supplemental Indenture No. 2, dated as of May 22, 1997, between First Industrial, L.P. and First Trust National Association as Trustee relating to $100 million of 73/8% Notes due 2011 (incorporated by reference to Exhibit 4.4 of the Form 10-QT of the Operating Partnership for the fiscal quarter ended March 31, 1997, File No. 333-21873)
  4 .4   Supplemental Indenture No. 3 dated October 28, 1997 between First Industrial, L.P. and First Trust National Association providing for the issuance of Medium-Term Notes due Nine Months or more from Date of Issue (incorporated by reference to Exhibit 4.1 of Form 8-K of the Operating Partnership, dated November 3, 1997, as filed November 3, 1997, File No. 333-21873)
  4 .5   7.00% Medium-Term Note due 2006 in principal amount of $150 million issued by First Industrial, L.P. (incorporated by reference to Exhibit 4.18 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1997, File No. 1-13102)
  4 .6   7.50% Medium-Term Note due 2017 in principal amount of $100 million issued by First Industrial, L.P. (incorporated by reference to Exhibit 4.19 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1997, File No. 1-13102)
  4 .7   Trust Agreement, dated as of May 16, 1997, between First Industrial, L.P. and First Bank National Association, as Trustee (incorporated by reference to Exhibit 4.5 of the Form 10-QT of the Operating Partnership for the fiscal quarter ended March 31, 1997, File No. 333-21873)
  4 .8   7.60% Notes due 2028 in principal amount of $200 million issued by First Industrial, L.P. (incorporated by reference to Exhibit 4.2 of the Form 8-K of the Operating Partnership dated July 15, 1998, File No. 333-21873)
  4 .9   Supplemental Indenture No. 5, dated as of July 14, 1998, between First Industrial, L.P. and the U.S. Bank Trust National Association, relating to First Industrial, L.P.’s 7.60% Notes due July 15, 2028 (incorporated by reference to Exhibit 4.1 of the Form 8-K of the Operating Partnership dated July 15, 1998, File No. 333-21873)
  4 .10   7.375% Note due 2011 in principal amount of $200 million issued by First Industrial, L.P. (incorporated by reference to Exhibit 4.15 of the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2000, File No. 333-21873)
  4 .11   Supplemental Indenture No. 6, dated as of March 19, 2001, between First Industrial, L.P. and U.S. Bank Trust National Association, relating to First Industrial, L.P.’s 7.375% Notes due March 15, 2011(incorporated by reference to Exhibit 4.16 of the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2000, File No. 333-21873)
  4 .12   Registration Rights Agreement, dated as of March 19, 2001, among First Industrial, L.P. and Credit Suisse First Boston Corporation, Chase Securities, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney, Inc., Banc of America Securities LLC, Banc One Capital Markets, Inc. and UBS Warburg LLC (incorporated by reference to Exhibit 4.17 of the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2000, File No. 333-21873)


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Exhibit
 		   
No.
 
Description
 
  4 .13   Supplemental Indenture No. 7 dated as of April 15, 2002, between First Industrial, L.P. and U.S. Bank National Association, relating to First Industrial, L.P.’s 6.875% Notes due 2012 and 7.75% Notes due 2032 (incorporated by reference to Exhibit 4.1 of the Operating Partnership’s Form 8-K, dated April 4, 2002, File No. 333-21873)
  4 .14   Form of 6.875% Notes due in 2012 in the principal amount of $200 million issued by First Industrial, L.P. and 7.75% Notes due in 2032 in the principal amount of $50 million issued by First Industrial L.P. (incorporated by reference to Exhibit 4.2 of the Operating Partnership’s Form 8-K dated April 4, 2002, File No. 333-21873)
  4 .15   Form of 7.75% Notes due 2032 in the principal amount of $50 million issued by First Industrial, L.P. (incorporated by reference to Exhibit 4.3 of the Operating Partnership’s Form 8-K, dated April 4, 2002, File No. 333-21873)
  4 .16   Supplemental Indenture No. 8, dated as of May 17, relating to 6.42% Senior Notes due June 1, 2014, by and between First Industrial, L.P. and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of the Form 8-K of the Operating Partnership, dated May 27, 2004, File No. 333-21873)
  4 .17   Supplemental Indenture No. 9, dated as of June 14, 2004, relating to 5.25% Senior Notes due 2009, by and between the Operating Partnership and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of the Form 8-K of the Operating Partnership, dated June 17, 2004, File No. 333-21873)
  4 .18   Supplemental Indenture No. 10, dated as of January 10, 2006, relating to 5.75% Senior Notes due 2016, by and between the Operating Partnership and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of the Form 8-K of the Company, filed January 11, 2006, File No. 1-13102)
  4 .19   Indenture dated as of September 25, 2006 among First Industrial, L.P., as issuer, the Company, as guarantor, and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 of the current report on Form 8-K of the Operating Partnership, dated September 25, 2006, File No. 333-21873)
  4 .20   Form of 4.625% Exchangeable Senior Note due 2011 (incorporated by reference to Exhibit 4.2 of the current report on Form 8-K of the Operating Partnership, dated September 25, 2006, File No. 333-21873)
  4 .21   Registration Rights Agreement dated September 25, 2006 among the Company, First Industrial, L.P. and the Initial Purchasers named therein (incorporated by reference to Exhibit 10.1 of the current report on Form 8-K of the Operating Partnership, dated September 25, 2006, File No. 333-21873)
  10 .1   Sales Agreement by and among the Company, First Industrial, L.P. and Cantor Fitzgerald & Co. dated September 16, 2004 (incorporated by reference to Exhibit 1.1 of the Form 8-K of the Operating Partnership, dated September 16, 2004, File No. 333-21873)
  10 .2   Fourth Amended and Restated Unsecured Revolving Credit Agreement, dated as of August 23, 2005, among First Industrial, L.P., First Industrial Realty Trust, Inc., JP Morgan Chase Bank, NA and certain other banks (incorporated by reference to Exhibit 10.1 of the Form 8-K of the Company, filed August 25, 2005, File No. 1-13102)
  12 .1*   Computation of ratios of earnings to fixed charges of First Industrial, L.P.
  21 .1   Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, File No. [ 1-13102)]
    23*     Consent of PricewaterhouseCoopers LLP
  31 .1*   Certification of Principal Executive Officer of First Industrial Realty Trust, Inc., registrant’s sole general partner, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended
   32**     Certification of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
*  Filed herewith.
 
** Furnished herewith.


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FIRST INDUSTRIAL, L.P.
 
INDEX TO FINANCIAL STATEMENTS
 
         
    Page
 
FINANCIAL STATEMENTS
   
  56
  58
  59
  60
  61
  62
  63
 
OTHER REAL ESTATE PARTNERSHIPS
 
INDEX TO FINANCIAL STATEMENTS
 
         
    Page
 
FINANCIAL STATEMENTS
   
  102
  103
  104
  105
  106
  107
 
FIRST INDUSTRIAL, L.P.
 
FINANCIAL STATEMENT SCHEDULE
 
         
    Page
 
     
FINANCIAL STATEMENT SCHEDULE
   
  S-1


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Report of Independent Registered Public Accounting Firm
 
To the Partners of
First Industrial, L.P.:
 
We have completed integrated audits of First Industrial, L.P.’s consolidated financial statements and of its internal control over financial reporting as of December 31, 2006, in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.
 
Consolidated financial statements and financial statement schedule
 
In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of First Industrial, L.P. and its subsidiaries (“the Consolidated Operating Partnership”) at December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2006 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Consolidated Operating Partnership’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
As discussed in Note 3 to the consolidated financial statements, the Consolidated Operating Partnership changed the manner in which it accounts for stock-based compensation in fiscal 2006.
 
Internal control over financial reporting
 
Also, in our opinion, management’s assessment, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A, that the Consolidated Operating Partnership maintained effective internal control over financial reporting as of December 31, 2006 based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Consolidated Operating Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006 based on criteria established in Internal Control — Integrated Framework issued by the COSO. The Consolidated Operating Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Consolidated Operating Partnership’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.


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A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
PricewaterhouseCoopers LLP
 
Chicago, Illinois
March 1, 2007


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FIRST INDUSTRIAL, L.P.
 
 
                 
    December 31,
 		    December 31,
 		 
    2006     2005  
    (Dollars in thousands, except share and per share data)  
 
ASSETS
Assets:
               
Investment in Real Estate:
               
Land
  $ 498,025     $ 490,359  
Buildings and Improvements
    2,297,988       2,340,504  
Construction in Progress
    30,575       66,074  
Less: Accumulated Depreciation
    (402,497 )     (355,755 )
                 
Net Investment in Real Estate
    2,424,091       2,541,182  
                 
Real Estate Held for Sale, Net of Accumulated Depreciation and Amortization of $9,688 and $1,622 at December 31, 2006 and December 31, 2005
    115,961       16,840  
Investments in and Advances to Other Real Estate Partnerships
    371,390       378,864  
Cash and Cash Equivalents
    15,124       6,811  
Restricted Cash
    15,970       14,945  
Tenant Accounts Receivable, Net
    6,571       7,627  
Investments in Joint Ventures
    55,614       44,330  
Deferred Rent Receivable, Net
    24,721       21,520  
Deferred Financing Costs, Net
    15,210       10,907  
Deferred Leasing Intangibles, Net
    75,958       70,879  
Prepaid Expenses and Other Assets, Net
    114,756       116,560  
                 
Total Assets
  $ 3,235,366     $ 3,230,465  
                 
 
LIABILITIES AND PARTNERS’ CAPITAL
Liabilities:
               
Mortgage Loans Payable, Net
  $ 77,926     $ 54,929  
Senior Unsecured Debt, Net
    1,549,732       1,298,893  
Unsecured Lines of Credit
    207,000       457,500  
Accounts Payable and Accrued Expenses
    128,691       116,249  
Deferred Leasing Intangibles, Net
    17,402       22,169  
Rents Received in Advance and Security Deposits
    26,097       27,578  
Leasing Intangibles Held for Sale, Net of Accumulated Amortization of $183 at December 31, 2006
    2,310       —  
Dividends Payable
    42,548       39,509  
                 
Total Liabilities
    2,051,706       2,016,827  
                 
Commitments and Contingencies
    —       —  
Partners’ Capital:
               
General Partner Preferred Units (21,550 and 21,500 units issued and outstanding at December 31, 2006 and 2005, respectively), with a liquidation preference of $325,000 and $312,500, respectively
    314,208       303,068  
General Partner Units (45,010,630 and 44,444,710 units issued and outstanding at December 31, 2006 and 2005, respectively)
    730,493       773,921  
Unamortized Value of General Partnership Restricted Units
    —       (16,825 )
Limited Partners’ Units (6,558,442 and 6,740,742 units issued and outstanding at December 31, 2006 and 2005, respectively)
    150,758       159,832  
Accumulated Other Comprehensive Loss
    (11,799 )     (6,358 )
                 
Total Partners’ Capital
    1,183,660       1,213,638  
                 
Total Liabilities and Partners’ Capital
  $ 3,235,366     $ 3,230,465  
                 
 
The accompanying notes are an integral part of the financial statements.


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FIRST INDUSTRIAL, L.P.
 
 
                         
    Year Ended
 		    Year Ended
 		    Year Ended
 		 
    December 31,
 		    December 31,
 		    December 31,
 		 
    2006     2005     2004  
    (In thousands except per unit data)  
 
Revenues:
                       
Rental Income
  $ 234,941     $ 192,856     $ 174,509  
Tenant Recoveries and Other Income
    101,008       77,556       60,393  
Build to Suit Development for Sale Revenues
    10,540       16,241       —  
                         
Total Revenues
    346,489       286,653       234,902  
                         
Expenses:
                       
Property Expenses
    115,644       96,283       78,859  
General and Administrative
    76,631       54,846       38,912  
Depreciation and Other Amortization
    126,264       92,853       70,369  
Expenses from Build to Suit Development for Sale
    10,263       15,574       —  
                         
Total Expenses
    328,802       259,556       188,140  
                         
Other Income/Expense:
                       
Interest Income
    947       1,075       2,025  
Mark-to-Market/(Loss) Gain on Settlement of Interest Rate Protection Agreements
    (3,112 )     811       1,583  
Interest Expense
    (121,130 )     (108,164 )     (98,458 )
Amortization of Deferred Financing Costs
    (2,664 )     (2,122 )     (1,928 )
Gain (Loss) From Early Retirement of Debt
    —       82       (515 )
                         
Total Other Income/Expense
    (125,959 )     (108,318 )     (97,293 )
Loss from Continuing Operations Before Equity in Income of Other Real Estate Partnerships, Equity in Income of Joint Ventures and Income Tax Benefit
    (108,272 )     (81,221 )     (50,531 )
Equity in Income of Other Real Estate Partnerships
    33,531       48,212       29,203  
Equity in Income of Joint Ventures
    30,671       3,698       35,840  
Income Tax Benefit
    8,920       14,022       7,937  
                         
(Loss) Income from Continuing Operations
    (35,150 )     (15,289 )     22,449  
Income from Discontinued Operations (Including Gain on Sale of Real Estate of $196,622, $102,926 and $81,806 for the Years Ended December 31, 2006, 2005 and 2004, respectively)
    207,184       120,273       103,969  
Provision for Income Taxes Allocable to Discontinued Operations (Including $47,511, $20,529 and $8,659 allocable to Gain on Sale of Real Estate for the Year Ended December 31, 2006, 2005 and 2004, respectively)
    (50,140 )     (23,583 )     (11,005 )
                         
Income Before Gain on Sale of Real Estate
    121,894       81,401       115,413  
Gain on Sale of Real Estate
    6,195       28,686       15,112  
Provision for Income Taxes Allocable to Gain on Sale of Real Estate
    (2,119 )     (10,871 )     (5,371 )
                         
Net Income
    125,970       99,216       125,154  
Less: Preferred Unit Distributions
    (21,424 )     (10,688 )     (14,488 )
Less: Redemption of Preferred Units
    (672 )     —       (7,959 )
                         
Net Income Available to Unitholders
  $ 103,874     $ 88,528     $ 102,707  
                         
Basic Earnings Per Unit:
                       
(Loss) Income from Continuing Operations Available to Unitholders
  $ (1.05 )   $ (0.17 )   $ 0.21  
                         
Income from Discontinued Operations
  $ 3.10     $ 1.97     $ 1.97  
                         
Net Income Available to Unitholders
  $ 2.05     $ 1.81     $ 2.18  
                         
Weighted Average Units Outstanding
    50,703       48,968       47,136  
                         
Diluted Earnings Per Unit:
                       
(Loss) Income from Continuing Operations Available to Unitholders
  $ (1.05 )   $ (0.17 )   $ 0.21  
                         
Income from Discontinued Operations
  $ 3.10     $ 1.97     $ 1.96  
                         
Net Income Available to Unitholders
  $ 2.05     $ 1.81     $ 2.16  
                         
Weighted Average Units Outstanding
    50,703       48,968       47,467  
                         
Distributions Per Unit
  $ 2.8100     $ 2.7850     $ 2.7500  
                         
 
The accompanying notes are an integral part of the financial statements.


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FIRST INDUSTRIAL , LP.
 
 
                         
    Year Ended
 		    Year Ended
 		    Year Ended
 		 
    December 31,
 		    December 31,
 		    December 31,
 		 
    2006     2005     2004  
    (Dollars in thousands)  
 
Net Income
  $ 125,970     $ 99,216     $ 125,154  
Other Comprehensive (Loss) Income:
                       
Settlement of Interest Rate Protection Agreements
    (1,729 )     —       6,816  
Reclassification of Settlement of Interest Rate Protection Agreements to Net Income
    —       (159 )     —  
Mark-to-Market of Interest Rate Protection Agreements
    (2,800 )     (1,414 )     106  
Amortization of Interest Rate Protection Agreements
    (912 )     (1,085 )     (512 )
                         
Comprehensive Income
  $ 120,529     $ 96,558     $ 131,564  
                         
 
The accompanying notes are an integral part of the financial statements.


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FIRST INDUSTRIAL, L.P.
 
 
                         
    Year Ended
 		    Year Ended
 		    Year Ended
 		 
    December 31,
 		    December 31,
 		    December 31,
 		 
    2006     2005     2004  
    (Dollars in thousands)  
 
General Partner Preferred Units — Beginning of Year
  $ 303,068     $ 121,584     $ 240,697  
Distributions
    (22,096 )     (10,688 )     (22,447 )
Issuance of Preferred Units
    192,624       181,484       194,424  
Redemption of Preferred Units
    (181,484 )     —       (313,537 )
Net Income
    22,096       10,688       22,447  
                         
General Partner Preferred Units — End of Year
  $ 314,208     $ 303,068     $ 121,584  
                         
General Partner Units — Beginning of Year
  $ 773,921     $ 757,840     $ 687,721  
Contributions and Issuance of General Partner Units
    3,820       56,122       99,280  
Issuance of General Partner Restricted Units
    —       8,381       8,379  
Call Spread
    (6,835 )     —       —  
Repurchase and Retirement of Restricted Units/Units
    (2,728 )     (3,285 )     (3,751 )
Restricted Unit Forfeitures
    —       (2,972 )     (14,095 )
Distributions
    (125,986 )     (120,995 )     (114,569 )
Unit Conversions
    5,144       1,951       6,195  
Amortization of General Partner Restricted Units
    9,624       —       —  
Reclassification to initially adopt SFAS No. 123R
    (16,825 )     —       —  
Net Income
    90,357       76,879       88,680  
                         
General Partner Units — End of Year
  $ 730,492     $ 773,921     $ 757,840  
                         
Unamort. Value of Gen. Partner Restricted Units — Beg. of Year
  $ (16,825 )   $ (19,611 )   $ (19,035 )
Issuance of General Partner Restricted Units
    —       (8,381 )     (8,379 )
Amortization of General Partner Restricted Units
    —       8,845       6,866  
Restricted Unit Forfeitures
    —       2,322       937  
Reclassification to initially adopt SFAS No. 123R
    16,825       —       —  
                         
Unamort. Value of Gen. Partner Restricted Units — End of Year
  $ —     $ (16,825 )   $ (19,611 )
                         
Limited Partners Units — Beginning of Year
  $ 159,832     $ 153,609     $ 163,794  
Contributions and Issuance of Limited Partner Units
    1,288       14,698       —  
Distributions
    (18,734 )     (18,173 )     (18,017 )
Unit Conversions
    (5,144 )     (1,951 )     (6,195 )
Net Income
    13,517       11,649       14,027  
                         
Limited Partners Units — End of Year
  $ 150,759     $ 159,832     $ 153,609  
                         
Accum. Other Comprehensive Loss — Beginning of Year
  $ (6,358 )   $ (3,700 )   $ (10,110 )
Settlement of Interest Rate Protection Agreements
    (1,729 )     —       6,816  
Reclassification of Settlement of Interest Rate Protection Agreements to Net Income
    —       (159 )     —  
Mark to Market of Interest Rate Protection Agreements
    (2,800 )     (1,414 )     106  
Amortization of Interest Rate Protection Agreements
    (912 )     (1,085 )     (512 )
                         
Accum. Other Comprehensive Loss — End of Year
  $ (11,799 )   $ (6,358 )   $ (3,700 )
                         
Total Partners’ Capital at End of Year
  $ 1,183,660     $ 1,213,638     $ 1,009,722  
                         
 
The accompanying notes are an integral part of the financial statements.


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FIRST INDUSTRIAL, LP.
 
 
                         
    Year Ended
 		    Year Ended
 		    Year Ended
 		 
    December 31,
 		    December 31,
 		    December 31,
 		 
    2006     2005     2004  
    (Dollars in thousands)  
 
CASH FLOWS FROM OPERATING ACTIVITIES:
                       
Net Income
  $ 125,970     $ 99,216     $ 125,154  
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
                       
Depreciation
    107,418       86,588       71,785  
Amortization of Deferred Financing Costs
    2,664       2,122       1,928  
Other Amortization
    35,462       31,031       20,661  
Provision for Bad Debt
    1,906       1,689       (1,474 )
Mark-to-Market of /Loss on Settlement of Interest Rate Protection Agreements
    (16 )     (143 )     —  
Equity in Income of Joint Ventures
    (30,671 )     (3,698 )     (34,990 )
Distributions from Joint Ventures
    31,664       3,866       34,990  
Gain on Sale of Real Estate
    (202,817 )     (131,612 )     (83,160 )
(Gain) Loss on Early Retirement of Debt
    —       (82 )     515  
Equity in Income of Other Real Estate Partnerships
    (33,531 )     (48,212 )     (29,203 )
Distributions from Investment in Other Real Estate Partnerships
    33,531       48,212       29,203  
Decrease (Increase) in Build to Suit Development for Sale Costs Receivable
    5,883       (16,241 )     —  
Increase in Tenant Accounts Receivable and Prepaid Expenses and Other Assets, Net
    (15,550 )     (13,835 )     (53,510 )
Increase in Deferred Rent Receivable
    (9,092 )     (7,485 )     (5,254 )
Increase in Accounts Payable and Accrued Expenses and Rents Received in Advance and Security Deposits
    14,077       31,415       4,370  
                         
Net Cash Provided by Operating Activities
    66,898       82,831       81,015  
                         
CASH FLOWS FROM INVESTING ACTIVITIES:
                       
Purchase of and Additions to Investment in Real Estate
    (742,414 )     (846,033 )     (469,668 )
Net Proceeds from Sales of Investments in Real Estate
    857,670       478,937       324,919  
Investments in and Advances to Other Real Estate Partnerships
    (43,098 )     (122,606 )     (68,134 )
Distributions/Repayments from Other Real Estate Partnerships
    50,572       83,709       103,073  
Contributions to and Investments in Joint Ventures
    (32,773 )     (45,175 )     (5,422 )
Distributions from Joint Ventures
    19,734       2,971       15,535  
Repayment and Sale of Mortgage Loans Receivable
    11,200       58,375       44,418  
(Increase) Decrease in Restricted Cash
    (1,025 )     (14,920 )     60,849  
                         
Net Cash Provided by (Used in) Investing Activities
    119,866       (404,742 )     5,570  
                         
CASH FLOWS FROM FINANCING ACTIVITIES:
                       
Unit Contributions
    3,462       55,754       86,121  
Proceeds from the Issuance of Preferred Units
    200,000       187,500       200,000  
Preferred Unit Offering Costs
    (7,103 )     (5,906 )     (5,576 )
Unit Distributions
    (143,858 )     (137,672 )     (130,220 )
Repurchase of Restricted Units
    (2,660 )     (3,285 )     (3,751 )
Redemption of Preferred Units
    (182,156 )     —       (321,438 )
Preferred Unit Distributions
    (19,248 )     (8,162 )     (13,256 )
Repayments of Mortgage Loans Payable
    (10,263 )     (1,951 )     (5,931 )
Proceeds from Mortgage Loan Payable
    —       1,167       1,400  
Proceeds from Senior Unsecured Debt
    399,306       —       134,496  
Other (Costs) Proceeds from Senior Unsecured Debt
    (1,729 )     —       6,816  
Repayment of Senior Unsecured Debt
    (150,000 )     (50,000 )     —  
Proceeds from Unsecured Lines of Credit
    779,300       647,500       581,000  
Repayments on Unsecured Lines of Credit
    (1,029,800 )     (357,500 )     (609,400 )
Call Spread
    (6,835 )     —       —  
Cost of Debt Issuance and Prepayment Fees
    (6,867 )     (1,792 )     (3,777 )
                         
Net Cash (Used by) Provided by Financing Activities
    (178,451 )     325,653       (83,516 )
                         
Net Increase in Cash and Cash Equivalents
    8,313       3,742       3,069  
Cash and Cash Equivalents, Beginning of Period
    6,811       3,069       —  
                         
Cash and Cash Equivalents, End of Period
  $ 15,124     $ 6,811     $ 3,069  
                         
 
The accompanying notes are an integral part of the financial statements.


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(Dollars in thousands)
 
1.   Organization and Formation of Partnership
 
First Industrial, L.P. (the “Operating Partnership”) was organized as a limited partnership in the state of Delaware on November 23, 1993. The sole general partner is First Industrial Realty Trust, Inc. (the “Company”) with an approximate 87.3% and 86.8% ownership interest at December 31, 2006 and 2005, respectively. The Company also owns a preferred general partnership interest in the Operating Partnership (“Preferred Units”) with an aggregate liquidation priority of $325,000. The Company is a real estate investment trust (“REIT”) as defined in the Internal Revenue Code. The Company’s operations are conducted primarily through the Operating Partnership. The limited partners of the Operating Partnership owned, in the aggregate, approximately a 12.7% and 13.2% interest in the Operating Partnership at December 31, 2006 and 2005, respectively.
 
The Operating Partnership is the sole member of several limited liability companies (the “L.L.C.s”) and the sole stockholder of First Industrial Investment, Inc. (together with the Operating Partnership and the L.L.C.’s, the “Consolidated Operating Partnership”), the operating data of which is consolidated with that of the Operating Partnership. The Operating Partnership or First Industrial Investment, Inc. also holds at least a 99% limited partnership interest in First Industrial Financing Partnership, L.P. (the “Financing Partnership”), First Industrial Securities, L.P. (the “Securities Partnership”), First Industrial Mortgage Partnership, L.P, (the “Mortgage Partnership”), First Industrial Pennsylvania, L.P. (the “Pennsylvania Partnership”), First Industrial Harrisburg, L.P. (the “Harrisburg Partnership”), First Industrial Indianapolis, L.P. (the “Indianapolis Partnership”), TK-SV, LTD. and FI Development Services, L.P. (together, the “Other Real Estate Partnerships”). The Other Real Estate Partnership’s operating data is presented on a combined basis, separate from that of the Consolidated Operating Partnership. The Operating Partnership or First Industrial Investment, Inc., through separate wholly-owned limited liability companies in which it is also the sole member, also owns minority equity interests in, and provides various services to, six joint ventures which invest in industrial properties (the “September 1998 Joint Venture,” the “May 2003 Joint Venture,” the “March 2005 Joint Venture,” the “September 2005 Joint Venture,” the “March 2006 Co-Investment Program” and the “July 2006 Joint Venture”). The Operating Partnership, through a separate, wholly-owned limited liability company of which the Operating Partnership is also the sole member, also owned a minority interest in, and provides various services to, a seventh joint venture which invested in industrial properties (the “December 2001 Joint Venture”; together with the September 1998 Joint Venture, the May 2003 Joint Venture, the March 2005 Joint Venture, the September 2005 Joint Venture, the March 2006 Co-Investment Program and the July 2006 Joint Venture, the “Joint Ventures”). During the year ended December 31, 2004, the December 2001 Joint Venture sold all of its industrial properties. On January 31, 2007, the Consolidated Operating Partnership purchased the 90% equity interest from the institutional investor in the September 1998 Joint Venture. The operating data of the Joint Ventures is not consolidated with that of the Consolidated Operating Partnership as presented herein. The Other Real Estate Partnerships and the Joint Ventures are accounted for under the equity method of accounting.
 
The general partners of the Other Real Estate Partnerships are separate corporations, each with at least a .01% general partnership interest in the Other Real Estate Partnerships for which it acts as a general partner. Each general partner of the Other Real Estate Partnerships is a wholly-owned subsidiary of the Company.
 
As of December 31, 2006, the Consolidated Operating Partnership owned 831 industrial properties (inclusive of developments in progress), containing an aggregate of approximately 67.5 million square feet (unaudited) of gross leasable area (“GLA”). On a combined basis, as of December 31, 2006, the Other Real Estate Partnerships owned 100 industrial properties, containing an aggregate of approximately 9.4 million square feet (unaudited) of GLA.
 
Profits, losses and distributions of the Operating Partnership, the L.L.C.s and Other Real Estate Partnerships are allocated to the general partner and the limited partners, or the members, as applicable, in


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

accordance with the provisions contained within the partnership agreements or ownership agreements, as applicable, of the Operating Partnership, the L.L.C.s and the Other Real Estate Partnerships.
 
2.   Basis of Presentation
 
The consolidated financial statements of the Consolidated Operating Partnership at December 31, 2006 and 2005 and for each of the years ended December 31, 2006, 2005 and 2004 include the accounts and operating results of the Operating Partnership, the L.L.C.s and First Industrial Investment, Inc. on a consolidated basis. Such financial statements present the Operating Partnership’s limited partnership interests in each of the Other Real Estate Partnerships and the Consolidated Operating Partnership’s minority equity interests in the Joint Ventures under the equity method of accounting. All intercompany transactions have been eliminated in consolidation.
 
3.   Summary of Significant Accounting Policies
 
In order to conform with generally accepted accounting principles, management, in preparation of the Consolidated Operating Partnership’s financial statements, is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of December 31, 2006 and 2005, and the reported amounts of revenues and expenses for each of the years ended December 31, 2006, 2005 and 2004. Actual results could differ from those estimates.
 
Cash and Cash Equivalents
 
Cash and cash equivalents include all cash and liquid investments with an initial maturity of three months or less. The carrying amount approximates fair value due to the short maturity of these investments.
 
Restricted Cash
 
At December 31, 2006 and 2005, restricted cash includes gross proceeds from the sales of certain properties. These sales proceeds will be disbursed as the Company exchanges into properties under Section 1031 of the Internal Revenue Code. The carrying amount approximates fair value due to the short term maturity of these investments.
 
Investment in Real Estate and Depreciation
 
Investment in Real Estate is carried at cost. The Consolidated Operating Partnership reviews its properties on a quarterly basis for impairment and provides a provision if impairments are found. To determine if an impairment may exist, the Consolidated Operating Partnership reviews its properties and identifies those that have had either an event of change or event of circumstances warranting further assessment of recoverability (such as a decrease in occupancy). If further assessment of recoverability is needed, the Consolidated Operating Partnership estimates the future net cash flows expected to result from the use of the property and its eventual disposition, on an individual property basis. If the sum of the expected future net cash flows (undiscounted and without interest charges) is less than the carrying amount of the property, on an individual property basis, the Consolidated Operating Partnership will recognize an impairment loss based upon the estimated fair value of such property. For properties management considers held for sale, the Consolidated Operating Partnership ceases depreciating the properties and values the properties at the lower of depreciated cost or fair value, less costs to dispose. If circumstances arise that were previously considered unlikely, and, as a result, the Consolidated Operating Partnership decides not to sell a property previously classified as held for sale, the Consolidated Operating Partnership will reclassify such property as held and used. Such property is measured at the lower of its carrying amount (adjusted for any depreciation and amortization expense that would have been recognized had the property been continuously classified as held and used) or fair value at the date of the subsequent decision not to sell. To calculate the fair value of properties held for sale, the


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Consolidated Operating Partnership deducts from the estimated sales price of the property the estimated costs to close the sale. The Consolidated Operating Partnership classifies properties as held for sale when management of the Consolidated Operating Partnership has approved the properties for sale.
 
Interest costs, real estate taxes, compensation costs of development personnel and other directly related costs incurred during construction periods are capitalized and depreciated commencing with the date the property is substantially completed. Upon substantial completion, the Consolidated Operating Partnership reclassifies construction in progress to building, tenant improvement and leasing commissions. Such costs begin to be capitalized to the development projects from the point the Consolidated Operating Partnership is undergoing necessary activities to get the development ready for its intended use and ceases when the development projects are substantially completed and held available for occupancy. Depreciation expense is computed using the straight-line method based on the following useful lives:
 
         
    Years  
 
Buildings and Improvements
    20 to 50  
Land Improvements
    15  
Furniture, Fixtures and Equipment
    5 to 10  
 
Construction expenditures for tenant improvements, leasehold improvements and leasing commissions (inclusive of compensation costs of personnel attributable to leasing) are capitalized and amortized over the terms of each specific lease. Capitalized compensation costs of personnel attributable to leasing relate to time directly attributable to originating leases with independent third parties that result directly from and are essential to originating those leases and would not have been incurred had these leasing transactions not occurred. Repairs and maintenance are charged to expense when incurred. Expenditures for improvements are capitalized.
 
The Consolidated Operating Partnership accounts for all acquisitions entered into subsequent to June 30, 2001 in accordance with Financial Accounting Standards Board’s (“FASB”) Statement of Financial Accounting Standard No. 141, “Business Combinations” (“FAS 141”). Upon acquisition of a property, the Consolidated Operating Partnership allocates the purchase price of the property based upon the fair value of the assets acquired, which generally consist of land, buildings, tenant improvements, leasing commissions and intangible assets including in-place leases, above market and below market leases and tenant relationships. The Consolidated Operating Partnership allocates the purchase price to the fair value of the tangible assets of an acquired property by valuing the property as if it were vacant. Acquired above and below market leases are valued based on the present value of the difference between prevailing market rates and the in-place rates over the remaining lease term.
 
The purchase price is further allocated to in-place lease values and tenant relationships based on management’s evaluation of the specific characteristics of each tenant’s lease and the Consolidated Operating Partnership’s overall relationship with the respective tenant. Acquired above and below market leases are amortized over the remaining non-cancelable terms of the respective leases as an adjustment to rental revenue on the Consolidated Operating Partnership’s consolidated statements of operations. The value of in-place lease intangibles and tenant relationships, which are included as components of Deferred Leasing Intangibles, Net, are amortized over the remaining lease term and expected renewal periods of the respective lease as adjustments to depreciation and other amortization expense. If a tenant terminates its lease early, the unamortized portion of leasing commissions, tenant improvements, above and below market leases the in-place lease value and tenant relationships is immediately written off.


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 
Deferred Leasing Intangibles, exclusive of Deferred Leasing Intangibles held for sale, included in the Consolidated Operating Partnership’s total assets consist of the following:
 
                 
    December 31,
 		    December 31,
 		 
    2006     2005  
 
In-Place Leases
  $ 73,341     $ 71,818  
Less: Accumulated Amortization
    (13,832 )     (5,829 )
                 
    $ 59,509     $ 65,989  
                 
Above Market Leases
  $ 5,049     $ 6,524  
Less: Accumulated Amortization
    (1,680 )     (1,634 )
                 
    $ 3,369     $ 4,890  
                 
Tenant Relationships
  $ 14,080     $ —  
Less: Accumulated Amortization
    (1,000 )     —  
                 
    $ 13,080     $ —  
                 
 
Deferred Leasing Intangibles included in the Consolidated Operating Partnership’s total liabilities consist of the following:
 
                 
    December 31,
 		    December 31,
 		 
    2006     2005  
 
Below Market Leases
  $ 22,873     $ 25,058  
Less: Accumulated Amortization
    (5,471 )     (2,889 )
                 
    $ 17,402     $ 22,169  
                 
 
Amortization expense related to deferred leasing intangibles, was $11,029, $6,624, and $1,620 for the years ended December 31, 2006, 2005, and 2004 respectively. The Consolidated Operating Partnership will recognize net amortization expense related to the deferred leasing intangibles over the next five years as follows:
 
         
2007
  $ 16,754  
2008
  $ 14,633  
2009
  $ 12,726  
2010
  $ 10,793  
2011
  $ 9,203  
 
Build to Suit for Sale Revenues and Expenses
 
During 2006 and 2005, First Industrial Investment, Inc. entered into contracts with third parties to construct industrial properties. The build-to-suit for sale contracts require the purchase price to be paid at closing. The Consolidated Operating Partnership uses the percentage-of-completion contract method of accounting in accordance with SOP 81-1 “Accounting for Performance of Construction- Type and Certain Production-Type Contracts”. During the period of performance, costs are accumulated on the balance sheet in Prepaid Expenses and Other Assets ($10,263 at December 31, 2006 and $15,574 at December 31, 2005) and revenues and expenses are recognized in continuing operations.


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 
Deferred Financing Costs
 
Deferred financing costs include fees and costs incurred to obtain long-term financing. These fees and costs are being amortized over the terms of the respective loans. Accumulated amortization of deferred financing costs was $13,863 and $12,517 at December 31, 2006 and 2005, respectively. Unamortized deferred financing costs are written-off when debt is retired before the maturity date.
 
Investment in and Advances to Other Real Estate Partnerships
 
Investment in and Advances to Other Real Estate Partnerships represents the Consolidated Operating Partnership’s limited partnership interests in and advances to, through the Operating Partnership, the Other Real Estate Partnerships. The Operating Partnership accounts for its Investment in and Advances to Other Real Estate Partnerships under the equity method of accounting. Under the equity method of accounting, the Operating Partnership’s share of earnings or losses of the Other Real Estate Partnerships is reflected in income as earned and contributions or distributions increase or decrease, respectively, the Operating Partnership’s Investment in and Advances to Other Real Estate Partnerships as paid or received, respectively.
 
Investments in Joint Ventures
 
Investments in Joint Ventures represent the Operating Partnership’s limited partnership interests in the Joint Ventures. The Operating Partnership accounts for its investments in Joint Ventures under the equity method of accounting, as the Operating Partnership does not have operational control or a majority voting interest. Under the equity method of accounting, the Operating Partnership’s share of earnings or losses of the Joint Ventures is reflected in income as earned and contributions or distributions increase or decrease, respectively, the Operating Partnership’s Investments in Joint Ventures as paid or received, respectively. Differences between the Operating Partnership’s carrying value of its investments in joint ventures and the Operating Partnership’s underlying equity of such joint ventures are amortized over the respective lives of the underlying assets, as applicable.
 
Stock Based Compensation
 
Effective January 1, 2006 the Consolidating Operating Partnership adopted Statement of Financial Accounting Standards No. 123R, “Share Based Payment” (“FAS 123R”), using the modified prospective application method, which requires measurement of compensation cost for all stock-based awards at fair value on the date of grant and recognition of compensation over the service period for awards expected to vest. For the years ended December 31, 2003, 2004 and 2005, the Consolidated Operating Partnership accounted for its stock incentive plans under the recognition and measurement principles of Statement of Financial Accounting Standards No. 123, “Accounting for Stock based Compensation” for all new issuances of stock based compensation. At January 1, 2006, the Consolidated Operating Partnership did not have any unvested option awards and the Consolidated Operating Partnership had accounted for their previously issued restricted stock awards at fair value, accordingly, the adoption of FAS 123R did not require the Consolidated Operating Partnership to recognize a cumulative effect of a change in accounting principle. The Consolidated Operating Partnership did reclassify $16,825 from the Unearned Value of General Partnership’s Restricted Units caption within Partner’s Capital to General Partner Units during the year ended December 31, 2006 in accordance with the provisions of FAS 123R.


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 
Prior to January 1, 2003, the Consolidated Operating Partnership accounted for its stock incentive plans under the recognition measurement principles of Accounting Principles Board opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). Under APB 25, compensation expense is not recognized for options issued in which the strike price is equal to the fair value of the Consolidated Operating Partnership’s stock on the date of grant. The following table illustrates the pro forma effect on net income and earnings per share as if the fair value recognition provisions of FAS 123R had been applied to all outstanding and unvested option awards for the years ended December 31, 2005 and 2004:
 
                 
    For the Year Ended  
    2005     2004  
 
Net Income Available to Unitholders — as reported
  $ 88,528     $ 102,707  
Add: Stock-Based Employee Compensation Expense Included in Net Income Available to Unitholders — as reported
    —       —  
Less: Total Stock-Based Employee Compensation Expense — Determined Under the Fair Value Method
    (100 )     (420 )
                 
Net Income Available to Unitholders — pro forma
  $ 88,428     $ 102,287  
                 
Net Income Available to Unitholders per Unit — as reported — Basic
  $ 1.81     $ 2.18  
Net Income Available to Unitholders per Unit — pro forma — Basic
  $ 1.81     $ 2.17  
Net Income Available to Unitholders per Unit — as reported — Diluted
  $ 1.81     $ 2.16  
Net Income Available to Unitholders per Unit — pro forma — Diluted
  $ 1.81     $ 2.15  
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:
               
Expected dividend yield
    N/A       N/A  
Expected stock price volatility
    N/A       N/A  
Risk-free interest rate
    N/A       N/A  
Expected life of options
    N/A       N/A  
 
The Consolidated Operating Partnership did not issue any options in 2005 and 2004.
 
Revenue Recognition
 
Rental income is recognized on a straight-line method under which contractual rent increases are recognized evenly over the lease term. Tenant recovery income includes payments from tenants for real estate taxes, insurance and other property operating expenses and is recognized as revenue in the same period the related expenses are incurred by the Consolidated Operating Partnership.
 
Revenue is recognized on payments received from tenants for early lease terminations after the Consolidated Operating Partnership determines that all the necessary criteria have been met in accordance with FASB Statement of Financial Accounting Standards No. 13 “Accounting for Leases” (“FAS 13”).
 
Interest income on mortgage loans receivable is recognized based on the accrual method unless a significant uncertainty of collection exists. If a significant uncertainty exists, interest income is recognized as collected.
 
The Consolidated Operating Partnership provides an allowance for doubtful accounts against the portion of tenant accounts receivable which is estimated to be uncollectible. Accounts receivable in the consolidated balance sheets are shown net of an allowance for doubtful accounts of $783 and $111 as of December 31, 2006 and 2005, respectively. For accounts receivable the Consolidated Operating Partnership deems uncollectible, the Consolidated Operating Partnership uses the direct write-off method.


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 
Gain on Sale of Real Estate
 
Gain on sale of real estate is recognized using the full accrual method, when appropriate. Gains relating to transactions which do not meet the full accrual method of accounting are deferred and recognized when the full accrual method of accounting criteria are met or by using the installment or deposit methods of profit recognition, as appropriate in the circumstances. As the assets are sold, their costs and related accumulated depreciation are written off with resulting gains or losses reflected in net income or loss. Estimated future costs to be incurred by the Consolidated Operating Partnership after completion of each sale are included in the determination of the gain on sales.
 
Income Taxes
 
In accordance with partnership taxation, each of the partners are responsible for reporting their share of taxable income or loss.
 
A provision has been made for federal income taxes in the accompanying consolidated financial statements for activities conducted in its taxable REIT subsidiary, First Industrial Investment, Inc. which has been accounted for under FASB Statement of Financial Standards No. 109, “Accounting for Income Taxes” (“FAS 109”). In accordance with FAS 109, the total benefit/expense has been separately allocated to income from continuing operations, income from discontinued operations and gain on sale of real estate.
 
The Consolidated Operating Partnership is subject to certain state and local income, excise and franchise taxes. The provision for excise and franchise taxes has been reflected in general and administrative expense in the consolidated statements of operations and has not been separately stated due to its insignificance. State and local income taxes are included in the provision/benefit for income taxes which is allocated to income from continuing operations, income from discontinued operations and gain on sale of real estate.
 
Earnings Per Unit (“EPU”)
 
Net income per weighted average general partnership and limited partnership unit (the “Units”) — basic is based on the weighted average Units outstanding (excluding restricted units that have not yet vested). Net income per weighted average Unit — diluted is based on the weighted average Units outstanding (excluding restricted units that have not yet vested) plus the dilutive effect of the Company’s in-the-money employee stock options, restricted stock and 2011 Exchangeable Notes (hereinafter defined) that result in the issuance of general partnership units. See Note 11 for further disclosure about earnings per unit.
 
Fair Value of Financial Instruments
 
The Consolidated Operating Partnership’s financial instruments include short-term investments, tenant accounts receivable, net, mortgage notes receivable, accounts payable, other accrued expenses, mortgage loans payable, unsecured lines of credit and senior unsecured debt.
 
The fair values of the short-term investments, tenant accounts receivable, net, mortgage notes receivable, accounts payable and other accrued expenses approximates their carrying or contract values. See Note 6 for the fair values of the mortgage loans payable, unsecured lines of credit and senior unsecured debt.
 
Derivative Financial Instruments
 
Historically, the Consolidated Operating Partnership, through the Operating Partnership, has used interest rate protection agreements (the “Agreements”) to fix the interest rate on anticipated offerings of senior unsecured debt or convert floating rate debt to fixed rate debt. Receipts or payments that result from the settlement of Agreements used to fix the interest rate on anticipated offerings of senior unsecured debt are amortized over the life of the senior unsecured debt and included in interest expense. Receipts or payments


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

resulting from Agreements used to convert floating rate debt to fixed rate debt are recognized as a component of interest expense. Agreements which qualify for hedge accounting are marked-to-market and any gain or loss is recognized in other comprehensive income (partners’ capital). Any agreements which no longer qualify for hedge accounting are marked-to-market and any gain or loss is recognized in net income immediately. The credit risks associated with the Agreements are controlled through the evaluation and monitoring of the creditworthiness of the counterparty. In the event that the counterparty fails to meet the terms of the Agreements, the Consolidated Operating Partnership’s exposure is limited to the current value of the interest rate differential, not the notional amount, and the Consolidated Operating Partnership’s carrying value of the Agreements on the balance sheet. See Note 6 for more information on the Agreements.
 
Discontinued Operations
 
On January 1, 2002, the Consolidated Operating Partnership adopted the FASB Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long Lived Assets” (“FAS 144”). FAS 144 addresses financial accounting and reporting for the disposal of long lived assets. FAS 144 requires that the results of operations and gains or losses on the sale of property or property held for sale be presented in discontinued operations if both of the following criteria are met: (a) the operations and cash flows of the property have been (or will be) eliminated from the ongoing operations of the Consolidated Operating Partnership as a result of the disposal transaction and (b) the Consolidated Operating Partnership will not have any significant continuing involvement in the operations of the property after the disposal transaction. FAS 144 also requires prior period results of operations for these properties to be reclassified and presented in discontinued operations in prior consolidated statements of operations.
 
Segment Reporting
 
Management views the Consolidated Operating Partnership as a single segment.
 
Recent Accounting Pronouncements
 
In February 2006, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 155, “Accounting for Certain Hybrid Financial Instruments” which amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (“FAS 133”), and SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This Statement resolves issues addressed in Statement 133 Implementation Issue No. D1, “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets.” This statement:
 
a. Permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation;
 
b. Clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133;
 
c. Establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation;
 
d. Clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives; and
 
e. Amends SFAS No. 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument.


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 
This Statement is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. The Consolidated Operating Partnership does not expect that the implementation of this statement will have a material effect on its consolidated financial position or results of operations.
 
In March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets” which amends FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, (“FAS 140”) with respect to the accounting for separately recognized servicing assets and servicing liabilities. This statement was issued to simplify the accounting for servicing rights and reduce the volatility that results from the use of different measurements attributes for servicing rights and the related financial instruments used to economically hedge risks associated with those servicing rights. The statement clarifies when to separately account for servicing rights, requires separately recognized servicing rights to be initially measured at fair value, and provides the option to subsequently account for those servicing rights at either fair value or under the amortization method previously required under FAS 140. An entity should adopt this statement as of the beginning of its first fiscal year that begins after September 15, 2006. The Consolidated Operating Partnership does not expect that the implementation of this statement will have a material effect on its consolidated financial position or results of operations.
 
In June 2006, the FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with SFAS No. 109, “Accounting for Income Taxes.” The evaluation of a tax position in accordance with FIN 48 is a two-step process. First, the Consolidated Operating Partnership determines whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position. Second, a tax position that meets the more-likely-than-not threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent reporting period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent reporting period in which the threshold is no longer met. The Consolidated Operating Partnership is required to apply the guidance of FIN 48 beginning January 1, 2007. The Consolidated Operating Partnership is currently evaluating what impact the application of FIN 48 will have on the consolidated financial statements.
 
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” which establishes a common definition of fair value, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements. This statement is effective for fiscal years beginning after November 15, 2007. The Consolidated Operating Partnership does not expect that the implementation of this statement will have a material effect on its consolidated financial position or results of operations.
 
In December 2006, the FASB ratified the consensus reached by the Emerging Issues Task Force (“EITF”) regarding EITF 00-19-2, “Accounting for Registration Payment Arrangements.” The guidance specifies that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement, whether issued as a separate agreement or included as a provision of a financial instrument or other agreement, should be separately recognized and measured in accordance with SFAS No. 5, “Accounting for Contingencies.” The guidance is effective for periods beginning after December 15, 2006. EITF 00-19-2 is not expected to impact its results of operations, financial position, or liquidity.
 
4.   Investments in and Advances to Other Real Estate Partnerships
 
The investments in and advances to Other Real Estate Partnerships reflects the Operating Partnership’s limited partnership equity interests in the entities referred to in Note 1 to these financial statements.


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 
Summarized condensed financial information as derived from the financial statements of the Other Real Estate Partnerships is presented below:
 
Condensed Combined Balance Sheets:
 
                 
    December 31,
 		    December 31,
 		 
    2006     2005  
 
ASSETS
               
Assets:
               
Investment in Real Estate, Net
  $ 330,223     $ 309,013  
Other Assets, Net
    59,363       87,866  
                 
Total Assets
  $ 389,586     $ 396,879  
                 
                 
LIABILITIES AND PARTNERS’ CAPITAL
               
Liabilities:
               
Mortgage Loans Payable, Net
  $ —     $ 2,380  
Other Liabilities
    15,024       12,492  
                 
Total Liabilities
    15,024       14,872  
Partners’ Capital
    374,562       382,007  
                 
Total Liabilities and Partners’ Capital
  $ 389,586     $ 396,879  
                 
 
Condensed Combined Statements of Operations:
 
                         
    Year Ended
 		    Year Ended
 		    Year Ended
 		 
    December 31,
 		    December 31,
 		    December 31,
 		 
    2006     2005     2004  
 
Total Revenues (including Interest Income)
  $ 50,156     $ 39,197     $ 34,710  
Property Expenses
    (14,586 )     (12,179 )     (11,314 )
General and Administrative
    (149 )     (123 )     (24 )
Interest Expense
    (11 )     (175 )     (178 )
Amortization of Deferred Financing Costs
    (2 )     (4 )     (3 )
Depreciation and Other Amortization
    (19,642 )     (12,867 )     (9,556 )
Equity in Income of Joint Ventures
    —       —       1,461  
                         
Income from Continuing Operations
    15,766       13,849       15,096  
Income from Discontinued Operations (Including Gain on Sale of Real Estate of $16,820, $29,213, and $6,439 for the years ended December 31, 2006, 2005 and 2004
    18,173       33,788       12,724  
(Loss) Gain on Sale of Real Estate
    (124 )     863       1,643  
                         
Net Income
  $ 33,815     $ 48,500     $ 29,463  
                         
 
5.   Investments in Joint Ventures
 
On September 28, 1998, the Consolidated Operating Partnership, through a wholly-owned limited liability company in which the Operating Partnership is its sole member, entered into a joint venture arrangement (the “September 1998 Joint Venture”) with an institutional investor to invest in industrial properties. At


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

December 31, 2006, the Consolidated Operating Partnership, through wholly-owned limited liability companies in which the Operating Partnership is the sole member, owns a ten percent equity interest in the September 1998 Joint Venture and provides property and asset management services to the September 1998 Joint Venture. On January 31, 2007, the Consolidated Operating Partnership purchased the 90% equity interest from the institutional investor in the September 1998 Joint Venture (See Note 17).
 
On December 28, 2001, the Consolidated Operating Partnership, through a wholly-owned limited liability company in which the Operating Partnership is the sole member, entered into a joint venture arrangement (the “December 2001 Joint Venture”) with an institutional investor to invest in industrial properties. The Consolidated Operating Partnership, through wholly-owned limited liability companies of the Operating Partnership, owned a 15% equity interest in the December 2001 Joint Venture and provided property management services to the December 2001 Joint Venture. On August 27, 2004, the December 2001 Joint Venture sold its investment of 36 industrial properties, containing approximately 6.2 million square feet (unaudited) of GLA, to a third party for gross proceeds of approximately $349,750. Due to certain provisions in the operating agreement, the Consolidated Operating Partnership received distributions in excess of it’s 15% equity interest in the December 2001 Joint Venture. Due to the sale of all industrial properties, the Consolidated Operating Partnership recognized, in aggregate, approximately $34,767 from the Consolidated Operating Partnership’s 15% share of gain from the sale of the December 2001 Joint Venture’s properties and distributions received from the December 2001 Joint Venture in excess of the Consolidated Operating Partnership’s 15% equity interest. This amount is included in Equity in Income of Joint Ventures.
 
As a result of the sale on August 27, 2004 to a third party, the Consolidated Operating Partnership recognized the unamortized portion of the previously deferred gain from the original sales to the December 2001 Joint Venture, of approximately $4,375. These deferred gains are included in Equity in Income of Joint Ventures.
 
On May 16, 2003, the Consolidated Operating Partnership, through a wholly-owned limited liability company in which the Operating Partnership is the sole member, entered into a joint venture arrangement (the “May 2003 Joint Venture”) with an institutional investor to invest in industrial properties. The Operating Partnership, through wholly-owned limited liability companies of the Operating Partnership or First Industrial Investment, Inc., owns a 15% equity interest in the May 2003 Joint Venture and provides property management services to the May 2003 Joint Venture.
 
On March 18, 2005, the Consolidated Operating Partnership, through First Industrial Investment, Inc., entered into a joint venture arrangement (the “March 2005 Joint Venture”) with an institutional investor to invest in, own, develop, redevelop and operate certain industrial properties. The Consolidated Operating Partnership, through wholly-owned limited liability companies of the Operating Partnership or First Industrial Investment, Inc., owns a 10% equity interest in the March 2005 Joint Venture and provides property management, asset management, development management and leasing management services to the March 2005 Joint Venture.
 
On September 7, 2005, the Consolidated Operating Partnership, through First Industrial Investment, Inc., entered into a joint venture arrangement (the “September 2005 Joint Venture”) with an institutional investor to invest in, own and operate certain industrial properties. The Consolidated Operating Partnership, through wholly-owned limited liability companies of the Operating Partnership or First Industrial Investment, Inc., owns a 10% equity interest in the September 2005 Joint Venture and provides property management, asset management, development management and leasing management services to the September 2005 Joint Venture.
 
On March 21, 2006, the Consolidated Operating Partnership, through separate wholly-owned limited liability companies of which it is the sole member, entered into a co-investment arrangement with an institutional investor to invest in industrial properties (the “March 2006 Co-Investment Program”). The


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Consolidated Operating Partnership, through separate wholly-owned limited liability companies of the Operating Partnership or First Industrial Investment, Inc. member, owns a 15% equity interest in and provides property management, asset management and leasing management services to the March 2006 Co-Investment Program.
 
On July 21, 2006, the Consolidated Operating Partnership, through a wholly-owned limited liability company of First Industrial Investment, Inc., entered into a joint venture arrangement with an institutional investor to invest in land and vertical development (the “July 2006 Joint Venture”). The Consolidated Operating Partnership, through a wholly-owned limited liability companies in which First Industrial Investment, Inc. is the sole member, owns a 10% equity interest in and provides property management, asset management, development management and leasing management services to the July 2006 Joint Venture.
 
As of December 31, 2006, the September 1998 Joint Venture owned 41 industrial properties comprising approximately 1.3 million square feet (unaudited) of GLA, the May 2003 Joint Venture owned 12 industrial properties comprising approximately 5.4 million square feet (unaudited) of GLA, the March 2005 Joint Venture owned 42 industrial properties comprising approximately 3.9 million square feet (unaudited) of GLA and several land parcels, the September 2005 Joint Venture owned 148 industrial properties comprising approximately 10.3 million square feet (unaudited) of GLA and several land parcels, the March 2006 Co-Investment Program owned 13 industrial properties comprising approximately 5.9 million square feet (unaudited) of GLA (of which the Consolidated Operating Partnership has an equity interest in 12 industrial properties comprising approximately 5.0 million square feet (unaudited) of GLA) and the July 2006 Joint Venture owned several land parcels.
 
During the year ended December 31, 2006, the Consolidated Operating Partnership sold several land parcels to the March 2005 Joint Venture for a sales price of $12.3 million. During the year ended December 31, 2005, the Consolidated Operating Partnership sold seven properties and several land parcels to the March 2005 Joint Venture for a sales price of $89.0 million. The Consolidated Operating Partnership deferred 10% of the gain from these sales in 2006 and 2005, which is equal to the Consolidated Operating Partnership’s economic interest in the March 2005 Joint Venture. In 2006, the March 2005 Joint Venture sold three properties and several parcels of land to third parties. As a result of the sales, the Consolidated Operating Partnership recognized the unamortized portion of the previously deferred gains from the original sales to the March 2005 Joint Venture in Equity in Income of Joint Ventures. If the Consolidated Operating Partnership repurchases any of the properties or land parcels, the 10% deferral will be netted against the basis of the property purchased (which reduces the basis of the property).
 
During the year ended December 31, 2006, the Consolidated Operating Partnership earned acquisition fees from the May 2003 Joint Venture, the September 2005 Joint Venture and the March 2006 Co-Investment Program. During the year ended December 31, 2005, the Company earned acquisition fees from the May 2003 Joint Venture and the September 2005 Joint Venture. The Consolidated Operating Partnership deferred 15% of the acquisition fees earned from the May 2003 Joint Venture and the March 2006 Co-Investment Program activity and 10% of the acquisition earned fees from the September 2005 Joint Venture. The deferrals reduced the Consolidated Operating Partnership’s investment in the joint ventures and are amortized into income over the life of the properties, generally 25 to 40 years.
 
At December 31, 2006 and 2005, the Consolidated Operating Partnership has a receivable from the Joint Ventures of $7,967 and $3,354, respectively, which relates to development, leasing, property management and asset management fees due to the Consolidated Operating Partnership from the Joint Ventures, reimbursement for general contractor expenditures made by a wholly owned subsidiary of the Consolidated Operating Partnership who is acting in the capacity of the developer for several development projects for the March 2005 Joint Venture and from borrowings made to the September 1998 Joint Venture.


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 
During the years ended December 31, 2006, 2005 and 2004, the Consolidated Operating Partnership invested the following amounts in its Joint Ventures as well as received distributions and recognized fees (included within Other Income) from acquisition, disposition, property management, leasing, development, general contractor, incentive and asset management services in the following amounts:
 
                         
    Year Ended
 		    Year Ended
 		    Year Ended
 		 
    December 31,
 		    December 31,
 		    December 31,
 		 
    2006     2005     2004  
 
Contributions
  $ 29,194       $43,311       $3,676  
Distributions
  $ 51,398       $6,837       $50,525  
Fees
  $ 22,507       $8,301       $2,689  
 
The combined summarized financial information of the investments in joint ventures is as follows
 
                 
    December 31,
 		    December 31,
 		 
    2006     2005  
 
Condensed Combined Balance Sheets
               
Gross Real Estate Investment
  $ 1,685,969     $ 1,410,389  
Less: Accumulated Depreciation
    (72,398 )     (30,497 )
                 
Net Real Estate
    1,613,571       1,379,892  
Other Assets
    224,048       256,233  
                 
Total Assets
  $ 1,837,619     $ 1,636,125  
                 
Debt
  $ 1,276,001     $ 1,174,296  
Other Liabilities
    108,430       46,962  
Equity
    453,188       414,867  
                 
Total Liabilities and Equity
  $ 1,837,619     $ 1,636,125  
                 
Consolidated Operating Partnership’s share of Equity
  $ 53,151     $ 44,772  
Basis Differentials(1)
    2,463       (442 )
                 
Carrying Value of the Consolidated Operating Partnership’s investments in joint ventures
  $ 55,614     $ 44,330  
                 
 
 
(1) This amount represents the aggregate difference between the Consolidated Operating Partnership’s historical cost basis and the basis reflected at the joint venture level. Basis differentials are primarily comprised of gain deferrals related to properties the Consolidated Operating Partnership sold to the Joint Ventures, certain acquisition costs which are not reflected at the joint venture level and incentive payments the Consolidated Operating Partnership has earned but has not received.
 


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

                         
    Year Ended December 31,  
    2006     2005     2004  
 
Condensed Combined Statements of Operations
                       
Total Revenues
  $ 163,443     $ 59,411     $ 32,353  
Expenses
                       
Operating and Other
    55,070       16,128       11,593  
Interest
    61,524       20,995       7,712  
Depreciation and Amortization
    90,842       32,150       12,540  
                         
Total Expenses
    207,436       69,273       31,845  
                         
Gain on Sale of Real Estate
    94,352       10,761       81,431  
                         
Net Income
    50,359       899       81,939  
                         
Consolidated Operating Partnership’s share of Net Income
  $ 30,671     $ 3,698     $ 35,840  
                         

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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

6.   Mortgage Loans Payable, Net, Senior Unsecured Debt, Net and Unsecured Lines of Credit

 
The following table discloses certain information regarding the Consolidated Operating Partnership’s mortgage loans, senior unsecured debt and unsecured lines of credit:
 
                             
    Outstanding
 		    Interest Rate
 		  Effective Interest
 		   
    Balance at     At
 		  Rate at
 		   
    December 31,
 		    December 31,
 		    December 31,
 		  December 31,
 		   
    2006     2005     2006   2006   Maturity Date
 
Mortgage Loans Payable, Net
  $ 77,926     $ 54,929     5.50% — 9.25%   4.58% — 9.25%   July 2009 — September 2024
Unamortized Premiums
    (2,919 )     (3,522 )            
                             
Mortgage Loans Payable, Gross
  $ 75,007     $ 51,407              
                             
Senior Unsecured Debt, Net
                           
2006 Notes
  $ —     $ 150,000     7.000%   7.22%   12/01/06
2007 Notes
    149,998       149,992     7.600%   7.61%   05/15/07
2016 Notes
    199,372       —     5.750%   5.91%   01/15/16
2017 Notes
    99,895       99,886     7.500%   7.52%   12/01/17
2027 Notes
    15,055       15,054     7.150%   7.11%   05/15/27
2028 Notes
    199,831       199,823     7.600%   8.13%   07/15/28
2011 Notes
    199,746       199,685     7.375%   7.39%   03/15/11
2012 Notes
    199,270       199,132     6.875%   6.85%   04/15/12
2032 Notes
    49,435       49,413     7.750%   7.87%   04/15/32
2009 Notes
    124,893       124,849     5.250%   4.10%   06/15/09
2014 Notes
    112,237       111,059     6.420%   6.54%   06/01/14
2011 Exchangeable Notes
    200,000       —     4.625%   4.63%   09/15/11
                             
Subtotal
  $ 1,549,732     $ 1,298,893              
                             
Unamortized Discounts
    15,338       16,177              
                             
Senior Unsecured Notes, Gross
  $ 1,565,070     $ 1,315,070              
                             
Unsecured Lines of Credit
                           
Unsecured Line of Credit I
  $ 207,000     $ 332,500     6.058%   6.058%   09/28/08
Unsecured Line of Credit II
    —       125,000     N/A   N/A   N/A
                             
Unsecured Lines of Credit Total
  $ 207,000     $ 457,500              
                             
 
Mortgage Loans Payable, Net
 
During 2006, in conjunction with the acquisition of several industrial properties, the Consolidated Operating Partnership assumed mortgages in the aggregate of $33,866. In conjunction with the assumption of the loans, the Consolidated Operating Partnership recorded a premium in the amount of $116. Also during 2006, the Consolidated Operating Partnership paid off and retired $7,964 of mortgage loans payable. As of December 31, 2006, mortgage loans payable of $77,926 is collateralized by industrial properties with a carrying value of $124,470.


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 
Senior Unsecured Debt, Net
 
On January 10, 2006, the Consolidated Operating Partnership, through the Operating Partnership, issued $200,000 of senior unsecured debt which matures on January 15, 2016 and bears interest at a rate of 5.75% (the “2016 Notes”). The issue price of the 2016 Notes was 99.653%. Interest is paid semi-annually in arrears on January 15 and July 15. In December 2005, the Consolidated Operating Partnership also entered into interest rate protection agreements which were used to fix the interest rate on the 2016 Notes prior to issuance. The Consolidated Operating Partnership settled the interest rate protection agreements on January 9, 2006 for a payment of approximately $1,729, which is included in other comprehensive income. The debt issue discount and the settlement amount of the interest rate protection agreements will be amortized over the life of the 2016 Notes as an adjustment to interest expense. Including the impact of the offering discount and the settlement amount of the interest rate protection agreements, the Consolidated Operating Partnership’s effective interest rate on the 2016 Notes is 5.91%.
 
On September 25, 2006, the Consolidated Operating Partnership, through the Operating Partnership, issued $175,000 of senior unsecured debt which bears interest at a rate of 4.625% (the “2011 Exchangeable Notes”). The Consolidated Operating Partnership also granted the initial purchasers of the 2011 Exchangeable Notes an option exercisable until October 4, 2006 to purchase up to an additional $25,000 principal amount of the 2011 Exchangeable Notes to cover over-allotments, if any (the “Over-allotment Option”). Holders of the 2011 Exchangeable Notes may exchange their notes for the Company’s common stock prior to the close of business on the second business day immediately preceding the stated maturity date at any time beginning on July 15, 2011 and also under the following circumstances: 1) during any calendar quarter beginning after December 31, 2006 (and only during such calendar quarter), if, and only if, the closing sale price per share of the Company’s common stock for at least 20 trading days ending on the last trading day of the preceding calendar quarter is more than 130% of the exchange price per share of the Company’s common stock in effect on the applicable trading day; 2) during the five consecutive trading-day period following any five consecutive trading-day period in which the trading price of the notes was less than 98% of the product of the closing sale price per share of the Company’s common stock multiplied by the applicable exchange rate; 3) if those notes have been called for redemption, at any time prior to the close of business on the second business day prior to the redemption date; 4) upon the occurrence of distributions of certain rights to purchase the Company’s common stock or certain other assets; or 5) if the Company’s common stock ceases to be listed on a U.S. national or regional securities exchange and is not quoted on the over-the-counter market as reported by Pink Sheets LLC or any similar organization, in each case, for 30 consecutive trading days. The 2011 Exchangeable Notes have an initial exchange rate of 19.6356 shares of the Company’s common stock per $1,000 principal amount, representing an exchange price of approximately $50.93 per common share and an exchange premium of approximately 20% based on the last reported sale price of $42.44 per share of the Company’s common stock on September 19, 2006. If a change of control transaction described in the indenture relating to the 2011 Exchangeable Notes occurs and a holder elects to exchange notes in connection with any such transaction, holders of the 2011 Exchangeable Notes will be entitled to a make-whole amount in the form of an increase in the exchange rate. The exchange rate may also be adjusted under certain other circumstances, including the payment of cash dividends in excess of the Company’s current regular quarterly dividend on its common stock of $0.70 per share. The 2011 Exchangeable Notes will be exchangeable for cash up to their principal amount and shares of the Company’s common stock for the remainder of the exchange value in excess of the principal amount. The 2011 Exchangeable notes mature on September 15, 2011, unless previously redeemed or repurchased by the Consolidated Operating Partnership or exchanged in accordance with their terms prior to such date. The issue price of the 2011 Exchangeable Notes was 98.0%. Interest is paid semi-annually in arrears on March 15 and September 15 of each year, beginning March 15, 2007. The 2011 Exchangeable Notes are fully and unconditionally guaranteed by the Company. On October 3, 2006, the initial purchasers of the 2011 Exchangeable Notes exercised their Over-Allotment Option with respect to $25,000 in principal amount of the 2011 Exchangeable Notes. With the exercise of the Over-


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Allotment Option, the aggregate principal amount of 2011 Exchangeable Notes issued and outstanding is $200,000. In connection with the Operating Partnership’s offering of the 2011 Exchangeable Notes, the Operating Partnership entered into capped call transactions (the “capped call transactions”) with affiliates of two of the initial purchasers of the 2011 Exchangeable Notes (the “option counterparties”) in order to increase the effective exchange price of the 2011 Exchangeable Notes to $59.42 per share of the Company’s common stock, which represents an exchange premium of approximately 40% based on the last reported sale price of $42.44 per share of the Company’s common stock on September 19, 2006. The aggregate cost of the capped call transactions was approximately $6,835. The capped call transactions are expected to reduce the potential dilution with respect to the Company’s common stock upon exchange of the 2011 Exchangeable Notes to the extent the then market value per share of the Company’s common stock does not exceed the cap price of the capped call transaction during the observation period relating to an exchange. The cost of the capped call will be accounted for as a hedge and included in shareholders’ equity because the derivative is indexed to the Company’s own stock and meets the scope exception in FAS 133.
 
On December 1, 2006, the Consolidated Operating Partnership paid off and retired its 7.0% 2006 Unsecured Notes in the amount of $150,000.
 
All of the Consolidated Operating Partnership’s senior unsecured debt (except for the 2011 Exchangeable Notes) contains certain covenants, including limitations on incurrence of debt and debt service coverage.
 
Unsecured Lines of Credit
 
The Consolidated Operating Partnership has maintained an unsecured revolving credit facility since 1997 (the “Unsecured Line of Credit”). On August 23, 2005, the Consolidated Operating Partnership amended and restated the Unsecured Line of Credit (the “Unsecured Line of Credit I”). The Unsecured Line of Credit I matures on September 28, 2008, has a borrowing capacity of $500,000, with the right, subject to certain conditions, to increase the borrowing capacity up to $600,000 and bears interest at a floating rate of LIBOR plus .625%, or the Prime Rate, at the Consolidated Operating Partnership’s election. The net unamortized deferred financing fees related to the Unsecured Line of Credit I and any additional deferred financing fees incurred related to the Unsecured Line of Credit I are being amortized over the life of the Unsecured Line of Credit I in accordance with Emerging Issues Task Force Issue 98-14, “Debtor’s Accounting for Changes in Line-of-Credit or Revolving-Debt Arrangements”, except for $51, which represents the write off of deferred financing costs and is included in the gain from early retirement of debt. The Unsecured Line of Credit I contains certain financial covenants relating to debt service coverage, market value net worth, dividend payout ratio and total funded indebtedness.
 
In December 2005, the Consolidated Operating Partnership, through the Operating Partnership, entered into a non-revolving unsecured line of credit (the “Unsecured Line of Credit II”; together with the Unsecured Line of Credit I, the “Unsecured Lines of Credit”). The Unsecured Line of Credit II had a borrowing capacity of $125,000 and matured on March 15, 2006. The Unsecured Line of Credit II provided for interest only payments at LIBOR plus .625% or at Prime, at the Company’s election. The Consolidated Operating Partnership, through the Operating Partnership, paid off and retired the Unsecured Line of Credit II in January 2006.


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 
The following is a schedule of the stated maturities and scheduled principal payments of the mortgage loans, senior unsecured debt and unsecured line of credit, exclusive of premiums and discounts, for the next five years ending December 31, and thereafter:
 
         
    Amount  
 
2007
  $ 152,884  
2008
    210,111  
2009
    133,001  
2010
    15,545  
2011
    407,360  
Thereafter
    928,176  
         
Total
  $ 1,847,077  
         
 
Fair Value
 
At December 31, 2006 and 2005, the fair value of the Consolidated Operating Partnership’s mortgage loans payable, senior unsecured debt and Unsecured Line of Credit I were as follows:
 
                                 
    December 31, 2006     December 31, 2005  
    Carrying
 		          Carrying
 		       
    Amount     Fair Value     Amount     Fair Value  
 
Mortgage Loans Payable
  $ 77,926     $ 78,730     $ 54,929     $ 56,455  
Senior Unsecured Debt
    1,549,732       1,636,318       1,298,893       1,415,268  
Unsecured Lines of Credit
    207,000       207,000       457,500       457,500  
                                 
Total
  $ 1,834,658     $ 1,922,048     $ 1,811,322     $ 1,929,223  
                                 
 
The fair value of the senior unsecured debt was determined by quoted market prices, if available. The fair values of the Consolidated Operating Partnership’s senior unsecured debt not valued by quoted market prices and mortgage loans payable were determined by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. The fair value of the Unsecured Lines of Credit was equal to their carrying value due to the variable interest rate nature of the loans.
 
Other Comprehensive Income
 
In conjunction with the prior issuances of senior unsecured debt, the Consolidated Operating Partnership, through the Operating Partnership, entered into interest rate protection agreements to fix the interest rate on anticipated offerings of senior unsecured debt (the “Interest Rate Protection Agreements”). In the next 12 months, the Consolidated Operating Partnership will amortize approximately $1,182 of the Interest Rate Protection Agreements into net income as a decrease to interest expense.
 
In October 2005, the Consolidated Operating Partnership, through First Industrial Investment, Inc., entered into an interest rate protection agreement which hedged the change in value of a build to suit development project the Consolidated Operating Partnership was constructing. This interest rate protection agreement had a notional value of $50,000, which was based on the three Month LIBOR rate, had a strike rate of 4.8675%, had an effective date of December 30, 2005 and a termination date of December 30, 2010. Per Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“FAS 133”) fair value and cash flow hedge accounting for hedges of non-financial assets and liabilities is limited to hedges of the risk of changes in the market price of the entire hedged item because changes in the price of an ingredient or component of a non-financial item generally do not have a predictable, separately measurable


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

effect on the price of the item. Since the interest rate protection agreement is hedging a component of the change in value of the build to suit development, the interest rate protection agreement does not qualify for hedge accounting and the change in value of the interest rate protection agreement will be recognized immediately in net income as opposed to other comprehensive income. On January 5, 2006, the Consolidated Operating Partnership, through First Industrial Investment, Inc., settled the interest rate protection agreement for a payment of $186.
 
In December 2005, the Consolidated Operating Partnership entered into three interest rate protection agreements which fixed the interest rate on a forecasted offering of unsecured debt which it designated as cash flow hedges. Two of the interest rate protection agreements each had a notional value of $48,700 and were effective from December 30, 2005 through December 30, 2015. The interest rate protection agreements fixed the LIBOR rate at 5.066% and 5.067%. The third interest rate protection agreement had a notional value of $48,700, is effective from January 19, 2006 through January 19, 2016, and fixed the LIBOR rate at 4.992%. The Consolidated Operating Partnership settled the three interest rate protection agreements on January 9, 2006 for a payment of $1,729, which is included in Other Comprehensive income. The settlement amount of the interest rate protection agreements will be amortized over the life of the 2016 Notes as an adjustment to interest expense.
 
In April 2006, the Consolidated Operating Partnership entered into four interest rate protection agreements which fixed the interest rate on forecasted offerings of unsecured debt which it designated as cash flow hedges. Two of the interest rate protection agreements each have a notional value of $72,900 and are effective from November 28, 2006 through November 28, 2016. The interest rate protection agreements fixed the LIBOR rate at 5.537%. The third and fourth interest rate protection agreements each have a notional value of $74,750, are effective from May 10, 2007 through May 10, 2012, and fixed the LIBOR rate at 5.420% (the “2006 Interest Rate Protection Agreements”). In September 2006, the 2006 Interest Rate Protection Agreements failed to qualify for hedge accounting, since the actual debt issuance date was not within the range of dates the Consolidated Operating Partnership disclosed in its hedge designation. The Consolidated Operating Partnership settled the 2006 Interest Rate Protection Agreements and paid the counterparties $2,942. This amount is recognized in the mark-to-market/gain (loss) on settlement of interest rate protection agreements caption on the consolidated statements of operations.
 
7.   Partners’ Capital
 
The Operating Partnership has issued general partnership units and limited partnership units (together, the “Units”) and preferred general partnership units. The general partnership units resulted from capital contributions from the Company. The limited partnership units are issued in conjunction with the acquisition of certain properties (see discussion below). Subject to lock-up periods and certain adjustments, limited partnership units are convertible into common stock, $.01 par value, of the Company on a one-for-one basis or cash at the option of the Company. The preferred general partnership units result from preferred capital contributions from the Company. The preferred general partnership units had an aggregate liquidation priority of $325,000 and $312,500 as of December 31, 2006 and 2005, respectively. The Operating Partnership is required to make all required distributions on the preferred general partnership units prior to any distribution of cash or assets to the holders of the Units. The consent of the holder of the limited partnership units is required to alter such holder’s rights as to allocations and distributions, to alter or modify such holder’s rights with respect to redemption, to cause the early termination of the Consolidated Operating Partnership, or to amend the provisions of the partnership agreement which requires such consent.
 
Unit Contributions:
 
On September 16, 2004, the Company and the Operating Partnership entered into a sales agreement to sell up to 3,900,000 shares of the Company’s common stock from time to time with Cantor Fitzgerald & Co.,


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

as sales agent, in a controlled equity offering program. During the year ended December 31, 2004, the Company issued 1,333,600 shares of common stock under the controlled equity offering program and received net proceeds of $48,820. The Company contributed the net proceeds to the Consolidated Operating Partnership and the Consolidated Operating Partnership, through the Operating Partnership, issued 1,333,600 General Partner Units to the Company in the same amount.
 
On December 9, 2005, the Company issued 1,250,000 shares of $.01 par value common stock (the “December 2005 Equity Offering”). The net proceeds of $48,775 received from the December 2005 Equity Offering were contributed to the Operating Partnership in exchange for 1,250,000 General Partner Units and are reflected in the Operating Partnership’s financial statements as a general partner contribution.
 
For the year ended December 31, 2005, the Operating Partnership issued 366,472 Limited Partner Units valued, in the aggregate, at $14,698 in exchange for interests in certain properties. These contributions are reflected in the Consolidated Operating Partnership’s financial statements as limited partner contributions.
 
For the year ended December 31, 2006, the Operating Partnership issued 31,473 Limited Partner Units valued, in the aggregate, at $1,288 in exchange for interests in certain properties. These contributions are reflected in the Consolidated Operating Partnership’s financial statements as limited partner contributions.
 
For the year ended December 31, 2004, certain employees of the Company exercised 1,663,652 non-qualified employee stock options. Net proceeds to the Company approximated $37,301. The gross proceeds from the option exercises were contributed to the Operating Partnership in exchange for Units and are reflected in the Consolidated Operating Partnership’s financial statements as a general partner contribution.
 
For the year ended December 31, 2005, certain employees of the Company exercised 248,881 non-qualified employee stock options. Net proceeds to the Company approximated $6,698. The gross proceeds from the option exercises were contributed to the Operating Partnership in exchange for Units and are reflected in the Consolidated Operating Partnership’s financial statements as a general partner contribution.
 
For the year ended December 31, 2006, certain employees and directors of the Company exercised 125,780 non-qualified employee stock options. Net proceeds to the Company approximated $3,742. The gross proceeds from the option exercises were contributed to the Operating Partnership in exchange for Units and are reflected in the Consolidated Operating Partnership’s financial statements as a general partner contribution.
 
During the years ended December 31, 2006, 2005 and 2004 the Company awarded 319,374, 200,042, and 216,617 restricted shares of common stock, respectively, to certain employees and certain directors of the Company. The Operating Partnership issued General Partner Units to the Company in the same amount.


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 
The following table is a roll-forward of the General Partnership and Limited Partnership units outstanding, including unvested restricted units, for the three years ended December 31, 2006:
 
         
    General Partnership and
 		 
    Limited Partnership
 		 
    Units Outstanding  
 
Balance at December 31, 2003
    46,554,382  
Issuance of General Partner Units
    2,621,082  
Issuance of General Partner Restricted Units
    216,617  
Repurchase and Retirement of Restricted Units
    (102,076 )
         
Balance at December 31, 2004
    49,290,005  
         
Issuance of General Partner Units
    1,480,942  
Issuance of General Partner Restricted Units
    200,042  
Repurchase and Retirement of Restricted Units
    (152,009 )
Issuance of Limited Partner Units
    366,472  
         
Balance at December 31, 2005
    51,185,452  
         
Issuance of General Partner Units
    125,780  
Issuance of General Partner Restricted Units
    319,374  
Repurchase and Retirement of Restricted Units
    (93,007 )
Issuance of Limited Partner Units
    31,473  
         
Balance at December 31, 2006
    51,569,072  
         
 
Preferred Contributions:
 
On June 6, 1997, the Company issued 2,000,000 Depositary Shares, each representing 1/100th of a share of the Company’s 85/8%, $.01 par value, Series C Cumulative Preferred Stock (the “Series C Preferred Stock”), at an initial offering price of $25 per Depositary Share. The net proceeds of $47,997 received from the Series C Preferred Stock were contributed to the Consolidated Operating Partnership in exchange for 85/8% Series C Cumulative Preferred Units (the “Series C Preferred Units”) and are reflected in the Consolidated Operating Partnership’s financial statements as a general partner preferred unit contribution.
 
On February 4, 1998, the Company issued 5,000,000 Depositary Shares, each representing 1/100th of a share of the Company’s 7.95%, $.01 par value, Series D Cumulative Preferred Stock (the “Series D Preferred Stock”), at an initial offering price of $25.00 per Depositary Share. The net proceeds of $120,562 received from the Series D Preferred Stock were contributed to the Operating Partnership in exchange for 7.95% Series D Cumulative Preferred Units (the “Series D Preferred Units”). On or after February 4, 2003, the Series D Preferred Stock became redeemable for cash at the option of the Company, in whole or in part, at a redemption price equivalent to $25.00 per Depositary Share, or $125,000 in the aggregate, plus dividends accrued and unpaid to the redemption date. The Company redeemed the Series D Preferred Stock on June 7, 2004 at a redemption price of $25.00 per Depositary Share and paid a prorated second quarter dividend of $.36990 per Depositary Share, totaling approximately $1,850. The Series D Preferred Units were redeemed on June 7, 2004 as well. In accordance with EITF D-42, due to the redemption of the Series D Preferred Units, the initial offering costs associated with the issuance of the Series D Preferred Units of $4,467 were reflected as a deduction from net income to arrive at net income available to unitholders in determining earnings per unit for the year ended December 31, 2004.
 
On March 18, 1998, the Company issued 3,000,000 Depositary Shares, each representing 1/100th of a share of the Company’s 7.90%, $.01 par value, Series E Cumulative Preferred Stock (the “Series E Preferred


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Stock”), at an initial offering price of $25.00 per Depositary Share. The net proceeds of $72,138 received from the Series E Preferred Stock were contributed to the Operating Partnership in exchange for 7.90% Series E Cumulative Preferred Units (the “Series E Preferred Units”). On or after March 18, 2003, the Series E Preferred Stock became redeemable for cash at the option of the Company, in whole or in part, at a redemption price equivalent to $25.00 per Depositary Share, or $75,000 in the aggregate, plus dividends accrued and unpaid to the redemption date. The Company redeemed the Series E Preferred Stock on June 7, 2004 at a redemption price of $25.00 per Depositary Share and paid a prorated second quarter dividend of $.36757 per Depositary Share, totaling approximately $1,103. The Series E Preferred Units were redeemed on June 7, 2004 as well. In accordance with EITF D-42, due to the redemption of the Series E Preferred Units, the initial offering costs associated with the issuance of the Series E Preferred Units of $2,892 were reflected as a deduction from net income to arrive at net income available to unitholders in determining earnings per unit for the year ended December 31, 2004.
 
On May 27, 2004, the Company issued 50,000 Depositary Shares, each representing 1/100th of a share of the Company’s 6.236%, $.01 par value, Series F Flexible Cumulative Redeemable Preferred Stock (the “Series F Preferred Stock”), at an initial offering price of $1,000.00 per Depositary Share for gross proceeds of $50,000. Net of offering costs, the Company received net proceeds of $49,075 from the issuance of the Series F Preferred Stock which were contributed to the Operating Partnership in exchange for 6.236% Series F Cumulative Preferred Units (the “Series F Preferred Units”) and are reflected in the Consolidated Operating Partnership’s financial statements as general partner preferred unit contribution. Dividends on the Series F Preferred Stock are cumulative from the date of initial issuance and are payable semi-annually in arrears for the period from the date of original issuance through March 31, 2009 (the “Series F Initial Fixed Rate Period”), commencing on September 30, 2004, at a rate of 6.236% per annum of the liquidation preference (the “Series F Initial Distribution Rate”) (equivalent to $62.36 per Depositary Share). On or after March 31, 2009, the Series F Initial Distribution Rate is subject to reset, at the Company’s option, subject to certain conditions and parameters, at fixed or floating rates and periods. Fixed rates and periods will be determined through a remarketing procedure. Floating rates during floating rate periods will equal 2.375% (the initial credit spread), plus the greater of (i) the 3-month LIBOR Rate, (ii) the 10-year Treasury CMT Rate (as defined in the Articles Supplementary), and (iii) the 30-year Treasury CMT Rate (the adjustable rate)(as defined in the Articles Supplementary), reset quarterly. Dividends on the Series F Preferred Stock are payable semi-annually in arrears for fixed rate periods subsequent to the Series F Initial Fixed Rate Period and quarterly in arrears for floating rate periods. With respect to the payment of dividends and amounts upon liquidation, dissolution or winding up, the Series F Preferred Stock ranks senior to payments on the Company’s Common Stock and pari passu with the Company’s Series C Preferred Stock, Series G Preferred Stock (hereinafter defined), Series J Preferred Stock (hereinafter defined) and Series K Preferred Stock (hereinafter defined). On or after March 31, 2009, subject to any conditions on redemption applicable in any fixed rate period subsequent to the Series F Initial Fixed Rate Period, the Series F Preferred Stock is redeemable for cash at the option of the Company, in whole or in part, at a redemption price equivalent to $1,000.00 per Depositary Share, or $50,000 in the aggregate, plus dividends accrued and unpaid to the redemption date. The Series F Preferred Stock has no stated maturity and is not convertible into any other securities of the Company.
 
On May 27, 2004, the Company issued 25,000 Depositary Shares, each representing 1/100th of a share of the Company’s 7.236%, $.01 par value, Series G Flexible Cumulative Redeemable Preferred Stock (the “Series G Preferred Stock”), at an initial offering price of $1,000.00 per Depositary Share for gross proceeds of $25,000. Net of offering costs, the Company received net proceeds of $24,512 from the issuance of the Series G Preferred Stock which were contributed to the Operating Partnership in exchange for 7.236% Series G Cumulative Preferred Units (the “Series G Preferred Units”) and are reflected in the Consolidated Operating Partnership’s financial statements as general partner preferred unit contribution. Dividends on the Series G Preferred Stock are cumulative from the date of initial issuance and are payable semi-annually in arrears for the period from the date of original issuance of the Series G Preferred Stock through March 31, 2014 (the


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

“Series G Initial Fixed Rate Period”), commencing on September 30, 2004, at a rate of 7.236% per annum of the liquidation preference (the “Series G Initial Distribution Rate”) (equivalent to $72.36 per Depositary Share). On or after March 31, 2014, the Series G Initial Distribution Rate is subject to reset, at the Company’s option, subject to certain conditions and parameters, at fixed or floating rates and periods. Fixed rates and periods will be determined through a remarketing procedure. Floating rates during floating rate periods will equal 2.500% (the initial credit spread), plus the greater of (i) the 3-month LIBOR Rate, (ii) the 10-year Treasury CMT Rate (as defined in the Articles Supplementary), and (iii) the 30-year Treasury CMT Rate (the adjustable rate)(as defined in the Articles Supplementary), reset quarterly. Dividends on the Series G Preferred Stock are payable semi-annually in arrears for fixed rate periods subsequent to the Series G Initial Fixed Rate Period and quarterly in arrears for floating rate periods. With respect to the payment of dividends and amounts upon liquidation, dissolution or winding up, the Series G Preferred Stock ranks senior to payments on the Company’s Common Stock and pari passu with the Company’s Series C Preferred Stock, Series F Preferred Stock, Series J Preferred Stock (hereinafter defined) and Series K Preferred Stock (hereinafter defined). On or after March 31, 2014, subject to any conditions on redemption applicable in any fixed rate period subsequent to the Series G Initial Fixed Rate Period, the Series G Preferred Stock is redeemable for cash at the option of the Company, in whole or in part, at a redemption price equivalent to $1,000.00 per Depositary Share, or $25,000 in the aggregate, plus dividends accrued and unpaid to the redemption date. The Series G Preferred Stock has no stated maturity and is not convertible into any other securities of the Company.
 
On June 2, 2004, the Company issued 500 shares of 2.965% $.01 par value, Series H Flexible Cumulative Redeemable Preferred Stock (the “Series H Preferred Stock”), at an initial offering price of $250,000 per share for gross proceeds of $125,000. Net of offering costs, the Company received net proceeds of $120,837 from the issuance of the Series H Preferred Stock which were contributed to the Consolidated Operating Partnership in exchange for Series H Cumulative Preferred Units (the “Series H Preferred Units”) and are reflected in the Consolidated Operating Partnership’s financial statements as a general partner preferred unit contribution. On or after July 2, 2004, the Series H Preferred Stock became redeemable for cash at the option of the Company, in whole but not in part, at a redemption price equivalent, initially, to $242,875 per share plus accrued and unpaid dividends. The Company redeemed the Series H Preferred Stock on July 2, 2004 and paid a prorated second and third quarter dividend of $629.555 per share, totaling approximately $315. The Series H Preferred Units were redeemed on July 2, 2004 as well. In accordance with EITF D-42, due to the redemption of the Series H Preferred Units, the initial offering costs associated with the issuance of the Series H Preferred Units of $600 is reflected as a deduction from net income to arrive at net income available to unitholders in determining earnings per Unit for the year ended December 31, 2004.
 
On November 8, 2005 and November 18, 2005, the Company issued 600 and 150 Shares, respectively, of $.01 par value, Series I Flexible Cumulative Redeemable Preferred Stock, (the “Series I Preferred Stock”), in a private placement at an initial offering price of $250,000 per share for an aggregate initial offering price of $187,500. Net of offering costs, the Company received net proceeds of $181,484 from the issuance of Series I Preferred Stock which were contributed to the Operating Partnership in exchange for Series I Cumulative Preferred Units (the “Series I Preferred Units”). The Company redeemed the Series I Preferred Stock on January 13, 2006 for $242,875.00 per share, and paid a prorated first quarter dividend of $470.667 per share, totaling approximately $353. The Operating Partnership redeemed the Series I Preferred Units as well. In accordance with EITF D-42, due to the redemption of the Series I Preferred Units, the difference between the redemption cost and the carrying value of the Series I Preferred Units of approximately $672 is reflected as a deduction from net income to arrive at net income available to Unitholders in determining earnings per unit for the year ended December 31, 2006.
 
On January 13, 2006, the Company issued 6,000,000 Depositary Shares, each representing 1/10,000th of a share of the Company’s 7.25%, $.01 par value, Series J Cumulative Redeemable Preferred Stock (the “Series J Preferred Stock”), at an initial offering price of $25.00 per Depositary Share. The net proceeds from the issuance of the Series J Preferred Stock were contributed to the Operating Partnership in exchange for


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Series J Cumulative Preferred Units (the “Series J Preferred Units”) and are reflected in the Consolidated Operating Partnership’s financial statements as a general partner preferred unit contribution. Dividends on the Series J Preferred Stock, represented by the Depositary Shares, are cumulative from the date of initial issuance and are payable quarterly in arrears. However, during any period that both (i) the depositary shares are not listed on the NYSE or AMEX, or quoted on NASDAQ, and (ii) the Company is not subject to the reporting requirements of the Exchange Act, but the preferred shares are outstanding, the Company will increase the dividend on the preferred shares to a rate of 8.25% of the liquidation preference per year. However, if at any time both (i) the depositary shares cease to be listed on the NYSE or the AMEX, or quoted on NASDAQ, and (ii) the Company ceases to be subject to the reporting requirements of the Exchange Act, but the preferred shares are outstanding, then the preferred shares will be redeemable, in whole but not in part at the Company’s option, within 90 days of the date upon which the depositary shares cease to be listed and the Company ceases to be subject to such reporting requirements, at a redemption price equivalent to $25.00 per Depositary Share, plus all accrued and unpaid dividends to the date of redemption. With respect to the payment of dividends and amounts upon liquidation, dissolution or winding up, the Series J Preferred Stock ranks senior to payments on the Company’s Common Stock and pari passu with the Company’s Series C Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and Series K Preferred Stock (hereinafter defined). The Series J Preferred Stock is not redeemable prior to January 15, 2011. On or after January 15, 2011, the Series J Preferred Stock is redeemable for cash at the option of the Company, in whole or in part, at a redemption price equivalent to $25.00 per Depositary Share, or $150,000 in the aggregate, plus dividends accrued and unpaid to the redemption date. The Series J Preferred Stock has no stated maturity and is not convertible into any other securities of the Company.
 
On August 21, 2006, the Company issued 2,000,000 Depositary Shares, each representing 1/10,000th of a share of the Company’s 7.25%, $.01 par value, Series K Flexible Cumulative Redeemable Preferred Stock (the “Series K Preferred Stock”), at an initial offering price of $25.00 per Depositary Share. The net proceeds from the issuance of the Series K Preferred Stock were contributed to the Operating Partnership in exchange for Series K Cumulative Preferred Units (the “Series K Preferred Units”) and are reflected in the Consolidated Operating Partnership’s financial statements as a general partner preferred unit contribution. Dividends on the Series K Preferred Stock, represented by the Depositary Shares, are cumulative from the date of initial issuance and are payable quarterly in arrears. With respect to the payment of dividends and amounts upon liquidation, dissolution or winding up, the Series K Preferred Stock ranks senior to payments on the Company’s Common Stock and pari passu with the Company’s Series C Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and Series J Preferred Stock. The Series K Preferred Stock is not redeemable prior to August 15, 2011. On or after August 15, 2011, the Series K Preferred Stock is redeemable for cash at the option of the Company, in whole or in part, at a redemption price equivalent to $25.00 per Depositary Share, or $50,000 in the aggregate, plus dividends accrued and unpaid to the redemption date. The Series K Preferred Stock has no stated maturity and is not convertible into any other securities of the Company.


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 
Distributions:
 
The following table summarizes distributions declared for the past three years:
 
                                                 
    Year Ended 2006     Year Ended 2005     Year Ended 2004  
    Distribution
 		    Total
 		    Distribution
 		    Total
 		    Distribution
 		    Total
 		 
    per Unit     Distribution     per Unit     Distribution     per Unit     Distribution  
 
General Partner/Limited Partner Units
  $ 2.8100     $ 144,720     $ 2.7850     $ 139,168     $ 2.7500     $ 132,585  
Series C Preferred Units
  $ 215.6240     $ 4,313     $ 215.6240     $ 4,313     $ 215.6240     $ 4,313  
Series D Preferred Units
  $ —     $ —     $ —     $ —     $ 86.6780     $ 4,334  
Series E Preferred Units
  $ —     $ —     $ —     $ —     $ 86.1320     $ 2,585  
Series F Preferred Units
  $ 6,236.0000     $ 3,118     $ 6,236.0000     $ 3,118     $ 3,724.2800     $ 1,861  
Series G Preferred Units
  $ 7,236.0000     $ 1,809     $ 7,236.0000     $ 1,809     $ 4,321.5000     $ 1,080  
Series H Preferred Units
  $ —     $ —     $ —     $ —     $ 629.5550     $ 315  
Series I Preferred Units
  $ 470.6667     $ 353     $ 1,930.2431     $ 1,448     $ —     $ —  
Series J Preferred Units
  $ 17,521.0000     $ 10,512     $ —     $ —     $ —     $ —  
Series K Preferred Units
  $ 6,595.6000     $ 1,319     $ —     $ —     $ —     $ —  
 
8.   Acquisition and Development of Real Estate
 
In 2004, the Consolidated Operating Partnership acquired 77 industrial properties comprising, in the aggregate, approximately 8.9 million square feet (unaudited) of GLA and several land parcels for a total purchase price of approximately $393,098, excluding costs incurred in conjunction with the acquisition of properties. The Consolidated Operating Partnership also substantially completed development of 11 properties comprising approximately 2.3 million square feet (unaudited) of GLA at a cost of approximately $80,241. The Consolidated Operating Partnership reduced the costs of substantially completed developments from construction in progress to building, tenant improvements and leasing commissions.
 
In 2005, the Consolidated Operating Partnership acquired 149 industrial properties comprising, in the aggregate, approximately 18.4 million square feet (unaudited) of GLA and several land parcels. The gross purchase price for 148 industrial properties and several land parcels totaled approximately $690,560, excluding costs incurred in conjunction with the acquisition of properties. Additionally, one industrial property was acquired through foreclosure due to a default on a mortgage loan receivable. The Consolidated Operating Partnership also substantially completed development of five properties comprising approximately 1.8 million square feet (unaudited) of GLA at a cost of approximately $97,466. The Consolidated Operating Partnership reduced the costs of substantially completed developments from construction in progress to building, tenant improvements and leasing commissions.
 
In 2006, the Consolidated Operating Partnership acquired 79 industrial properties comprising, in the aggregate, approximately 9.7 million square feet (unaudited) of GLA and several land parcels for a total purchase price of approximately $563,431, excluding costs incurred in conjunction with the acquisition of properties. The Consolidated Operating Partnership also substantially completed development of 15 properties comprising approximately 5.0 million square feet (unaudited) of GLA at a cost of approximately $188,592. The Consolidated Operating Partnership reclassed the costs of substantially completed developments from construction in progress to building, tenant improvements and leasing commissions.
 
Intangible Assets Subject To Amortization in the Period of Acquisition
 
The fair value of in-place leases, above market leases, tenant relationships, and below market leases recorded as a result of the above acquisitions is $33,434, $3,249, $17,439, and $(12,254), respectively, for the


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

year ended December 31, 2006. The weighted average life in months of in-place leases, above market leases, tenant relationships and below market leases recorded as a result of 2006 acquisitions was 72, 70, 109 and 117 months, respectively.
 
The fair value of in-place leases, above market leases, and below market leases recorded as a result of the above acquisitions is $54,084, $4,997, and ($21,254), respectively, for the year ended December 31, 2005. The weighted average life in months of in-place leases, above market leases, and below market leases recorded as a result of 2005 acquisitions was 142, 78, and 126 months, respectively.
 
9.   Sale of Real Estate, Real Estate Held for Sale and Discontinued Operations
 
In 2004, the Consolidated Operating Partnership, through the Operating Partnership, sold 90 industrial properties comprising approximately 6.8 million square feet (unaudited) of GLA and several land parcels. Gross proceeds from the sales of the 90 industrial properties and several land parcels were approximately $393,029. The gain on sale of real estate was approximately $96,918, of which $81,806 is shown in discontinued operations. Eighty-six of the 90 sold industrial properties meet the criteria established by FAS 144 to be included in discontinued operations. Therefore, in accordance with FAS 144, the results of operations and gain on sale of real estate for the 86 sold industrial properties that meet the criteria established by FAS 144 are included in discontinued operations. The results of operations and gain on sale of real estate for the four industrial properties and several land parcels that do not meet the criteria established by FAS 144 are included in continuing operations.
 
In 2005, the Consolidated Operating Partnership, through the Operating Partnership, sold 82 industrial properties comprising approximately 10.7 million square feet (unaudited) of GLA and several land parcels. Of the 82 industrial properties sold, seven industrial property sales were made to the March 2005 Joint Venture (see Note 5). Gross proceeds from the sales of the 82 industrial properties and several land parcels were approximately $561,622. The gain on sale of real estate was approximately $131,612, of which $102,926 is shown in discontinued operations. Seventy-three of the 82 sold industrial properties meet the criteria established by FAS 144 to be included in discontinued operations. Therefore, in accordance with FAS 144, the results of operations and gain on sale of real estate for the 73 sold industrial properties that meet the criteria established by FAS 144 are included in discontinued operations. The results of operations and gain on sale of real estate for the nine industrial properties and several land parcels that do not meet the criteria established by FAS 144 are included in continuing operations.
 
In 2006, the Consolidated Operating Partnership, through the Operating Partnership, sold 109 industrial properties comprising approximately 16.0 million square feet (unaudited) of GLA and several land parcels, totaling gross proceeds of $895,024. The gain on sale of real estate was approximately $202,817, of which $196,622 is shown in discontinued operations. The 109 sold industrial properties meet the criteria established by FAS 144 to be included in discontinued operations. Therefore, in accordance with FAS 144, the results of operations and gain on sale of real estate for the 109 sold industrial properties are included in discontinued operations. The results of operations and gain on sale of real estate for several land parcels that do not meet the criteria established by FAS 144 are included in continuing operations.
 
At December 31, 2006, the Consolidated Operating Partnership had 25 industrial properties comprising approximately 2.0 million square feet (unaudited) of GLA and certain land parcels held for sale. In accordance with FAS 144, the results of operations of the 25 industrial properties held for sale at December 31, 2006 are included in discontinued operations. There can be no assurance that such industrial properties held for sale will be sold.


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 
The following table discloses certain information regarding the industrial properties included in discontinued operations by the Consolidated Operating Partnership for the years ended December 31, 2006, 2005 and 2004.
 
                         
    Year Ended
 		    Year Ended
 		    Year Ended
 		 
    December 31,
 		    December 31,
 		    December 31,
 		 
    2006     2005     2004  
 
Total Revenues
  $ 35,141     $ 56,601     $ 62,105  
Property Expenses
    (10,586 )     (19,338 )     (21,836 )
Interest Expense
    —       (373 )     (609 )
Depreciation and Amortization
    (13,993 )     (19,543 )     (17,497 )
Provision for Income Taxes Allocable to Operations
    (2,629 )     (3,054 )     (2,346 )
Gain on Sale of Real Estate
    196,622       102,926       81,806  
Provision for Income Taxes Allocable Gain on Sale of Real Estate
    (47,511 )     (20,529 )     (8,659 )
                         
Income from Discontinued Operations
  $ 157,044     $ 96,690     $ 92,964  
                         


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

10.   Supplemental Information to Statements of Cash Flows

 
                         
    Year Ended
 		    Year Ended
 		    Year Ended
 		 
    December 31,
 		    December 31,
 		    December 31,
 		 
    2006     2005     2004  
 
Interest paid, net of capitalized interest
  $ 114,681     $ 107,397     $ 98,733  
                         
Interest capitalized
  $ 5,063     $ 3,271     $ 1,304  
                         
Income Taxes Paid
  $ 36,374     $ 36,080     $ 7,936  
                         
Supplemental schedule of noncash investing and financing activities:
                       
Distribution payable on general and limited partner units
  $ 36,613     $ 35,752     $ 34,255  
                         
Distribution payable on preferred units
  $ 5,935     $ 3,757     $ 1,232  
                         
Exchange of Limited partnership units for General partnership units:
                       
Limited partnership units
  $ (5,144 )   $ (1,951 )   $ (6,195 )
General partnership units
    5,144       1,951       6,195  
                         
    $ —     $ —     $ —  
                         
In conjunction with property and land acquisitions, the following assets and liabilities were assumed:
                       
Accounts payable and accrued expenses
  $ (1,284 )   $ (4,248 )   $ (3,181 )
                         
Issuance of Operating Partnership Units
  $ (1,288 )   $ (14,698 )   $ —  
                         
Mortgage debt
  $ (33,982 )   $ (11,545 )   $ (18,244 )
                         
Foreclosed property acquisition and write-off of a Mortgage loan receivable
  $ —     $ 3,870     $ —  
                         
Write off of fully depreciated assets
  $ 25,655     $ 59,920     $ 21,487  
                         
In conjunction with certain property sales, the Company provided seller financing or assigned a mortgage loan payable:
                       
Notes receivable
  $ 11,200     $ 42,543     $ 30,250  
                         
Mortgage note payable
  $ —     $ 13,242     $ —  
                         


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

11.   Earnings Per Unit (“EPU”)

 
The computation of basic and diluted EPU is presented below:
 
                         
    Year Ended
 		    Year Ended
 		    Year Ended
 		 
    December 31,
 		    December 31,
 		    December 31,
 		 
    2006     2005     2004  
 
Numerator:
                       
(Loss) Income from Continuing Operations
  $ (35,150 )   $ (15,289 )   $ 22,449  
Gain on Sale of Real Estate
    6,195       28,686       15,112  
Less: Provision for Income Taxes Allocable to Gain on Sale of Real Estate
    (2,119 )     (10,871 )     (5,371 )
Less: Preferred Unit Distributions
    (21,424 )     (10,688 )     (14,488 )
Less: Redemption of Preferred Units
    (672 )     —       (7,959 )
                         
(Loss) Income from Continuing Operations Available to Unitholders — For Basic and Diluted EPU
    (53,170 )     (8,162 )     9,743  
Income from Discontinued Operations
    207,184       120,273       103,969  
Less: Provision for Income Taxes Allocable to Discontinued Operations
    (50,140 )     (23,583 )     (11,005 )
                         
Net Income Available to Unitholders — For Basic and Diluted EPU
  $ 103,874     $ 88,528     $ 102,707  
                         
Denominator:
                       
Weighted Average Units Outstanding — Basic
    50,703,004       48,968,191       47,136,296  
Effect of Dilutive Securities of the Company that Result in the Issuance of General Partner Units:
                       
2011 Exchangeable Notes
    —       —       —  
Employee and Director Common Stock Options
    —       —       227,423  
Employee and Director Shares of Restricted Stock
    —       —       103,551  
                         
Weighted Average Units Outstanding — Diluted
    50,703,004       48,968,191       47,467,270  
                         
Basic EPU:
                       
(Loss) Income from Continuing Operations Available to Unitholders
  $ (1.05 )   $ (0.17 )   $ 0.21  
                         
Discontinued Operations, Net of Income Tax
  $ 3.10     $ 1.97     $ 1.97  
                         
Net Income Available to Unitholders
  $ 2.05     $ 1.81     $ 2.18  
                         
Diluted EPU:
                       
(Loss) Income from Continuing Operations Available to Unitholders
  $ (1.05 )   $ (0.17 )   $ 0.21  
                         
Discontinued Operations, Net of Income Tax
  $ 3.10     $ 1.97     $ 1.96  
                         
Net Income Available to Unitholders
  $ 2.05     $ 1.81     $ 2.16  
                         
 
Weighted average units — diluted are the same as weighted average units — basic for the years ended December 31, 2006 and 2005 as the dilutive effect of stock options and restricted stock was excluded because its inclusion would have been anti-dilutive to the loss from continuing operations available to unitholders. The


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

dilutive stock options and restricted stock excluded from the computation are 116,155 and 93,643, respectively, for the year ended December 31, 2006 and 141,625 and 82,888, respectively, for the year ended December 31, 2005.
 
Unvested restricted units of 778,535, 700,023, and 823,836 were outstanding as of December 31, 2006, 2005, and 2004, respectively. Unvested restricted units aggregating 109,517, 182,651, and 211,924 were anti-dilutive at December 31, 2006, 2005, and 2004, respectively, and accordingly, were excluded from dilution computations.
 
Additionally, options to purchase common stock of 381,976, 546,723, and 823,421 were outstanding as of December 31, 2006, 2005, and 2004, respectively. None of the options outstanding at December 31, 2006, 2005 and 2004 were antidilutive.
 
The 2011 Exchangeable Notes issued during 2006, which are convertible into common shares of the Company at a price of $50.93, were not included in the computation of diluted EPS for 2006 as the Company’s average stock price did not exceed the strike price of the conversion feature (see Note 6).
 
12.   Income Taxes
 
The components of income tax benefit (expense) for the Consolidated Operating Partnership’s taxable REIT subsidiary (the “TRS”) for the years ended December 31, 2006, 2005 and 2004 are comprised of the following:
 
                         
    2006     2005     2004  
 
Current:
                       
Federal
  $ (39,531 )   $ (19,265 )   $ (8,074 )
State
    (7,734 )     (4,519 )     (1,654 )
Deferred:
                       
Federal
    3,548       4,299       1,070  
State
    695       1,009       219  
                         
    $ (43,022 )   $ (18,476 )   $ (8,439 )
                         
 
In addition to the income tax expense/benefit recognized by the TRS, $317 and $1,956 of state income taxes was recognized by the Consolidated Operating Partnership and is included in income tax expense (benefit) on the Consolidated Operating Partnership’s consolidated statement of operations for the years ended December 31, 2006 and 2005.


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 
Deferred income taxes represent the tax effect of the temporary differences between the book and tax basis of assets and liabilities. Deferred tax assets (liabilities) of the TRS include the following as of December 31, 2006, 2005 and 2004:
 
                         
    2006     2005     2004  
 
Bad debt expense
  $ 119     $ 118     $ —  
Investment in partnerships
    2,519       648       —  
Fixed assets
    7,133       4,363       2,012  
Prepaid rent
    556       461       323  
Capitalized general and administrative expense under 263A
    2,408       2,696       818  
Deferred losses/gains
    968       878       334  
Mark-to-Market of interest rate protection agreements
    —       6       —  
Capitalized interest under 263A
    191       184       —  
Accrued contingency loss
    297       —       —  
                         
Total deferred tax assets
  $ 14,191     $ 9,354     $ 3,487  
                         
Straight-line rent
    (1,483 )     (923 )     (430 )
Build to suit development
    (100 )     (66 )     —  
                         
Total deferred tax liabilities
  $ (1,583 )   $ (989 )   $ (430 )
                         
Total net deferred tax asset
  $ 12,608     $ 8,365     $ 3,057  
                         
 
The TRS does not have any net operating loss carryforwards or tax credit carryforwards.
 
The TRS’s components of income tax (expense) benefit for the years ended December 31, 2006, 2005 and 2004 are as follows:
 
                         
    2006     2005     2004  
 
Tax expense associated with income from operations on sold properties which is included in discontinued operations
  $ (2,629 )   $ (3,054 )   $ (2,346 )
Tax expense associated with gains and losses on the sale of real estate which is included in discontinued operations
    (47,511 )     (20,529 )     (8,659 )
Tax expense associated with gains and losses on the sale of real estate
    (2,119 )     (10,871 )     (5,371 )
Income tax benefit
    9,237       15,978       7,937  
                         
Income tax expense
  $ (43,022 )   $ (18,476 )   $ (8,439 )
                         


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The income tax benefit (expense) pertaining to income from continuing operations and gain on sale of real estate for the TRS differs from the amounts computed by applying the applicable federal statutory tax rate to income as follows:
 
                         
    2006     2005     2004  
 
Tax benefit at Federal rate related to continuing operations
  $ 5,873     $ 2,785     $ 2,256  
State tax benefit, net of Federal benefit
    700       403       282  
Meals and Entertainment
    (24 )     (19 )     (16 )
Prior year provision to return adjustments
    484       1,886       —  
Other
    85       52       44  
                         
Net Income tax benefit
  $ 7,118     $ 5,107     $ 2,566  
                         
 
13.   Future Rental Revenues
 
The Consolidated Operating Partnership’s properties are leased to tenants under net and semi-net operating leases. Minimum lease payments receivable, excluding tenant reimbursements of expenses, under non-cancelable operating leases in effect as of December 31, 2006 are approximately as follows:
 
         
2007
  $ 243,536  
2008
    207,817  
2009
    166,919  
2010
    125,579  
2011
    95,610  
Thereafter
    436,656  
         
Total
  $ 1,276,117  
         
 
14.   Stock Based Compensation
 
The Company maintains three stock incentive plans, (the “Stock Incentive Plans”) which are administered by the Compensation Committee of the Board of Directors of the Company. There are approximately 10.0 million shares reserved under the Stock Incentive Plans. Only officers, other employees of the Company, its Independent Directors and its affiliates generally are eligible to participate in the Stock Incentive Plans.
 
The Stock Incentive Plans authorize (i) the grant of stock options that qualify as incentive stock options under Section 422 of the Code, (ii) the grant of stock options that do not so qualify, (iii) restricted stock awards, (iv) performance share awards and (v) dividend equivalent rights. The exercise price of stock options is determined by the Compensation Committee. Special provisions apply to awards granted under the Stock Incentive Plans in the event of a change in control in the Company. As of December 31, 2006, stock options and restricted stock covering 1.2 million shares were outstanding and 2.3 million shares were available under


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the Stock Incentive Plans. At December 31, 2006 all outstanding stock options are vested. Stock option transactions are summarized as follows:
 
                                 
          Weighted
 		             
          Average
 		    Exercise
 		    Aggregate
 		 
          Exercise
 		    Price
 		    Intrinsic
 		 
    Shares     Price     per Share     Value  
 
Outstanding at December 31, 2004
    823,421     $ 30.74     $ 18.25-$33.15     $ 8,230  
Exercised
    (248,881 )   $ 29.57     $ 18.25-$33.13     $ 2,588  
Expired or Terminated
    (27,817 )   $ 30.71     $ 25.13-$33.13          
                                 
Outstanding at December 31, 2005
    546,723     $ 31.27     $ 22.75-$33.15     $ 3,954  
Exercised
    (125,780 )   $ 30.24     $ 22.75-$33.15     $ 1,846  
Expired or Terminated
    (38,967 )   $ 30.88     $ 27.25-$33.13          
                                 
Outstanding at December 31, 2006
    381,976     $ 31.65     $ 25.13-$33.15     $ 5,823  
                                 
 
The following table summarizes currently outstanding and exercisable options as of December 31, 2006:
 
                         
          Weighted
 		    Weighted
 		 
    Number
 		    Average
 		    Average
 		 
    Outstanding
 		    Remaining
 		    Exercise
 		 
Range of Exercise Price
  and Exercisable     Contractual Life     Price  
 
$25.13 - $30.53
    117,576       3.98       29.90  
$31.05 - $33.15
    264,400       3.45       32.42  
 
In September 1994, the Board of Directors approved and the Company adopted a 401(k)/Profit Sharing Plan. Under the Company’s 401(k)/Profit Sharing Plan, all eligible employees may participate by making voluntary contributions. The Company may make, but is not required to make, matching contributions. For the years ended December 31, 2006, 2005 and 2004, the Company, through the Operating Partnership, made matching contributions of approximately $451, $358, and $305, respectively.
 
For the twelve months ended December 31, 2006, 2005 and 2004, the Consolidating Operating Partnership awarded 319,374, 200,042 and 216,617 restricted stock awards to its employees and directors of the Consolidated Operating Partnership having a fair value at grant date of $12,152, $8,381 and $8,379 respectively. Restricted stock awards granted to employees generally vest over a period of three years and restricted stock awards granted to directors generally vest over a period or five or ten years. For the twelve months ended December 31, 2006, 2005 and 2004, the Consolidated Operating Partnership recognized $9,624, $8,845 and $6,869 in restricted stock amortization related to restricted stock awards, of which $1,323, $1,357, and $1,140 respectively, was capitalized in connection with development activities. At December 31, 2006, the Consolidated Operating Partnership has $18,541 in unearned compensation related to unvested restricted stock awards. The weighted average period that the unrecognized compensation is expected to be incurred is 1.84 years. The Consolidated Operating Partnership has not awarded options to employees or directors of the Consolidated Operating Partnership during the twelve months ended December 31, 2006, 2005 and 2004, and therefore no stock-based employee compensation expense related to options is included in net income available to unitholders.


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 
Restricted stock transactions for the years ended December 31, 2006 and 2005 are summarized as follows:
 
                 
          Weighted Average
 		 
          Grant Date
 		 
    Shares     Fair Value  
 
Outstanding at December 31, 2004
    823,836     $ 31.88  
Issued
    200,042     $ 41.89  
Vested
    (279,266 )   $ 32.78  
Forfeited
    (44,589 )   $ 34.37  
                 
Outstanding at December 31, 2005
    700,023     $ 34.23  
Issued
    319,374     $ 38.05  
Vested
    (217,168 )   $ 36.57  
Forfeited
    (23,694 )   $ 34.55  
                 
Outstanding at December 31, 2006
    778,535     $ 35.49  
                 
 
15.   Related Party Transactions
 
The Consolidated Operating Partnership periodically engages in transactions for which CB Richard Ellis, Inc. acts as a broker. A relative of one of the Company’s officers/Directors is an employee of CB Richard Ellis, Inc. For the years ended December 31, 2006, 2005 and 2004, this relative received brokerage commissions in the amount of $341, $285 and $29, respectively.
 
At December 31, 2006 the Consolidated Operating Partnership has a payable balance of $17,468 to wholly owned entities of the Company. At December 31, 2005 the Consolidated Operating Partnership has a payable balance of $12,166 to wholly owned entities of the Company. At December 31, 2004, the Consolidated Operating Partnership has a receivable balance of $9,650 from wholly owned entities of the Company.
 
16.   Commitments and Contingencies
 
In the normal course of business, the Consolidated Operating Partnership is involved in legal actions arising from the ownership of its properties. In management’s opinion, the liabilities, if any, that may ultimately result from such legal actions are not expected to have a materially adverse effect on the consolidated financial position, operations or liquidity of the Consolidated Operating Partnership.
 
Nine properties have leases granting the tenants options to purchase the property. Such options are exercisable at various times and at appraised fair market value or at a fixed purchase price in excess of the Consolidated Operating Partnership’s depreciated cost of the asset. The Consolidated Operating Partnership has no notice of any exercise of any tenant purchase option.
 
The Consolidated Operating Partnership has committed to the construction of certain industrial properties totaling approximately 2.9 million square feet (unaudited) of GLA. The estimated total construction costs are approximately $155,293 (unaudited). Of this amount, approximately $92,740 (unaudited) remains to be funded. There can be no assurance that the actual completion cost will not exceed the estimated completion cost stated above.
 
At December 31, 2006, the Consolidated Operating Partnership, through the Operating Partnership had 23 other letters of credit outstanding in the aggregate amount of $9,012. These letters of credit expire between March 31, 2007 and January 13, 2010.


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 
Ground and Operating Lease Agreements
 
Future minimum rental payments under the terms of all non-cancelable ground and operating leases under which the Consolidated Operating Partnership is the lessee, as of December 31, 2006, are as follows:
 
         
2007
  $ 2,561  
2008
    2,433  
2009
    1,984  
2010
    1,789  
2011
    1,715  
Thereafter
    31,167  
         
Total
  $ 41,649  
         
 
17.   Subsequent Events
 
On January 2, 2007, the Operating Partnership paid fourth quarter 2006 distributions of $53.91 per Unit on its Series C Preferred Units, totaling, in the aggregate, approximately $1,078; a distribution of $4,531.30 per Unit on its Series J Preferred Units, totaling, in the aggregate, approximately $2,719; and a distribution of $4,531.30 per Unit on its Series K Preferred Units, totaling, in the aggregate, approximately $906.
 
On January 22, 2007, the Operating Partnership paid a fourth quarter 2006 distribution of $.7100 per Unit, totaling approximately $36,613.
 
On February 28, 2007, the Operating Partnership declared a first quarter 2007 distribution of $.7100 per Unit which is payable on April 16, 2007. The Operating Partnership also declared a first quarter 2007 preferred unit distributions of $53.91 per Unit on its Series C Preferred Units totaling, in the aggregate, approximately $1,078, which is payable on April 2, 2007; a semi-annual distribution of $3,118.00 per Unit on its Series F Preferred Units, totaling, in the aggregate, approximately $1,559, which is payable on April 2, 2007; a semi-annual distribution of $3,618.00 per Unit on its Series G Preferred Units, totaling, in the aggregate, approximately $905, which is payable on April 2, 2007; a distribution of $4,531.30 per Unit on its Series J Preferred Units, totaling, in the aggregate, approximately $2,719, which is payable on April 2, 2007; and a distribution of $4,531.30 per Unit on its Series K Preferred Units, totaling, in the aggregate, approximately $906, which is payable on April 2, 2007.
 
From January 1, 2007 to February 22, 2007, the Company awarded 1,598 shares of restricted common stock to certain Directors. The Operating Partnership issued General Partner Units to the Company in the same amount. These shares of restricted common stock had a fair value of approximately $73 on the date of grant. The restricted common stock vests over five years. Compensation expense will be charged to earnings over the respective vesting period.
 
From January 1, 2007 to February 22, 2007, the Consolidated Operating Partnership acquired 53 industrial properties (including 41 properties in connection with the purchase of the 90% equity interest from the institutional investor in the September 1998 Joint Venture on January 31, 2007) and several land parcels for a total estimated investment of approximately $110,837. The Consolidated Operating Partnership also sold 14 industrial properties and several land parcels for approximately $74,430 of gross proceeds during this period.


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 
18.   Quarterly Financial Information (unaudited)
 
The following table summarizes quarterly financial information of the Consolidated Operating Partnership. The first, second and third fiscal quarters of 2006 and all fiscal quarters in 2005 have been reclassified in accordance with FAS 144.
 
                                 
    Year Ended December 31, 2006  
    First
 		    Second
 		    Third
 		    Fourth
 		 
    Quarter     Quarter     Quarter     Quarter  
 
Total Revenues
  $ 78,459     $ 82,277       85,138       100,615  
Equity in Income (Loss) of Joint Ventures
    (35 )     7,307       4,747       18,652  
Equity in Income Other Real Estate Partnerships
    4,888       17,950       4,507       6,186  
(Loss) Income from Continuing Operations, Net of Income Tax
    (15,876 )     887       (16,787 )     (3,374 )
Income from Discontinued Operations, Net of Income Tax
    40,693       34,106       48,141       34,104  
Gain (Loss) on Sale of Real Estate, Net of Income Tax
    982       1,475       1,728       (109 )
Net Income
    25,799       36,468       33,082       30,621  
Preferred Unit Distributions
    (5,019 )     (5,029 )     (5,442 )     (5,934 )
Redemption of Preferred Units
    (672 )     —       —       —  
                                 
Net Income Available to Unitholders
  $ 20,108     $ 31,439     $ 27,640     $ 24,687  
                                 
Basic Earnings Per Unit:
                               
Loss From Continuing Operations Available to Unitholders
  $ (0.41 )   $ (0.05 )   $ (0.40 )   $ (0.19 )
                                 
Income From Discontinued Operations
  $ 0.80     $ 0.67     $ 0.95     $ 0.67  
                                 
Net Income Available to Unitholders
  $ 0.40     $ 0.62     $ 0.54     $ 0.49  
                                 
Weighted Average Units Outstanding
    50,644       50,706       50,721       50,739  
                                 
Diluted Earnings Per Unit:
                               
Loss From Continuing Operations Available to Unitholders
  $ (0.41 )   $ (0.05 )   $ (0.40 )   $ (0.19 )
                                 
Income From Discontinued Operations
  $ 0.80     $ 0.67     $ 0.95     $ 0.67  
                                 
Net Income Available to Unitholders
  $ 0.40     $ 0.62     $ 0.54     $ 0.49  
                                 
Weighted Average Units Outstanding
    50,644       50,706       50,721       50,739  
                                 
 


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

                                 
    Year Ended December 31, 2005  
    First
 		    Second
 		    Third
 		    Fourth
 		 
    Quarter     Quarter     Quarter     Quarter  
 
Total Revenues
  $ 64,247     $ 63,290     $ 78,823     $ 80,293  
Equity in (Loss) Income of Joint Ventures
    (122 )     (98 )     3,977       (59 )
Equity in Income Other Real Estate Partnerships
    6,743       9,786       20,490       11,193  
(Loss) Income from Continuing Operations, Net of Income Tax
    (6,888 )     (6,025 )     5,039       (7,415 )
Income from Discontinued Operations, Net of Income Tax
    12,596       29,064       20,204       34,826  
Gain on Sale of Real Estate, Net of Income Tax
    12,967       1,766       1,540       1,542  
Net Income
    18,675       24,805       26,783       28,953  
Preferred Unit Distributions
    (2,310 )     (2,310 )     (2,310 )     (3,758 )
                                 
Net Income Available to Unitholders
  $ 16,365     $ 22,495     $ 24,473     $ 25,195  
                                 
Basic Earnings Per Unit:
                               
Income (Loss) From Continuing Operations Available to Unitholders
  $ 0.08     $ (0.13 )   $ 0.09     $ (0.19 )
                                 
Income From Discontinued Operations
  $ 0.26     $ 0.60     $ 0.41     $ 0.70  
                                 
Net Income Available to Unitholders
  $ 0.34     $ 0.46     $ 0.50     $ 0.51  
                                 
Weighted Average Units Outstanding
    48,625       48,759       49,042       49,436  
                                 
Diluted Earnings Per Unit:
                               
Income (Loss) From Continuing Operations Available to Unitholders
  $ 0.08     $ (0.13 )   $ 0.09     $ (0.19 )
                                 
Income From Discontinued Operations
  $ 0.26     $ 0.60     $ 0.41     $ 0.70  
                                 
Net Income Available to Unitholders
  $ 0.33     $ 0.46     $ 0.50     $ 0.51  
                                 
Weighted Average Units Outstanding
    48,934       48,759       49,248       49,436  
                                 

 
19.   Pro Forma Financial Information (unaudited)
 
The following Pro Forma Condensed Statements of Operations for the years ended December 31, 2006 and 2005 (the “Pro Forma Statements”) are presented as if the acquisition of 45 operating industrial properties between January 1, 2006 and December 31, 2006 had occurred at the beginning of each year. The Pro Forma Statements do not include acquisitions between January 1, 2006 and December 31, 2006 for industrial properties that were vacant upon purchase, were leased back to the sellers upon purchase or were subsequently sold before December 31, 2006. The Pro Forma Condensed Statements of Operations include all necessary adjustments to reflect the occurrence of purchases and sales of properties during 2006 as of January 1, 2006 and 2005.
 
The Pro Forma Statements are not necessarily indicative of what the Consolidated Operating Partnership’s results of operations would have been for the years ended December 31, 2006 and 2005, nor do they purport to present the future results of operations of the Consolidated Operating Partnership.

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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 
Pro Forma Condensed Statements of Operations
 
                 
    Year Ended
 		    Year Ended
 		 
    December 31,
 		    December 31,
 		 
    2006     2005  
 
Pro Forma Revenues
  $ 357,797     $ 312,202  
Pro Forma Loss from Continuing Operations Available to Common Stockholders, Net of Income Taxes
  $ (46,980 )   $ (48,206 )
Pro Forma Net Income Available to Common Stockholders
  $ 110,064     $ 48,484  
Per Share Data:
               
Basic Earnings Per Share Data:
               
Income from Continuing Operations Available to Common Stockholders
  $ (1.05 )   $ (1.14 )
                 
Net Income Available to Common Stockholders
  $ 2.50     $ 1.14  
                 
Diluted Earnings Per Share Data:
               
Income from Continuing Operations Available to Common Stockholders
  $ (1.05 )   $ (1.14 )
                 
Net Income Available to Common Stockholders
  $ 2.50     $ 1.14  
                 
 
The following Pro Forma Condensed Statements of Operations for the years ended December 31, 2005 and 2004 (the “Pro Forma Statements”) are presented as if the acquisition of 62 operating industrial properties between January 1, 2005 and December 31, 2005 had occurred at the beginning of each year. The Pro Forma Statements do not include acquisitions between January 1, 2005 and December 31, 2005 for industrial properties that were vacant upon purchase, were leased back to the sellers upon purchase or were subsequently sold before December 31, 2005. The Pro Forma Condensed Statements of Operations include all necessary adjustments to reflect the occurrence of purchases and sales of properties during 2005 as of January 1, 2005 and 2004.
 
The Pro Forma Statements are not necessarily indicative of what the Consolidated Operating Partnership’s results of operations would have been for the years ended December 31, 2005 and 2004, nor do they purport to present the future results of operations of the Consolidated Operating Partnership.
 


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FIRST INDUSTRIAL, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

                 
    Year Ended
 		    Year Ended
 		 
    December 31,
 		    December 31,
 		 
    2005     2004  
 
Pro Forma Revenues
  $ 341,238     $ 285,473  
Pro Forma Income from Continuing Operations Available to Common Stockholders, Net of Income Taxes
  $ 7,634     $ 28,089  
Pro Forma Net Income Available to Common Stockholders
  $ 93,379     $ 114,138  
Per Share Data:
               
Basic Earnings Per Share Data:
               
Income from Continuing Operations Available to Common Stockholders
  $ 0.16     $ 0.60  
                 
Net Income Available to Common Stockholders
  $ 1.91     $ 2.42  
                 
Diluted Earnings Per Share Data:
               
Income from Continuing Operations Available to Common Stockholders
  $ 0.16     $ 0.59  
                 
Net Income Available to Common Stockholders
  $ 1.90     $ 2.40  
                 

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Report of Independent Auditors
 
To the Partners of
the Other Real Estate Partnerships:
 
In our opinion, the accompanying combined balance sheets and the related combined statements of operations, of changes in partners’ capital and of cash flows present fairly, in all material respects, the financial position of the Other Real Estate Partnerships at December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2006 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Other Real Estate Partnerships’ management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
PricewaterhouseCoopers LLP
 
Chicago, Illinois
March 1, 2007


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OTHER REAL ESTATE PARTNERSHIPS
 
 
                 
    December 31,
 		    December 31,
 		 
    2006     2005  
    (Dollars in thousands)  
 
ASSETS
Assets:
               
Investment in Real Estate:
               
Land
  $ 60,401     $ 51,047  
Buildings and Improvements
    328,297       312,777  
Construction in Progress
    4,445       —  
Less: Accumulated Depreciation
    (62,920 )     (54,811 )
                 
Net Investment in Real Estate
    330,223       309,013  
                 
Cash and Cash Equivalents
    973       1,388  
Restricted Cash
    —       14,636  
Tenant Accounts Receivable, Net
    1,444       1,270  
Deferred Rent Receivable
    4,118       3,390  
Deferred Financing Costs, Net
    —       2  
Deferred Leasing Intangibles, Net
    10,306       7,659  
Mortgage Loans Receivable
    —       24,118  
Prepaid Expenses and Other Assets, Net
    42,522       35,403  
                 
Total Assets
  $ 389,586     $ 396,879  
                 
 
LIABILITIES AND PARTNERS’ CAPITAL
Liabilities:
               
Mortgage Loans Payable, Net
  $ —     $ 2,380  
Accounts Payable and Accrued Expenses
    8,193       5,649  
Deferred Leasing Intangibles, Net
    2,084       2,138  
Rents Received in Advance and Security Deposits
    4,747       4,705  
                 
Total Liabilities
    15,024       14,872  
                 
Commitments and Contingencies
    —       —  
Partners’ Capital
    374,562       382,007  
                 
Total Liabilities and Partners’ Capital
  $ 389,586     $ 396,879  
                 
 
The accompanying notes are an integral part of the financial statements.


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OTHER REAL ESTATE PARTNERSHIPS
 
 
                         
    Year Ended
 		    Year Ended
 		    Year Ended
 		 
    December 31,
 		    December 31,
 		    December 31,
 		 
    2006     2005     2004  
    (Dollars in thousands)  
 
Revenues:
                       
Rental Income
  $ 39,966     $ 30,715     $ 26,087  
Tenant Recoveries and Other Income
    9,580       8,140       7,019  
                         
Total Revenues
    49,546       38,855       33,106  
                         
Expenses:
                       
Property Expenses
  $ 14,586     $ 12,179     $ 11,314  
General and Administrative
    149       123       24  
Depreciation and Other Amortization
    19,642       12,867       9,556  
                         
Total Expenses
    34,377       25,169       20,894  
                         
Other Income/Expense:
                       
Interest Income
    610       342       1,604  
Interest Expense
    (11 )     (175 )     (178 )
Amortization of Deferred Financing Costs
    (2 )     (4 )     (3 )
                         
Total Other Income/Expense
    597       163       1,423  
Equity in Income of Joint Ventures
    —       —       1,461  
                         
Income from Continuing Operations
    15,766       13,849       15,096  
Income from Discontinued Operations (Including Gain on Sale of Real Estate of $16,820, $29,213, and $6,439 for the Years Ended December 31, 2006, 2005, and 2004)
    18,173       33,788       12,724  
                         
Income Before Gain on Sale of Real Estate
    33,939       47,637       27,820  
(Loss) Gain on Sale of Real Estate
    (124 )     863       1,643  
                         
Net Income
  $ 33,815     $ 48,500     $ 29,463  
                         
 
The accompanying notes are an integral part of the financial statements.


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OTHER REAL ESTATE PARTNERSHIPS
 
 
         
    Total  
    (Dollars in thousands)  
 
Balance at December 31, 2003
  $ 378,173  
Contributions
    68,770  
Distributions
    (133,490 )
Net Income
    29,463  
         
Balance at December 31, 2004
  $ 342,916  
Contributions
    123,344  
Distributions
    (132,753 )
Net Income
    48,500  
         
Balance at December 31, 2005
  $ 382,007  
Contributions
    43,516  
Distributions
    (84,776 )
Net Income
    33,815  
         
Balance at December 31, 2006
  $ 374,562  
         
 
The accompanying notes are an integral part of the financial statements.


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OTHER REAL ESTATE PARTNERSHIPS
 
 
                         
    Year Ended
 		    Year Ended
 		    Year Ended
 		 
    December 31, 2006     December 31, 2005     December 31, 2004  
    (Dollars in thousands)  
 
CASH FLOWS FROM OPERATING ACTIVITIES:
                       
Net Income
  $ 33,815     $ 48,500     $ 29,463  
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
                       
Depreciation
    13,995       12,749       10,963  
Amortization of Deferred Financing Costs
    2       4       3  
Other Amortization
    5,502       2,697       1,872  
Gain on Sale of Real Estate
    (16,696 )     (30,076 )     (8,082 )
Equity in Net Income of Joint Ventures
    —       —       (1,461 )
Provision for Bad Debt
    383       128       —  
Change in Tenant Accounts Receivable and Prepaid Expenses and Other Assets, Net
    (7,899 )     (20,007 )     8,645  
Change in Deferred Rent Receivable
    (1,062 )     (1,974 )     (1,517 )
Change in Accounts Payable and Accrued Expenses and Rents Received in Advance and Security Deposits
    (1,886 )     2,838       (14,963 )
                         
Net Cash Provided by Operating Activities
    26,154       14,859       24,923  
                         
CASH FLOWS FROM INVESTING ACTIVITIES:
                       
Purchase of and Additions to Investment in Real Estate
    (71,134 )     (74,734 )     (15,799 )
Net Proceeds from Sales of Investment in Real Estate
    49,758       81,249       26,017  
Repayment and Sale of Mortgage Loans Receivable
    23,787       25,185       66,631  
Funding of Mortgage Loan Receivable
    —       (22,936 )     (57,446 )
Decrease (Increase) in Restricted Cash
    14,636       (14,636 )     21,132  
                         
Net Cash Provided by (Used in) Investing Activities
    17,047       (5,872 )     40,535  
                         
CASH FLOWS FROM FINANCING ACTIVITIES:
                       
Contributions
    43,516       123,344       68,770  
Distributions
    (84,776 )     (132,753 )     (133,490 )
Repayments on Mortgage Loans Payable
    (2,356 )     (37 )     (34 )
                         
Net Cash Used in Financing Activities
    (43,616 )     (9,446 )     (64,754 )
                         
Net (Decrease) Increase in Cash and Cash Equivalents
    (415 )     (459 )     704  
Cash and Cash Equivalents, Beginning of Period
    1,388       1,847       1,143  
                         
Cash and Cash Equivalents, End of Period
  $ 973     $ 1,388     $ 1,847  
                         
 
The accompanying notes are an integral part of the financial statements.


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OTHER REAL ESTATE PARTNERSHIPS
 
 
1.   Organization and Formation of Partnerships
 
First Industrial, L.P. (the “Operating Partnership”) was organized as a limited partnership in the state of Delaware on November 23, 1993. The sole general partner is First Industrial Realty Trust, Inc. (the “Company”) with an approximate 87.3% and 86.8% partnership interest at December 31, 2006 and 2005, respectively. The Company is a real estate investment trust (“REIT”) as defined in the Internal Revenue Code. The Company’s operations are conducted primarily through the Operating Partnership. The limited partners of the Operating Partnership own, in the aggregate, approximately a 12.7% and 13.2% interest in the Operating Partnership at December 31, 2006 and 2005 respectively.
 
The Operating Partnership owns at least a 99% limited partnership interest in First Industrial Financing Partnership, L.P., First Industrial Securities, L.P., First Industrial Mortgage Partnership, L.P., First Industrial Pennsylvania, L.P., First Industrial Harrisburg, L.P., First Industrial Indianapolis, L.P., TK-SV, LTD. and FI Development Services, L.P. (together, the “Other Real Estate Partnerships”).
 
The general partners of the Other Real Estate Partnerships are separate corporations, each with at least a .01% general partnership interest in the Other Real Estate Partnerships for which it acts as a general partner. Each general partner of the Other Real Estate Partnerships is a wholly-owned subsidiary of the Company.
 
On a combined basis, as of December 31, 2006, the Other Real Estate Partnerships owned 100 industrial properties, containing an aggregate of approximately 9.4 million square feet (unaudited) of GLA.
 
Profits, losses and distributions of the Other Real Estate Partnerships are allocated to the general partner and the limited partners in accordance with the provisions contained within its restated and amended partnership agreement.
 
2.   Basis of Presentation
 
The combined financial statements of the Other Real Estate Partnerships at December 31, 2006 and 2005 and for each of the years ended December 31, 2006, 2005 and 2004 include the accounts and operating results of the Other Real Estate Partnerships on a combined basis.
 
3.   Summary of Significant Accounting Policies
 
In order to conform with generally accepted accounting principles, management, in preparation of the Other Real Estate Partnerships’ financial statements, is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of December 31, 2006 and 2005, and the reported amounts of revenues and expenses for each of the years ended December 31, 2006, 2005 and 2004. Actual results could differ from those estimates.
 
Cash and Cash Equivalents
 
Cash and cash equivalents include all cash and liquid investments with an initial maturity of three months or less. The carrying amount approximates fair value due to the short maturity of these investments.
 
Restricted Cash
 
Restricted cash includes gross proceeds from the sales of certain properties. These sales proceeds will be disbursed as the Other Real Estate Partnerships exchanges into properties under Section 1031 of the Internal Revenue Code. The carrying amount approximates fair value due to the short term maturity of these investments.


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OTHER REAL ESTATE PARTNERSHIPS
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

Investment in Real Estate and Depreciation
 
Investment in Real Estate is carried at cost. The Other Real Estate Partnerships reviews its properties on a quarterly basis for impairment and provides a provision if impairments are found. To determine if an impairment may exist, the Other Real Estate Partnerships reviews its properties and identifies those that have had either an event of change or event of circumstances warranting further assessment of recoverability (such as a decrease in occupancy). If further assessment of recoverability is needed, the Other Real Estate Partnerships estimates the future net cash flows expected to result from the use of the property and its eventual disposition, on an individual property basis. If the sum of the expected future net cash flows (undiscounted and without interest charges) is less than the carrying amount of the property, on an individual property basis, the Other Real Estate Partnerships will recognize an impairment loss based upon the estimated fair value of such property. For properties management considers held for sale, the Other Real Estate Partnerships ceases depreciating the properties and values the properties at the lower of depreciated cost or fair value, less costs to dispose. If circumstances arise that were previously considered unlikely, and as a result, the Other Real Estate Partnerships decides not to sell a property previously classified as held for sale, the Other Real Estate Partnerships will reclassify such property as held and used. Such property is measured at the lower of its carrying amount (adjusted for any depreciation and amortization expense that would have been recognized had the property been continuously classified as held and used) or fair value at the date of the subsequent decision not to sell. The Other Real Estate Partnerships determines fair value of properties that are held for use by discounting the future expected cash flows of the properties. To calculate the fair value of properties held for sale, the Other Real Estate Partnerships deduct from the estimated sales price of the property the estimated costs to close the sale.
 
Interest costs, real estate taxes, compensation costs of development personnel and other directly related expenses incurred during construction periods are capitalized and depreciated commencing with the date the property is substantially completed. Upon substantial completion, the Other Real Estate Partnerships reclassifies construction in progress to building, tenant improvement and leasing commissions. Such costs begin to be capitalized to the development projects from the point the Other Real Estate Partnerships is undergoing necessary activities to get the development ready for its intended use and ceases when the development projects are substantially completed and held available for occupancy. Depreciation expense is computed using the straight-line method based on the following useful lives:
 
     
    Years
 
Buildings and Improvements
  20 to 50
Land Improvements
  15
Furniture, Fixtures and Equipment
  5 to 10
 
Construction expenditures for tenant improvements, leasehold improvements and leasing commissions (inclusive of compensation costs of personnel attributable to leasing) are capitalized and amortized over the terms of each specific lease. Capitalized compensation costs of personnel attributable to leasing relate to time directly attributable to originating leases with independent third parties that result directly from and are essential to originating those leases and would not have been incurred had these leasing transactions not occurred. Repairs and maintenance are charged to expense when incurred. Expenditures for improvements are capitalized.
 
The Other Real Estate Partnerships account for all acquisitions entered into subsequent to June 30, 2001 in accordance with FAS 141. Upon acquisition of a property, the Other Real Estate Partnerships allocate the purchase price of the property based upon the fair value of the assets acquired, which generally consist of land, buildings, tenant improvements, leasing commissions and intangible assets including in-place leases, above market and below market leases and tenant relationships. The Other Real Estate Partnerships allocate the purchase price to the fair value of the tangible assets of an acquired property determined by valuing the


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OTHER REAL ESTATE PARTNERSHIPS
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

property as if it were vacant. Acquired above and below market leases are valued based on the present value of the difference between prevailing market rates and the in-place rates over the remaining lease term.
 
The purchase price is further allocated to in-place lease values and tenant relationships based on management’s evaluation of the specific characteristics of each tenant’s lease and the Other Real Estate Partnership’s overall relationship with the respective tenant. Acquired above and below market leases are amortized over the remaining non-cancelable terms of the respective leases as an adjustment to rental revenue on the Other Real Estate Partnerships’ combined statements of operations. The value of in-place lease intangibles and tenant relationships which are included as components of Deferred Leasing Intangibles included in total assets, are amortized over the remaining lease term and expected renewal periods in the respective lease as adjustments to depreciation and other amortization expense and is included in other assets. If a tenant terminates its lease early, the unamortized portion of leasing commissions, tenant improvements, above and below market leases, the in-place lease value and tenant relationships is immediately charged to expense.
 
Deferred Leasing Intangibles included in total assets consist of the following:
 
                 
    December 31,
 		    December 31,
 		 
    2006     2005  
 
In-Place Leases
  $ 8,081     $ 6,856  
Less: Accumulated Amortization
    (1,530 )     (407 )
                 
    $ 6,551     $ 6,449  
                 
Above Market Leases
  $ 1,884     $ 1,434  
Less: Accumulated Amortization
    (497 )     (224 )
                 
    $ 1,387     $ 1,210  
                 
Tenant Relationships
  $ 2,577     $ —  
Less: Accumulated Amortization
    (209 )     —  
                 
    $ 2,368     $ —  
                 
 
Deferred Leasing Intangibles included in total liabilities consist of the following:
 
                 
    December 31,
 		    December 31,
 		 
    2006     2005  
 
Below Market Leases
  $ 2,862     $ 2,652  
Less: Accumulated Amortization
    (778 )     (514 )
                 
    $ 2,084     $ 2,138  
                 
 
Amortization expense related to deferred leasing intangibles, was $2,718, $109 and $23 for the years ended December 31, 2006, 2005, and 2004 respectively. The Other Real Estate Partnerships will recognize net amortization expense related to the deferred leasing intangibles over the next five years as follows:
 
         
2007
  $ 2,919  
2008
    2,379  
2009
    1,969  
2010
    1,531  
2011
    1,206  


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OTHER REAL ESTATE PARTNERSHIPS
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

Deferred Financing Costs
 
Deferred financing costs include fees and costs incurred to obtain long-term financing. These fees and costs are being amortized over the terms of the respective loans. Accumulated amortization of deferred financing costs was $0 and $24 at December 31, 2006 and 2005, respectively. Unamortized deferred financing costs are written-off when debt is retired before the maturity date.
 
Revenue Recognition
 
Rental income is recognized on a straight-line method under which contractual rent increases are recognized evenly over the lease term. Tenant recovery income includes payments from tenants for real estate taxes, insurance and other property operating expenses and is recognized as revenues in the same period the related expenses are incurred by the Other Real Estate Partnerships.
 
Revenue is recognized on payments received from tenants for early lease terminations after the Other Real Estate Partnerships determine that all the necessary criteria have been met in accordance with FAS 13 “Accounting for Leases”.
 
Interest income on mortgage loans receivable is recognized based on the accrual method unless a significant uncertainty of collection exists. If a significant uncertainty exists, interest income is recognized as collected.
 
The Other Real Estate Partnerships provide an allowance for doubtful accounts against the portion of tenant accounts receivable which is estimated to be uncollectible. Accounts receivable in the combined balance sheets are shown net of an allowance for doubtful accounts of $0 and $0 as of December 31, 2006 and 2005, respectively. For accounts receivable the Other Real Estate Partnerships deem uncollectible, the Other Real Estate Partnerships uses the direct write-off method.
 
Gain on Sale of Real Estate
 
Gain on sale of real estate is recognized using the full accrual method. Gains relating to transactions which do not meet the full accrual method of accounting are deferred and recognized when the full accrual method of accounting criteria are met or by using the installment or deposit methods of profit recognition, as appropriate in the circumstances. As the assets are sold, their costs and related accumulated depreciation are written off with resulting gains or losses reflected in net income or loss. Estimated future costs to be incurred by the Other Real Estate Partnerships after completion of each sale are included in the determination of the gain on sales.
 
Income Taxes
 
In accordance with partnership taxation, each of the partners are responsible for reporting their share of taxable income or loss. The Other Real Estate Partnerships are subject to certain state and local income, excise and franchise taxes. The provision for such state and local taxes has been reflected in general and administrative expense in the combined statement of operations and has not been separately stated due to its insignificance.
 
Fair Value of Financial Instruments
 
The Other Real Estate Partnerships’ financial instruments include short-term investments, tenant accounts receivable, net, mortgage notes receivable, accounts payable, other accrued expenses and mortgage loans payable. The fair values of the short-term investments, tenant accounts receivable, net, mortgage notes receivable, accounts payable and other accrued expenses were not materially different from their carrying or contract values.


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OTHER REAL ESTATE PARTNERSHIPS
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

 
Discontinued Operations
 
On January 1, 2002, the Other Real Estate Partnerships adopted FAS 144. FAS 144 addresses financial accounting and reporting for the disposal of long lived assets. FAS 144 requires that the results of operations and gains or losses on the sale of property sold be presented in discontinued operations if both of the following criteria are met: (a) the operations and cash flows of the property have been (or will be) eliminated from the ongoing operations of the Other Real Estate Partnerships as a result of the disposal transaction and (b) the Other Real Estate Partnerships will not have any significant continuing involvement in the operations of the property after the disposal transaction. FAS 144 also requires prior period results of operations for these properties to be restated and presented in discontinued operations in prior combined statements of operations.
 
4.   Mortgage Loans Payable, Net
 
During 2006, the Other Real Estate Partnerships, through TK-SV, LTD., paid off and retired $2,380 of mortgage loans payable. As of December 31, 2006, the Other Real Estate Partnerships mortgage loans payable balance is $0.
 
5.   Acquisition and Development of Real Estate
 
In 2004, the Other Real Estate Partnerships acquired two industrial properties comprising approximately 0.3 million square feet (unaudited) of GLA and several land parcels for a total purchase price of approximately $9,290, excluding costs incurred in conjunction with the acquisition of the properties.
 
In 2005, the Other Real Estate Partnerships acquired twelve industrial properties comprising approximately 1.7 million square feet (unaudited) of GLA and several land parcels for a total purchase price of approximately $62,114, excluding costs incurred in conjunction with the acquisition of the properties.
 
In 2006, the Other Real Estate Partnerships acquired 12 industrial properties comprising approximately 0.8 million square feet (unaudited) of GLA and several land parcels for a total purchase price of approximately $47,314, excluding costs incurred in conjunction with the acquisition of the properties.
 
Intangible Assets Subject to Amortization in the Period of Acquisition
 
The fair value of in-place leases, above market leases, tenant relationships, and below market leases recorded as a result of the above acquisitions was $2,836, $582, $2,897, and $(894), respectively for the year ended December 31, 2006. The weighted average life in months of in-place leases, above market leases, tenant relationships, and below market leases recorded as a result of 2006 acquisitions was 79, 78, 81 and 17 months, respectively.
 
The fair value of in-place leases, above market leases, and below market leases recorded as a result of the above acquisitions was $5,817, $1,140, and $(2,347), respectively for the year ended December 31, 2005. The weighted average life in months of in-place leases, above market leases, and below market leases recorded as a result of 2005 acquisitions was 99, 65 and 13 months, respectively.
 
6.   Sale of Real Estate, Real Estate Held For Sale and Discontinued Operations
 
In 2004, the Other Real Estate Partnerships sold seven industrial properties comprising approximately 0.6 million square feet (unaudited) of GLA and several parcels of land. Gross proceeds from the sales of the seven industrial properties and several land parcels totaled approximately $31,849. The gain on sale of real estate was approximately $8,082, of which $6,439 is shown in discontinued operations. Six of the seven sold industrial properties met the criteria established by FAS 144 to be included in discontinued operations. Therefore, in accordance with FAS 144, the results of operations and gain on sale of real estate for the six sold industrial properties that met the criteria established by FAS 144 are included in discontinued operations.


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OTHER REAL ESTATE PARTNERSHIPS
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

The results of operations and gain on sale of real estate for the industrial property and several land parcels that do not meet the criteria established by FAS 144 are included in continuing operations.
 
In 2005, the Other Real Estate Partnerships sold 14 industrial properties comprising approximately 2.1 million square feet (unaudited) of GLA. Of the 14 industrial properties sold, one industrial property sale was made to a joint venture in which the Operating Partnership owns a 10% equity interest. Gross proceeds from the sales of the 14 industrial properties totaled approximately $94,472. The gain on sale of real estate was approximately $30,076, of which $29,213 is shown in discontinued operations. One of the 14 sold industrial properties did not meet the criteria established by FAS 144 to be included in discontinued operations. Therefore, in accordance with FAS 144, the results of operations and gain on sale of real estate for the 13 sold industrial properties that met the criteria established by FAS 144 are included in discontinued operations. The results of operations and gain on sale of real estate for the industrial property and several land parcels that do not meet the criteria established by FAS 144 are included in continuing operations.
 
In 2006, the Other Real Estate Partnerships sold 16 industrial properties comprising approximately 1.1 million square feet (unaudited) of GLA, totaling gross proceeds of approximately $51,776. The gain on sale of real estate was approximately $16,696, of which $16,820 is shown in discontinued operations. Therefore, in accordance with FAS 144, the results of operations and gain on sale of real estate for the 16 sold industrial properties are included in discontinued operations. The results of operations and gain on sale of real estate for the several land parcels that do not meet the criteria established by FAS 144 are included in continuing operations.
 
The following table discloses certain information regarding the industrial properties included in discontinued operations by the Other Real Estate Partnerships for the years ended December 31, 2006, 2005 and 2004.
 
                         
    Year Ended
 		    Year Ended
 		    Year Ended
 		 
    December 31,
 		    December 31,
 		    December 31,
 		 
    2006     2005     2004  
 
Total Revenues
  $ 2,308     $ 10,130     $ 13,000  
Property Expenses
    (559 )     (2,817 )     (3,605 )
Depreciation and Amortization
    (396 )     (2,738 )     (3,110 )
Gain on Sale of Real Estate
    16,820       29,213       6,439  
                         
Income from Discontinued Operations
  $ 18,173     $ 33,788     $ 12,724  
                         
 
In conjunction with certain property sales, the Other Real Estate Partnerships provide seller financing on behalf of certain buyers. At December 31, 2006 and 2005, the Other Real Estate Partnerships had mortgage notes receivable outstanding and accrued interest of approximately $0 and $24,118, respectively, which is included as a component of prepaid expenses and other assets.
 
7.   Supplemental Information to Statements of Cash Flows
 
Supplemental disclosure of cash flow information:
 
                         
    Year Ended
 		  Year Ended
 		  Year Ended
    December 31,
 		  December 31,
 		  December 31,
    2006   2005   2004
 
Interest paid
  $ 28     $ 175     $ 178  
                         
Interest capitalized
  $ 96     $ —     $ —  
                         


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OTHER REAL ESTATE PARTNERSHIPS
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

In conjunction with certain property sales, the Other Real Estate Partnerships provided seller financing on behalf of certain buyers:
 
                         
    2006   2005   2004
Notes Receivable
  $ —     $ 11,265     $ 4,450  
                         
 
8.   Future Rental Revenues
 
The Other Real Estate Partnerships’ properties are leased to tenants under net and semi-net operating leases. Minimum lease payments receivable, excluding tenant reimbursements of expenses, under noncancelable operating leases in effect as of December 31, 2006 are approximately as follows:
 
         
2007
  $ 37,118  
2008
    29,065  
2009
    22,116  
2010
    15,274  
2011
    10,584  
Thereafter
    23,575  
         
Total
  $ 137,732  
         
 
9.   Related Party Transactions
 
At December 31, 2006 and 2005 the Other Real Estate Partnerships have a receivable balance of $32,633 and $27,055 from wholly owned entities of the Company.
 
10.   Commitments and Contingencies
 
In the normal course of business, the Other Real Estate Partnerships are involved in legal actions arising from the ownership of its properties. In management’s opinion, the liabilities, if any, that may ultimately result from such legal actions are not expected to have a materially adverse effect on the combined financial position, operations or liquidity of the Other Real Estate Partnerships.
 
Three properties have a lease granting the tenant an option to purchase the property. Such options are exercisable at various times and at appraised fair market value or at a fixed purchase price generally in excess of the Other Real Estate Partnerships’ depreciated cost of the asset. The Other Real Estate Partnerships have no notice of any exercise of these tenant purchase options.
 
The Other Real Estate Partnerships have committed to the construction of one industrial property totaling approximately 0.3 million square feet (unaudited) of GLA. The estimated total construction cost is approximately $13,321 (unaudited). Of this amount, approximately $8,310 (unaudited) remains to be funded. There can be no assurance that the actual completion cost will not exceed the estimated completion cost stated above.
 
11.   Subsequent Events
 
During the period January 1, 2007 through February 22, 2007, the Other Real Estate Partnerships acquired two industrial properties for a total estimated investment of approximately $25,100.


113

Table of Contents

FIRST INDUSTRIAL, LP.
 
SCHEDULE III:
 
REAL ESTATE AND ACCUMULATED DEPRECIATION
As of December 31, 2006
 
                                                                                     
                          (s)
 		                                     
                          Costs
 		                                     
                          Capitalized
 		                                     
                          Subsequent to
 		                                     
                          Acquisition or
 		    Gross Amount Carried
 		                   
              (b)
 		    Completion
 		    At Close of Period 12/31/06     Accumulated
 		             
    Location
 		  (a)
 		    Initial Cost     and Valuation
 		          Building and
 		          Depreciation
 		    Year Built/
 		    Depreciable
 		 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/06     Renovated     Lives (Years)  
    (Dollars in thousands)  
 
Atlanta
                                                                                   
1650 GA Highway 155
  McDonough, GA             788       4,544       203       788       4,747       5,535       1,453       1991       (o )
14101 Industrial Park Boulevard
  Covington, GA             285       1,658       703       285       2,361       2,646       640       1984       (o )
801-804 Blacklawn Road
  Conyers, GA             361       2,095       859       361       2,954       3,316       879       1982       (o )
1665 Dogwood Drive
  Conyers, GA             635       3,662       481       635       4,143       4,778       1,335       1973       (o )
1715 Dogwood Drive
  Conyers, GA             288       1,675       1,042       288       2,717       3,005       544       1973       (o )
11235 Harland Drive
  Covington, GA             125       739       88       125       827       952       251       1988       (o )
4050 Southmeadow Parkway
  Atlanta, GA             401       2,813       328       425       3,117       3,542       972       1991       (o )
4051 Southmeadow Parkway
  Atlanta, GA             726       4,130       1,429       726       5,558       6,284       1,820       1989       (o )
4071 Southmeadow Parkway
  Atlanta, GA             750       4,460       1,094       828       5,476       6,304       1,705       1991       (o )
4081 Southmeadow Parkway
  Atlanta, GA             1,012       5,918       1,649       1,157       7,423       8,579       2,077       1989       (o )
370 Great Southwest Parkway
  Atlanta, GA             527       2,984       578       546       3,542       4,088       935       1986       (o )
955 Cobb Place
  Kennesaw, GA             780       4,420       627       804       5,023       5,827       1,161       1991       (o )
1256 Oakbrook Drive
  Norcross, GA             336       1,907       346       339       2,250       2,589       368       1984       (o )
1265 Oakbrook Drive
  Norcross, GA             307       1,742       636       309       2,377       2,686       310       1984       (o )
1266 Oakbrook Drive
  Norcross, GA             234       1,326       95       235       1,419       1,654       194       1984       (o )
1275 Oakbrook Drive
  Norcross, GA             400       2,269       235       403       2,502       2,905       352       1986       (o )
1280 Oakbrook Drive
  Norcross, GA             281       1,592       345       283       1,935       2,218       290       1986       (o )
1300 Oakbrook Drive
  Norcross, GA             420       2,381       185       423       2,563       2,986       342       1986       (o )
1325 Oakbrook Drive
  Norcross, GA             332       1,879       260       334       2,137       2,470       297       1986       (o )
1351 Oakbrook Drive
  Norcross, GA             370       2,099       173       373       2,270       2,643       316       1984       (o )
1346 Oakbrook Drive
  Norcross, GA             740       4,192       132       744       4,319       5,063       602       1985       (o )
1412 Oakbrook Drive
  Norcross, GA             313       1,776       209       315       1,983       2,298       300       1985       (o )
7800 The Bluffs
  Austell, GA             490       2,415       564       496       2,974       3,469       372       1995       (o )
Greenwood Industrrial Park
  McDonough, GA             1,550       —       7,485       1,550       7,485       9,035       441       2003       (o )
3060 South Park Blvd
  Ellenwood, GA             1,600       12,464       862       1,603       13,323       14,926       1,392       1992       (o )
46 Kent Drive
  Cartersville, GA             875       2,476       13       879       2,485       3,364       148       2001       (o )
100 Dorris Williams Industrial — King
  Atlanta, GA     (l )     401       3,754       42       406       3,791       4,197       343       2000       (o )
605 Stonehill Diver
  Atlanta, GA             485       1,979       24       490       1,998       2,488       316       1970       (o )


S-1

Table of Contents

                                                                                     
                          (s)
 		                                     
                          Costs
 		                                     
                          Capitalized
 		                                     
                          Subsequent to
 		                                     
                          Acquisition or
 		    Gross Amount Carried
 		                   
              (b)
 		    Completion
 		    At Close of Period 12/31/06     Accumulated
 		             
    Location
 		  (a)
 		    Initial Cost     and Valuation
 		          Building and
 		          Depreciation
 		    Year Built/
 		    Depreciable
 		 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/06     Renovated     Lives (Years)  
    (Dollars in thousands)  
 
6514 Warren Drive
  Norcross, GA             510       1,250       (165 )     513       1,082       1,595       57       1999       (o )
6544 Warren Drive
  Norcross, GA             711       2,310       52       715       2,358       3,073       140       1999       (o )
720 Industrial Boulevard
  Dublin, GA             250       2,632       39       255       2,667       2,921       389       1973/2000       (o )
5356 East Ponce DeLeon
  One Mountain, GA             604       3,888       7       610       3,890       4,499       284       1982       (o )
5390 East Ponce DeLeon
  One Mountain, GA             397       1,791       8       402       1,794       2,196       136       1982       (o )
1755 Enterprise Drive
  Buford, GA             712       2,118       41       716       2,155       2,871       45       1997       (o )
4555 Atwater Court(j)
  Buford, GA             881       3,550       34       885       3,580       4,465       63       1999       (o )
195 & 197 Collins Boulevard
  Athens, GA             1,410       5,344       64       1,426       5,393       6,818       747       1969/1984       (o )
Baltimore
                                                                                   
1820 Portal
  Baltimore, MD             884       4,891       455       899       5,330       6,230       1,151       1982       (o )
8900 Yellow Brick Road
  Baltimore, MD             447       2,473       409       475       2,853       3,328       624       1982       (o )
504 Advantage Way
  Aberdeen, MD             2,799       15,864       953       2,807       16,809       19,616       1,651       1987/92       (o )
9700 Martin Luther King Hwy
  Lanham, MD             700       1,920       729       700       2,649       3,349       447       1980       (o )
9730 Martin Luther King Hwy
  Lanham, MD             500       955       418       500       1,373       1,873       212       1980       (o )
4621 Boston Way
  Lanham, MD             1,100       3,070       614       1,100       3,684       4,784       469       1980       (o )
4720 Boston Way
  Lanham, MD             1,200       2,174       735       1,200       2,909       4,109       512       1979       (o )
2250 Randolph Drive
  Dulles, VA             3,200       8,187       36       3,208       8,215       11,423       654       1999       (o )
22630 Dulles Summit Court
  Dulles, VA             2,200       9,346       128       2,206       9,468       11,674       747       1998       (o )
4201 Forbes Boulevard(j)
  Lanham, MD             356       1,823       403       375       2,207       2,582       176       1989       (o )
4370-4383 Lottsford Vista Road
  Lanham, MD             279       1,358       247       296       1,588       1,884       109       1989       (o )
4400 Lottsford Vista Road
  Lanham, MD             351       1,955       112       372       2,046       2,418       140       1989       (o )
4420 Lottsford Vista Road
  Lanham, MD             539       2,196       165       568       2,332       2,900       187       1989       (o )
11204 McCormick Road
  Hunt Valley, MD             1,017       3,132       86       1,038       3,197       4,235       231       1962       (o )
11110 Pepper Road
  Hunt Valley, MD             918       2,529       252       938       2,762       3,699       152       1964       (o )
11100 Gilroy Road
  Hunt Valley, MD             901       1,455       43       919       1,480       2,399       107       1972       (o )
336 Clubhouse(j)
  Hunt Valley, MD             982       3,158       98       1,004       3,234       4,238       240       1976       (o )
10709 Gilroy Road
  Hunt Valley, MD             907       2,884       (173 )     913       2,705       3,618       195       1978       (o )
10947 Golden West
  Hunt Valley, MD             1,134       3,436       70       1,135       3,504       4,640       168       1983       (o )
7120-7132 Ambassador Road
  Hunt Valley, MD             829       1,329       145       847       1,456       2,303       117       1970       (o )
7142 Ambassador Road
  Hunt Valley, MD             924       2,876       86       942       2,945       3,886       119       1973       (o )
7144-7160 Ambassador Road
  Hunt Valley, MD             979       1,672       162       1,000       1,813       2,813       178       1974       (o )
7200 Rutherford(j)
  Hunt Valley, MD             1,032       2,150       145       1,054       2,274       3,327       211       1978       (o )
2700 Lord Baltimore(j)
  Hunt Valley, MD             875       1,826       261       897       2,065       2,962       169       1978       (o )
9800 Martin Luther King Hwy
  Lanham, MD             1,200       2,457       309       1,200       2,766       3,966       360       1978       (o )
Central Pennsylvania
                                                                                   

S-2

Table of Contents

                                                                                     
                          (s)
 		                                     
                          Costs
 		                                     
                          Capitalized
 		                                     
                          Subsequent to
 		                                     
                          Acquisition or
 		    Gross Amount Carried
 		                   
              (b)
 		    Completion
 		    At Close of Period 12/31/06     Accumulated
 		             
    Location
 		  (a)
 		    Initial Cost     and Valuation
 		          Building and
 		          Depreciation
 		    Year Built/
 		    Depreciable
 		 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/06     Renovated     Lives (Years)  
    (Dollars in thousands)  
 
16522 Hunters Green Parkway
  Hagerstown, MD     (m )     1,390       13,104       3,902       1,863       16,534       18,396       1,496       2000       (o )
Golden Eagle Business Center
  Harrisburg, PA             585       3,176       68       601       3,229       3,829       169       2000       (o )
37 Valleyview Business Park
  Jessup, PA             542       —       2,971       542       2,972       3,513       151       2004       (o )
320 Museum Road
  Washington, PA             201       1,819       56       208       1,868       2,076       128       1967/75       (o )
Chicago
                                                                                   
3600 West Pratt Avenue
  Lincolnwood, IL             1,050       5,767       1,158       1,050       6,925       7,975       2,179       1953/88       (o )
6750 South Sayre Avenue
  Bedford Park, IL             224       1,309       477       224       1,786       2,010       499       1975       (o )
585 Slawin Court
  Mount Prospect, IL             611       3,505       183       611       3,688       4,299       1,115       1992       (o )
2300 Windsor Court
  Addison, IL             688       3,943       590       696       4,525       5,221       1,482       1986       (o )
3505 Thayer Court
  Aurora, IL             430       2,472       71       430       2,543       2,973       788       1989       (o )
305-311 Era Drive
  Northbrook, IL             200       1,154       146       205       1,296       1,501       396       1978       (o )
12241 Melrose Street
  Franklin Park, IL             332       1,931       1,915       469       3,709       4,178       1,290       1969       (o )
11939 S Central Avenue
  Alsip, IL             1,208       6,843       2,523       1,305       9,268       10,573       2,132       1972       (o )
405 East Shawmut
  LaGrange, IL             368       2,083       359       387       2,422       2,809       606       1965       (o )
1010-50 Sesame Street
  Bensenville, IL             979       5,546       2,306       1,048       7,782       8,831       1,500       1976       (o )
7501 S. Pulaski
  Chicago, IL             318       2,038       767       318       2,805       3,123       590       1975/86       (o )
385 Fenton Lane
  West Chicago, IL             868       4,918       554       884       5,455       6,340       1,451       1990       (o )
905 Paramount
  Batavia, IL             243       1,375       439       252       1,805       2,057       401       1977       (o )
1005 Paramount
  Batavia, IL             282       1,600       451       293       2,041       2,334       472       1978       (o )
2120-24 Roberts
  Broadview, IL             220       1,248       565       231       1,802       2,033       451       1960       (o )
700 Business Center Drive
  Mount Prospect, IL             270       1,492       297       288       1,771       2,059       243       1980       (o )
800 Business Center Drive
  Mount Prospect, IL             631       3,493       233       666       3,691       4,358       561       1988/99       (o )
580 Slawin Court
  Mount Prospect, IL             233       1,292       234       254       1,505       1,760       218       1985       (o )
1150 Feehanville Drive
  Mount Prospect, IL             260       1,437       131       273       1,555       1,829       247       1983       (o )
1331 Business Center Drive
  Mount Prospect, IL             235       1,303       177       255       1,460       1,716       219       1985       (o )
19W661 101st Street
  Lemont, IL             1,200       6,643       2,227       1,220       8,850       10,069       1,243       1988       (o )
175 Wall Street
  Glendale Heights, IL             427       2,363       162       433       2,519       2,952       307       1990       (o )
800-820 Thorndale Avenue(j)
  Bensenville, IL             751       4,159       323       761       4,473       5,233       455       1985       (o )
830-890 Supreme Drive
  Bensenville, IL             671       3,714       319       679       4,025       4,704       485       1981       (o )
1661 Feehanville Drive
  Mount Prospect, IL             985       5,455       1,159       1,044       6,555       7,599       1,096       1986       (o )
2250 Arthur Avenue
  Elk Grove Village, IL             800       1,543       (6 )     809       1,529       2,337       237       1973/86       (o )
1850 Touhy & 1158-60 McCage Ave
  Elk Grove Village, IL             1,500       4,842       57       1,514       4,885       6,399       573       1978       (o )
1088-1130 Thorndale Avenue(j)
  Bensenville, IL             2,103       3,674       4       2,108       3,673       5,781       291       1983       (o )
855-891 Busse(Route 83)
  Bensenville, IL             1,597       2,767       11       1,601       2,774       4,375       243       1983       (o )
1060-1074 W. Thorndale Ave.(j)
  Bensenville, IL             1,704       2,108       52       1,709       2,156       3,864       214       1982       (o )

S-3

Table of Contents

                                                                                     
                          (s)
 		                                     
                          Costs
 		                                     
                          Capitalized
 		                                     
                          Subsequent to
 		                                     
                          Acquisition or
 		    Gross Amount Carried
 		                   
              (b)
 		    Completion
 		    At Close of Period 12/31/06     Accumulated
 		             
    Location
 		  (a)
 		    Initial Cost     and Valuation
 		          Building and
 		          Depreciation
 		    Year Built/
 		    Depreciable
 		 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/06     Renovated     Lives (Years)  
    (Dollars in thousands)  
 
400 Crossroads Parkway
  Bolingbrook, IL             1,178       9,453       264       1,181       9,714       10,895       601       1988       (o )
7609 West Industrial Drive(j)
  Forest Park, IL             1,207       2,343       182       1,213       2,518       3,732       200       1974       (o )
7801 West Industrial Drive
  Forest Park, IL             1,215       3,020       19       1,220       3,034       4,254       249       1976       (o )
1111 Davis Road(j)
  Elgin, IL             998       1,859       646       1,046       2,458       3,503       245       1974/97       (o )
501 Airport Road
  Aurora, IL             694       —       5,267       694       5,268       5,961       659       2002       (o )
251 Airport Road
  Aurora, IL             983       —       6,675       983       6,675       7,658       990       2002       (o )
1900-1960 Devon Avenue
  Elk Grove Village, IL             1,154       2,552       319       1,167       2,858       4,025       309       1979       (o )
725 Kimberly Drive
  Carol Stream, IL             793       1,395       11       801       1,398       2,199       94       1987       (o )
17001 S. Vincennes
  Thornton, IL             497       504       29       513       518       1,030       64       1974       (o )
750 South Schmidt Road
  Bolingbrook, IL             1,894       14,416       105       1,907       14,507       16,415       208       1997       (o )
550 North West Frontage Road
  Bolingbrook, IL             2,210       23,889       324       2,240       24,183       26,423       311       2004       (o )
525 Crossroads Parkway
  Bolingbrook, IL             790       5,414       40       795       5,448       6,244       80       1998       (o )
Cincinnati
                                                                                   
9900-9970 Princeton
  Cincinnati, OH             545       3,088       2,137       566       5,203       5,769       1,524       1970       (o )
2940 Highland Avenue
  Cincinnati, OH             1,717       9,730       2,279       1,772       11,954       13,726       3,577       1969/74       (o )
4700-4750 Creek Road
  Blue Ash, OH             1,080       6,118       703       1,109       6,791       7,900       1,966       1960       (o )
12072 Best Place
  Springboro, OH             426       —       3,177       443       3,160       3,604       710       1984       (o )
901 Pleasant Valley Drive
  Springboro, OH             304       1,721       244       316       1,954       2,269       425       1984/94       (o )
4440 Mulhauser Road
  Cincinnati, OH             655       39       5,796       655       5,835       6,490       1,395       1999       (o )
4434 Mulhauser Road
  Cincinnati, OH             444       16       4,858       463       4,854       5,318       977       1999       (o )
9449 Glades Drive
  Hamilton, OH             465       —       4,106       477       4,094       4,571       673       1999       (o )
420 Wars Corner Road
  Loveland, OH             600       1,083       1,040       606       2,117       2,723       393       1985       (o )
422 Wards Corner Road
  Loveland, OH             600       1,811       468       605       2,274       2,879       527       1985       (o )
4436 Muhlhauser Road
  Hamilton, OH             630       —       5,669       630       5,670       6,299       916       2001       (o )
4438 Muhlhauser Road
  Hamilton, OH             779       —       7,156       779       7,156       7,935       1,020       2000       (o )
4663 Dues Drive(j)
  West Chester, OH             858       2,273       1,203       875       3,460       4,334       456       1972       (o )
Cleveland
                                                                                   
30311 Emerald Valley Parkway(j)
  Glenwillow, OH             681       11,838       176       691       12,003       12,694       233       2005       (o )
30333 Emerald Valley Parkway
  Glenwillow, OH             466       5,913       (363 )     475       5,541       6,016       121       2004       (o )
7800 Cochran Road
  Glenwillow, OH             972       7,033       65       980       7,090       8,070       155       1999       (o )
7900 Cochran Road
  Glenwillow, OH             775       6,244       205       801       6,424       7,224       131       2003       (o )
7905 Cochran Road
  Glenwillow, OH             920       6,174       173       945       6,322       7,267       147       2001       (o )
30600 Carter Street(j)
  Solon, OH             989       3,492       102       1,022       3,561       4,583       183       1970       (o )
Columbus
                                                                                   
3800 Lockbourne Industrial Pkwy
  Columbus, OH             1,045       6,421       21       1,045       6,442       7,486       1,718       1986       (o )

S-4

Table of Contents

                                                                                     
                          (s)
 		                                     
                          Costs
 		                                     
                          Capitalized
 		                                     
                          Subsequent to
 		                                     
                          Acquisition or
 		    Gross Amount Carried
 		                   
              (b)
 		    Completion
 		    At Close of Period 12/31/06     Accumulated
 		             
    Location
 		  (a)
 		    Initial Cost     and Valuation
 		          Building and
 		          Depreciation
 		    Year Built/
 		    Depreciable
 		 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/06     Renovated     Lives (Years)  
    (Dollars in thousands)  
 
3880 Groveport Road
  Columbus, OH             1,955       12,154       616       1,955       12,770       14,725       3,497       1986       (o )
1819 North Walcutt Road
  Columbus, OH             637       4,590       (322 )     634       4,271       4,905       1,239       1973       (o )
4300 Cemetary Road
  Hillard, OH             764       6,248       (5,628 )     764       620       1,384       10       1968/74       (o )
4115 Leap Road(c)
  Hillard, OH             756       4,297       815       756       5,111       5,867       1,022       1977       (o )
3300 Lockbourne
  Columbus, OH             708       3,920       1,504       710       5,422       6,132       1,269       1964       (o )
1076 Pittsburgh Drive
  Delaware, OH     (n )     2,497       5,103       37       2,505       5,132       7,637       426       1996       (o )
6150 Huntley Road
  Columbus, OH             986       5,162       17       990       5,175       6,165       274       2002       (o )
4600 S. Hamilton Road
  Groveport, OH             681       5,941       55       688       5,989       6,677       42       1996/2003       (o )
Dallas/Fort Worth
                                                                                   
1275-1281 Roundtable Drive
  Dallas, TX             117       839       53       117       892       1,009       210       1966       (o )
2406-2416 Walnut Ridge
  Dallas, TX             178       1,006       294       183       1,295       1,478       325       1978       (o )
1324-1343 Roundtable Drive
  Dallas, TX             178       1,006       227       184       1,227       1,411       273       1972       (o )
2401-2419 Walnut Ridge
  Dallas, TX             148       839       119       153       953       1,106       234       1978       (o )
900-906 Great Southwest Pkwy
  Arlington, TX             237       1,342       596       270       1,905       2,175       444       1972       (o )
3000 West Commerce
  Dallas, TX             456       2,584       530       469       3,101       3,570       681       1980       (o )
3030 Hansboro
  Dallas, TX             266       1,510       419       276       1,920       2,195       410       1971       (o )
405-407 113th
  Arlington, TX             181       1,026       462       185       1,484       1,669       308       1969       (o )
816 111th Street
  Arlington, TX             251       1,421       224       258       1,638       1,896       417       1972       (o )
7341 Dogwood Park
  Richland Hills, TX             79       435       237       84       666       750       197       1973       (o )
7427 Dogwood Park
  Richland Hills, TX             96       532       571       102       1,098       1,200       203       1973       (o )
7348-54 Tower Street
  Richland Hills, TX             88       489       213       94       696       790       147       1978       (o )
7370 Dogwood Park
  Richland Hills, TX             91       503       97       96       594       691       145       1987       (o )
7339-41 Tower Street
  Richland Hills, TX             98       541       97       104       632       735       123       1980       (o )
7437-45 Tower Street
  Richland Hills, TX             102       563       72       108       629       736       128       1977       (o )
7331-59 Airport Freeway
  Richland Hills, TX             354       1,958       394       372       2,333       2,706       539       1987       (o )
7338-60 Dogwood Park
  Richland Hills, TX             106       587       122       112       704       816       155       1978       (o )
7450-70 Dogwood Park
  Richland Hills, TX             106       584       122       112       700       812       166       1985       (o )
7423-49 Airport Freeway
  Richland Hills, TX             293       1,621       331       308       1,936       2,245       437       1985       (o )
7400 Whitehall Street
  Richland Hills, TX             109       603       91       115       688       804       148       1994       (o )
1602-1654 Terre Colony
  Dallas, TX             458       2,596       214       468       2,800       3,268       547       1981       (o )
3330 Duncanville Road
  Dallas, TX             197       1,114       28       199       1,139       1,338       187       1987       (o )
6851-6909 Snowden Road
  Fort Worth, TX             1,025       5,810       480       1,038       6,277       7,315       1,104       1985/86       (o )
2351-2355 Merritt Drive
  Garland, TX             101       574       134       103       706       809       145       1986       (o )
701-735 North Plano Road
  Richardson, TX             696       3,944       152       705       4,087       4,792       682       1972/94       (o )
2220 Merritt Drive
  Garland, TX             352       1,993       638       356       2,627       2,983       391       1986/2000       (o )

S-5

Table of Contents

                                                                                     
                          (s)
 		                                     
                          Costs
 		                                     
                          Capitalized
 		                                     
                          Subsequent to
 		                                     
                          Acquisition or
 		    Gross Amount Carried
 		                   
              (b)
 		    Completion
 		    At Close of Period 12/31/06     Accumulated
 		             
    Location
 		  (a)
 		    Initial Cost     and Valuation
 		          Building and
 		          Depreciation
 		    Year Built/
 		    Depreciable
 		 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/06     Renovated     Lives (Years)  
    (Dollars in thousands)  
 
2010 Merritt Drive
  Garland, TX             350       1,981       469       354       2,445       2,799       390       1986       (o )
2363 Merritt Drive
  Garland, TX             73       412       117       74       529       602       85       1986       (o )
2447 Merritt Drive
  Garland, TX             70       395       89       71       483       554       81       1986       (o )
2465-2475 Merritt Drive
  Garland, TX             91       514       158       92       671       763       90       1986       (o )
2485-2505 Merritt Drive
  Garland, TX             431       2,440       415       436       2,849       3,285       427       1986       (o )
2081 Hutton Drive — Bldg 1(d)
  Carrolton, TX             448       2,540       465       453       3,000       3,453       531       1981       (o )
2150 Hutton Drive
  Carrolton, TX             192       1,089       514       194       1,601       1,795       306       1980       (o )
2110 Hutton Drive
  Carrolton, TX             374       2,117       487       377       2,600       2,977       417       1985       (o )
2025 McKenzie Drive
  Carrolton, TX             437       2,478       156       442       2,629       3,071       458       1985       (o )
2019 McKenzie Drive
  Carrolton, TX             502       2,843       529       507       3,368       3,874       524       1985       (o )
1420 Valwood Parkway — Bldg 1(c)
  Carrolton, TX             460       2,608       710       466       3,313       3,778       498       1986       (o )
1620 Valwood Parkway(d)
  Carrolton, TX             1,089       6,173       1,190       1,100       7,352       8,452       1,333       1986       (o )
1505 Luna Road — Bldg II
  Carrolton, TX             167       948       180       169       1,126       1,294       200       1988       (o )
1625 West Crosby Road
  Carrolton, TX             617       3,498       739       631       4,223       4,854       840       1988       (o )
2029-2035 McKenzie Drive
  Carrolton, TX             306       1,870       997       306       2,867       3,173       802       1985       (o )
1840 Hutton Drive(c)
  Carrolton, TX             811       4,597       687       819       5,277       6,095       791       1986       (o )
1420 Valwood Pkwy — Bldg II
  Carrolton, TX             373       2,116       343       377       2,455       2,832       387       1986       (o )
2015 McKenzie Drive
  Carrolton, TX             510       2,891       321       516       3,206       3,722       481       1986       (o )
2105 McDaniel Drive
  Carrolton, TX             502       2,844       735       507       3,573       4,080       555       1986       (o )
2009 McKenzie Drive
  Carrolton, TX             476       2,699       482       481       3,176       3,657       527       1987       (o )
1505 Luna Road — Bldg I
  Carrolton, TX             521       2,953       579       529       3,524       4,053       558       1988       (o )
900-1100 Avenue S
  Grand Prairie, TX             623       3,528       324       629       3,846       4,474       576       1985       (o )
15001 Trinity Blvd
  Ft. Worth, TX             529       2,998       50       534       3,043       3,578       329       1984       (o )
Plano Crossing(e)
  Plano, TX             1,961       11,112       346       1,981       11,437       13,418       1,244       1998       (o )
7413A-C Dogwood Park
  Richland Hills, TX             110       623       106       111       728       839       76       1990       (o )
7450 Tower Street
  Richland Hills, TX             36       204       191       36       394       431       50       1977       (o )
7436 Tower Street
  Richland Hills, TX             57       324       161       58       485       543       60       1979       (o )
7501 Airport Freeway
  Richland Hills, TX             113       638       50       115       686       800       91       1983       (o )
7426 Tower Street
  Richland Hills, TX             76       429       105       76       533       610       49       1978       (o )
7427-7429 Tower Street
  Richland Hills, TX             75       427       27       76       453       529       48       1981       (o )
2840-2842 Handley Ederville Rd
  Richland Hills, TX             112       635       58       113       692       805       78       1977       (o )
7451-7477 Airport Freeway
  Richland Hills, TX             256       1,453       155       259       1,605       1,864       212       1984       (o )
7415 Whitehall Street
  Richland Hills, TX             372       2,107       148       375       2,251       2,627       258       1986       (o )
7450 Whitehall Street
  Richland Hills, TX             104       591       30       105       620       725       64       1978       (o )
7430 Whitehall Street
  Richland Hills, TX             143       809       15       144       822       966       89       1985       (o )

S-6

Table of Contents

                                                                                     
                          (s)
 		                                     
                          Costs
 		                                     
                          Capitalized
 		                                     
                          Subsequent to
 		                                     
                          Acquisition or
 		    Gross Amount Carried
 		                   
              (b)
 		    Completion
 		    At Close of Period 12/31/06     Accumulated
 		             
    Location
 		  (a)
 		    Initial Cost     and Valuation
 		          Building and
 		          Depreciation
 		    Year Built/
 		    Depreciable
 		 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/06     Renovated     Lives (Years)  
    (Dollars in thousands)  
 
7420 Whitehall Street
  Richland Hills, TX             110       621       35       111       655       766       80       1985       (o )
300 Wesley Way
  Richland Hills, TX             208       1,181       17       211       1,196       1,407       128       1995       (o )
825-827 Avenue H(c)
  Arlington, TX             600       3,006       300       604       3,302       3,906       395       1979       (o )
1013-31 Avenue M
  Grand Prairie, TX             300       1,504       66       302       1,568       1,870       180       1978       (o )
1172-84 113th Street(c)
  Grand Prairie, TX             700       3,509       59       704       3,564       4,268       347       1980       (o )
1200-16 Avenue H(c)
  Arlington, TX             600       2,846       30       604       2,873       3,476       311       1981/82       (o )
1322-66 N. Carrier Parkway(d)
  Grand Prairie, TX             1,000       5,012       73       1,006       5,079       6,085       522       1979       (o )
2401-2407 Centennial Dr. 
  Arlington, TX             600       2,534       141       604       2,672       3,275       287       1977       (o )
3111 West Commerce Street
  Dallas, TX             1,000       3,364       53       1,011       3,405       4,417       390       1979       (o )
4201 Kellway
  Addison, TX             306       1,342       31       317       1,361       1,679       86       1980       (o )
9150 West Royal Lane(j)
  Irving, TX             818       3,767       234       820       3,999       4,819       260       1985       (o )
13800 Senlac Drive
  Farmers Ranch, TX             823       4,042       12       825       4,052       4,877       324       1988       (o )
801-831 S. Great Southwest Pkwy(j)(y)
  Grand Prairie, TX             2,581       16,556       401       2,586       16,952       19,538       1,829       1975       (o )
801-842 Heinz Way(j)
  Grand Prairie, TX             599       3,327       74       601       3,399       4,000       250       1977       (o )
901-937 Heinz Way
  Grand Prairie, TX             493       2,823       (62 )     481       2,773       3,254       238       1997       (o )
2104 Hutton Drive
  Carrolton, TX             246       1,393       172       249       1,563       1,811       243       1990       (o )
7451 Dogwood Park
  Richland Hills, TX             133       753       195       134       947       1,081       209       1977       (o )
2900 Avenue E(j)
  Arlington, TX             296       —       1,936       296       1,936       2,232       88       1968       (o )
5801 Martin Luther King Blvd
  Lubbock, TX             1,119       35,324       74       1,125       35,391       36,516       1,163       2000       (o )
3730 Wheeler Avenue
  Fort Smith, AR             720       2,800       27       726       2,822       3,547       19       1960/97       (o )
Denver
                                                                                   
7100 North Broadway — 1
  Denver, CO             201       1,141       380       217       1,505       1,722       401       1978       (o )
7100 North Broadway — 2
  Denver, CO             203       1,150       264       204       1,413       1,617       347       1978       (o )
7100 North Broadway — 3
  Denver, CO             139       787       134       140       920       1,060       232       1978       (o )
7100 North Broadway — 5
  Denver, CO             178       1,018       218       178       1,236       1,414       288       1978       (o )
7100 North Broadway — 6
  Denver, CO             269       1,526       304       271       1,828       2,099       464       1978       (o )
20100 East 32nd Avenue Parkway
  Aurora, CO             314       1,888       168       314       2,055       2,370       624       1997       (o )
700 West 48th Street
  Denver, CO             302       1,711       429       307       2,135       2,442       611       1984       (o )
702 West 48th Street
  Denver, CO             135       763       103       139       861       1,000       220       1984       (o )
6425 North Washington
  Denver, CO             374       2,118       326       385       2,433       2,817       627       1983       (o )
3370 North Peoria Street
  Aurora, CO             163       924       106       163       1,030       1,193       263       1978       (o )
3390 North Peoria Street
  Aurora, CO             145       822       104       147       924       1,071       245       1978       (o )
3508-3538 North Peoria Street
  Aurora, CO             260       1,472       505       264       1,973       2,237       612       1978       (o )
3568 North Peoria Street
  Aurora, CO             222       1,260       333       225       1,590       1,815       453       1978       (o )
4785 Elati
  Denver, CO             173       981       177       175       1,156       1,332       314       1972       (o )

S-7

Table of Contents

                                                                                     
                          (s)
 		                                     
                          Costs
 		                                     
                          Capitalized
 		                                     
                          Subsequent to
 		                                     
                          Acquisition or
 		    Gross Amount Carried
 		                   
              (b)
 		    Completion
 		    At Close of Period 12/31/06     Accumulated
 		             
    Location
 		  (a)
 		    Initial Cost     and Valuation
 		          Building and
 		          Depreciation
 		    Year Built/
 		    Depreciable
 		 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/06     Renovated     Lives (Years)  
    (Dollars in thousands)  
 
4770 Fox Street
  Denver, CO             132       750       128       134       875       1,009       233       1972       (o )
1550 W. Evans
  Denver, CO             385       2,200       466       385       2,665       3,050       613       1975       (o )
3871 Revere
  Denver, CO             361       2,047       534       368       2,574       2,942       607       1980       (o )
4570 Ivy Street
  Denver, CO             219       1,239       201       220       1,438       1,658       361       1985       (o )
5855 Stapleton Drive North
  Denver, CO             288       1,630       267       290       1,896       2,186       489       1985       (o )
5885 Stapleton Drive North
  Denver, CO             376       2,129       251       380       2,376       2,756       531       1985       (o )
5977-5995 North Broadway
  Denver, CO             268       1,518       529       271       2,044       2,315       490       1978       (o )
2952-5978 North Broadway
  Denver, CO             414       2,346       690       422       3,029       3,451       764       1978       (o )
4721 Ironton Street
  Denver, CO             232       1,313       1,520       236       2,827       3,064       1,236       1969       (o )
7100 North Broadway — 7
  Denver, CO             215       1,221       186       219       1,403       1,622       368       1985       (o )
7100 North Broadway — 8
  Denver, CO             79       448       109       82       554       636       132       1985       (o )
6804 East 48th Avenue
  Denver, CO             253       1,435       395       256       1,827       2,084       438       1973       (o )
445 Bryant Street
  Denver, CO             1,829       10,219       1,722       1,829       11,941       13,770       2,843       1960       (o )
East 47th Drive — A
  Denver, CO             441       2,689       (25 )     441       2,664       3,105       647       1997       (o )
9500 West 49th Street — A
  Wheatridge, CO             283       1,625       328       286       1,951       2,236       561       1997       (o )
9500 West 49th Street — B
  Wheatridge, CO             225       1,272       67       226       1,338       1,564       312       1997       (o )
9500 West 49th Street — C
  Wheatridge, CO             600       3,409       126       600       3,536       4,136       846       1997       (o )
9500 West 49th Street — D
  Wheatridge, CO             246       1,537       293       246       1,830       2,076       603       1997       (o )
8100 South Park Way — A
  Littleton, CO             423       2,507       220       423       2,727       3,150       669       1997       (o )
8100 South Park Way — B
  Littleton, CO             103       582       162       104       743       847       210       1984       (o )
8100 South Park Way — C
  Littleton, CO             568       3,219       223       575       3,435       4,010       785       1984       (o )
451-591 East 124th Avenue
  Littleton, CO             383       2,145       816       383       2,961       3,344       835       1979       (o )
608 Garrison Street
  Lakewood, CO             265       1,501       404       267       1,903       2,170       455       1984       (o )
610 Garrison Street
  Lakewood, CO             264       1,494       421       266       1,913       2,179       491       1984       (o )
15000 West 6th Avenue
  Golden, CO             913       5,174       1,230       916       6,402       7,318       1,690       1985       (o )
14998 West 6th Avenue Bldg E
  Golden, CO             565       3,199       224       568       3,419       3,987       870       1995       (o )
14998 West 6th Avenue Bldg F
  Englewood, CO             269       1,525       86       271       1,610       1,881       415       1995       (o )
12503 East Euclid Drive
  Denver, CO             1,208       6,905       1,024       1,208       7,930       9,138       2,058       1986       (o )
6547 South Racine Circle
  Denver, CO             739       4,241       173       739       4,415       5,153       1,021       1996       (o )
7800 East Iliff Avenue
  Denver, CO             188       1,067       255       190       1,320       1,510       311       1983       (o )
2369 South Trenton Way
  Denver, CO             292       1,656       193       294       1,848       2,141       480       1983       (o )
2422 S. Trenton Way
  Denver, CO             241       1,364       399       243       1,762       2,005       421       1983       (o )
2452 South Trenton Way
  Denver, CO             421       2,386       269       426       2,650       3,076       624       1983       (o )
1600 South Abilene
  Aurora, CO             465       2,633       140       467       2,771       3,238       650       1986       (o )
1620 South Abilene
  Aurora, CO             268       1,520       99       270       1,617       1,887       391       1986       (o )

S-8

Table of Contents

                                                                                     
                          (s)
 		                                     
                          Costs
 		                                     
                          Capitalized
 		                                     
                          Subsequent to
 		                                     
                          Acquisition or
 		    Gross Amount Carried
 		                   
              (b)
 		    Completion
 		    At Close of Period 12/31/06     Accumulated
 		             
    Location
 		  (a)
 		    Initial Cost     and Valuation
 		          Building and
 		          Depreciation
 		    Year Built/
 		    Depreciable
 		 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/06     Renovated     Lives (Years)  
    (Dollars in thousands)  
 
1640 South Abilene
  Aurora, CO             368       2,085       147       382       2,219       2,600       556       1986       (o )
13900 East Florida Ave
  Aurora, CO             189       1,071       81       190       1,151       1,341       276       1986       (o )
14401-14492 East 33rd Place
  Aurora, CO             440       2,519       288       440       2,806       3,246       675       1979       (o )
11701 East 53rd Avenue
  Denver, CO             416       2,355       193       422       2,542       2,964       575       1985       (o )
5401 Oswego Street
  Denver, CO             273       1,547       341       278       1,882       2,160       551       1985       (o )
3811 Joilet
  Denver, CO             735       4,166       448       752       4,597       5,349       977       1977       (o )
2650 West 2nd Avenue
  Denver, CO             221       1,252       190       223       1,440       1,663       349       1970       (o )
14818 West 6th Avenue Bldg A
  Golden, CO             468       2,799       300       468       3,099       3,567       754       1985       (o )
14828 West 6th Avenue Bldg B
  Golden, CO             503       2,942       566       503       3,508       4,011       943       1985       (o )
12055 E 49th Ave/4955 Peoria
  Denver, CO             298       1,688       439       305       2,120       2,424       487       1984       (o )
4940-4950 Paris
  Denver, CO             152       861       174       156       1,032       1,187       233       1984       (o )
4970 Paris
  Denver, CO             95       537       69       97       604       701       128       1984       (o )
7367 South Revere Parkway
  Englewood, CO             926       5,124       507       934       5,623       6,557       1,217       1997       (o )
8200 East Park Meadows Drive(c)
  Lone Tree, CO             1,297       7,348       1,236       1,304       8,577       9,881       1,548       1984       (o )
3250 Quentin(c)
  Aurora, CO             1,220       6,911       615       1,230       7,515       8,745       1,383       1984/2000       (o )
11585 E. 53rd Ave.(c)
  Denver, CO             1,770       10,030       1,052       1,780       11,072       12,852       1,644       1984       (o )
10500 East 54th Ave.(d)
  Denver, CO             1,253       7,098       890       1,260       7,980       9,240       1,347       1986       (o )
8835 W. 116th Street
  Broomfield, CO             1,151       6,523       869       1,304       7,239       8,543       725       2002       (o )
3101-3151 S. Platte River Dr. 
  Englewood, CO             2,500       8,549       184       2,504       8,729       11,233       825       1974       (o )
3155-3199 S. Platte River Dr. 
  Englewood, CO             1,700       7,787       199       1,702       7,983       9,686       691       1974       (o )
3201-3273 S. Platte River Dr. 
  Englewood, CO             1,600       6,592       170       1,602       6,760       8,362       708       1974       (o )
18150 E. 32nd Street
  Aurora, CO             563       3,188       1,164       572       4,344       4,915       995       2000       (o )
8820 W. 116th Street
  Broomfield, CO             338       1,918       543       372       2,426       2,798       245       2001       (o )
7005 East 46th Avenue
  Denver, CO             512       2,025       9       517       2,029       2,546       112       1996       (o )
Hilltop Business Center I — Bldg. B(j)
  Littleton, CO             739       —       3,622       781       3,580       4,361       621       2001       (o )
Jeffco Business Center A
  Broomfield, CO             312       —       1,358       370       1,299       1,670       163       2001       (o )
Park Centre A(j)
  Westminister, CO             441       —       4,238       441       4,238       4,679       820       2001       (o )
Park Centre B(j)
  Westminister, CO             374       —       3,048       374       3,047       3,422       582       2001       (o )
Park Centre C(j)
  Westminister, CO             374       —       3,031       374       3,031       3,405       614       2001       (o )
Park Centre D(j)
  Westminister, CO             441       —       3,762       441       3,762       4,203       629       2001       (o )
4001 Salazar Way
  Frederick, CO             1,271       6,577       26       1,276       6,598       7,874       253       1999       (o )
1690 S. Abilene
  Aurora, CO             406       2,814       37       411       2,846       3,257       100       1985       (o )
9586 Interstate 25 East Frontage
  Longmont, CO             898       5,038       377       967       5,346       6,313       346       1997       (o )
555 Corporate Circle
  Golden, CO             397       2,673       345       448       2,968       3,416       308       1996       (o )
Des Moines
                                                                                   

S-9

Table of Contents

                                                                                     
                          (s)
 		                                     
                          Costs
 		                                     
                          Capitalized
 		                                     
                          Subsequent to
 		                                     
                          Acquisition or
 		    Gross Amount Carried
 		                   
              (b)
 		    Completion
 		    At Close of Period 12/31/06     Accumulated
 		             
    Location
 		  (a)
 		    Initial Cost     and Valuation
 		          Building and
 		          Depreciation
 		    Year Built/
 		    Depreciable
 		 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/06     Renovated     Lives (Years)  
    (Dollars in thousands)  
 
1021 W. First Street, Hwy 93
  Sumner, IA             99       2,540       20       100       2,559       2,659       197       1990/1995       (o )
Detroit
                                                                                   
238 Executive Drive
  Troy, MI             52       173       554       100       679       779       606       1973       (o )
301 Executive Drive
  Troy, MI             71       293       731       133       962       1,095       789       1974       (o )
449 Executive Drive
  Troy, MI             125       425       1,030       218       1,362       1,580       1,073       1975       (o )
501 Executive Drive
  Troy, MI             71       236       678       129       856       985       487       1984       (o )
451 Robbins Drive
  Troy, MI             96       448       961       192       1,313       1,505       1,018       1975       (o )
1095 Crooks Road(j)
  Troy, MI             331       1,017       1,075       360       2,063       2,423       1,214       1986       (o )
1416 Meijer Drive
  Troy, MI             94       394       403       121       771       891       515       1980       (o )
1624 Meijer Drive
  Troy, MI             236       1,406       940       373       2,209       2,582       1,378       1984       (o )
1972 Meijer Drive
  Troy, MI             315       1,301       721       372       1,965       2,337       1,205       1985       (o )
1621 Northwood Drive
  Troy, MI             85       351       918       215       1,140       1,354       1,011       1977       (o )
1707 Northwood Drive
  Troy, MI             95       262       1,221       239       1,339       1,578       901       1983       (o )
1788 Northwood Drive
  Troy, MI             50       196       549       103       692       795       528       1977       (o )
1821 Northwood Drive
  Troy, MI             132       523       756       220       1,192       1,411       1,037       1977       (o )
1826 Northwood Drive
  Troy, MI             55       208       394       103       554       657       491       1977       (o )
1864 Northwood Drive
  Troy, MI             57       190       437       107       577       684       510       1977       (o )
2277 Elliott Avenue
  Troy, MI             48       188       501       104       633       737       512       1975       (o )
2451 Elliott Avenue
  Troy, MI             78       319       742       164       975       1,139       841       1974       (o )
2730 Research Drive
  Rochester Hills, MI             903       4,215       675       903       4,891       5,793       2,862       1988       (o )
2791 Research Drive
  Rochester Hills, MI             557       2,731       719       560       3,447       4,007       1,728       1991       (o )
2871 Research Drive
  Rochester Hills, MI             324       1,487       372       327       1,856       2,183       982       1991       (o )
3011 Research Drive
  Rochester Hills, MI             457       2,104       346       457       2,450       2,907       1,469       1988       (o )
2870 Technology Drive
  Rochester Hills, MI             275       1,262       290       279       1,548       1,827       886       1988       (o )
2900 Technology Drive
  Rochester Hills, MI             214       977       531       219       1,503       1,722       721       1992       (o )
2920 Technology Drive
  Rochester Hills, MI             153       671       196       153       868       1,020       444       1992       (o )
2930 Technology Drive
  Rochester Hills, MI             131       594       380       138       966       1,105       466       1991       (o )
2950 Technology Drive
  Rochester Hills, MI             178       819       223       185       1,035       1,220       552       1991       (o )
23014 Commerce Drive
  Farmington Hills, MI             39       203       169       56       355       411       225       1983       (o )
23028 Commerce Drive
  Farmington Hills, MI             98       507       247       125       727       852       464       1983       (o )
23035 Commerce Drive
  Farmington Hills, MI             71       355       262       93       596       688       374       1983       (o )
23042 Commerce Drive
  Farmintgon Hills, MI             67       277       313       89       568       657       357       1983       (o )
23065 Commerce Drive
  Farmington Hills, MI             71       408       227       93       613       706       378       1983       (o )
23070 Commerce Drive
  Farmington Hills, MI             112       442       673       125       1,102       1,227       810       1983       (o )
23079 Commerce Drive
  Farmington Hills, MI             68       301       316       79       605       685       348       1983       (o )

S-10

Table of Contents

                                                                                     
                          (s)
 		                                     
                          Costs
 		                                     
                          Capitalized
 		                                     
                          Subsequent to
 		                                     
                          Acquisition or
 		    Gross Amount Carried
 		                   
              (b)
 		    Completion
 		    At Close of Period 12/31/06     Accumulated
 		             
    Location
 		  (a)
 		    Initial Cost     and Valuation
 		          Building and
 		          Depreciation
 		    Year Built/
 		    Depreciable
 		 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/06     Renovated     Lives (Years)  
    (Dollars in thousands)  
 
23093 Commerce Drive
  Farmington Hills, MI             211       1,024       844       295       1,784       2,079       1,134       1983       (o )
23135 Commerce Drive
  Farmington Hills, MI             146       701       279       158       969       1,126       555       1986       (o )
23163 Commerce Drive
  Farmington Hills, MI             111       513       350       138       836       974       468       1986       (o )
23177 Commerce Drive
  Farmington Hills, MI             175       1,007       642       254       1,570       1,824       926       1986       (o )
23206 Commerce Drive
  Farmington Hills, MI             125       531       350       137       868       1,006       514       1985       (o )
23370 Commerce Drive
  Farmington Hills, MI             59       233       308       66       534       600       347       1980       (o )
32450 N Avis Drive
  Madison Heights, MI             281       1,590       193       286       1,778       2,064       469       1974       (o )
12707 Eckles Road
  Plymouth Township, MI             255       1,445       129       267       1,562       1,829       401       1990       (o )
9300-9328 Harrison Rd
  Romulus, MI             147       834       397       154       1,223       1,378       347       1978       (o )
9330-9358 Harrison Rd
  Romulus, MI             81       456       278       85       731       815       209       1978       (o )
28420-28448 Highland Rd
  Romulus, MI             143       809       220       149       1,023       1,172       305       1979       (o )
28450-28478 Highland Rd
  Romulus, MI             81       461       280       85       738       823       226       1979       (o )
28421-28449 Highland Rd
  Romulus, MI             109       617       291       114       903       1,017       258       1980       (o )
28451-28479 Highland Rd
  Romulus, MI             107       608       302       112       905       1,017       204       1980       (o )
28825-28909 Highland Rd
  Romulus, MI             70       395       236       73       627       700       162       1981       (o )
28933-29017 Highland Rd
  Romulus, MI             112       634       137       117       766       883       188       1982       (o )
28824-28908 Highland Rd
  Romulus, MI             134       760       244       140       997       1,137       256       1982       (o )
28932-29016 Highland Rd
  Romulus, MI             123       694       330       128       1,019       1,147       275       1982       (o )
9710-9734 Harrison Rd
  Romulus, MI             125       706       149       130       850       980       239       1987       (o )
9740-9772 Harrison Rd
  Romulus, MI             132       749       164       138       906       1,044       236       1987       (o )
9840-9868 Harrison Rd
  Romulus, MI             144       815       146       151       954       1,105       253       1987       (o )
9800-9824 Harrison Rd
  Romulus, MI             117       664       126       123       785       907       191       1987       (o )
29265-29285 Airport Dr
  Romulus, MI             140       794       220       147       1,008       1,155       258       1983       (o )
29185-29225 Airport Dr
  Romulus, MI             140       792       258       146       1,044       1,191       279       1983       (o )
29149-29165 Airport Dr
  Romulus, MI             216       1,225       377       226       1,592       1,818       380       1984       (o )
29101-29115 Airport Dr
  Romulus, MI             130       738       306       136       1,038       1,175       272       1985       (o )
29031-29045 Airport Dr
  Romulus, MI             124       704       144       130       842       972       216       1985       (o )
29050-29062 Airport Dr
  Romulus, MI             127       718       133       133       845       978       239       1986       (o )
29120-29134 Airport Dr
  Romulus, MI             161       912       244       169       1,149       1,317       277       1986       (o )
29200-29214 Airport Dr
  Romulus, MI             170       963       352       178       1,307       1,485       378       1985       (o )
9301-9339 Middlebelt Rd
  Romulus, MI             124       703       186       130       883       1,013       244       1983       (o )
26980 Trolley Industrial Drive
  Taylor, MI             450       2,550       1,014       463       3,551       4,014       925       1997       (o )
32975 Capitol Avenue
  Livonia, MI             135       748       332       144       1,071       1,215       251       1978       (o )
2725 S. Industrial Highway
  Ann Arbor, MI             660       3,654       470       704       4,080       4,784       850       1997       (o )
32920 Capitol Avenue
  Livonia, MI             76       422       88       82       504       586       109       1973       (o )

S-11

Table of Contents

                                                                                     
                          (s)
 		                                     
                          Costs
 		                                     
                          Capitalized
 		                                     
                          Subsequent to
 		                                     
                          Acquisition or
 		    Gross Amount Carried
 		                   
              (b)
 		    Completion
 		    At Close of Period 12/31/06     Accumulated
 		             
    Location
 		  (a)
 		    Initial Cost     and Valuation
 		          Building and
 		          Depreciation
 		    Year Built/
 		    Depreciable
 		 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/06     Renovated     Lives (Years)  
    (Dollars in thousands)  
 
11923 Brookfield Avenue
  Livonia, MI             120       665       495       128       1,151       1,280       431       1973       (o )
11965 Brookfield Avenue
  Livonia, MI             120       665       67       128       724       852       156       1973       (o )
13405 Stark Road
  Livonia, MI             46       254       136       49       387       436       97       1980       (o )
1170 Chicago Road
  Troy, MI             249       1,380       256       266       1,618       1,885       328       1983       (o )
1200 Chicago Road
  Troy, MI             268       1,483       274       286       1,739       2,025       350       1984       (o )
450 Robbins Drive
  Troy, MI             166       920       257       178       1,165       1,343       227       1976       (o )
1230 Chicago Road
  Troy, MI             271       1,498       156       289       1,636       1,925       349       1996       (o )
12886 Westmore Avenue
  Livonia, MI             190       1,050       194       202       1,232       1,434       257       1981       (o )
12898 Westmore Avenue
  Livonia, MI             190       1,050       235       202       1,273       1,475       283       1981       (o )
33025 Industrial Road
  Livonia, MI             80       442       130       85       567       652       133       1980       (o )
47711 Clipper Street
  Plymouth Township, MI             539       2,983       265       575       3,212       3,787       691       1996       (o )
32975 Industrial Road
  Livonia, MI             160       887       341       171       1,217       1,388       298       1984       (o )
32985 Industrial Road
  Livonia, MI             137       761       149       147       900       1,047       193       1985       (o )
32995 Industrial Road
  Livonia, MI             160       887       180       171       1,056       1,227       242       1983       (o )
12874 Westmore Avenue
  Livonia, MI             137       761       239       147       990       1,137       220       1984       (o )
33067 Industrial Road
  Livonia, MI             160       887       305       171       1,181       1,352       256       1984       (o )
1775 Bellingham
  Troy, MI             344       1,902       297       367       2,176       2,543       447       1987       (o )
1785 East Maple
  Troy, MI             92       507       86       98       587       685       126       1985       (o )
1807 East Maple
  Troy, MI             321       1,775       210       342       1,964       2,306       427       1984       (o )
980 Chicago
  Troy, MI             206       1,141       176       220       1,303       1,523       265       1985       (o )
1840 Enterprise Drive
  Rochester Hills, MI             573       3,170       371       611       3,503       4,114       767       1990       (o )
1885 Enterprise Drive
  Rochester Hills, MI             209       1,158       115       223       1,259       1,482       273       1990       (o )
1935-55 Enterprise Drive
  Rochester Hills, MI             1,285       7,144       701       1,371       7,759       9,130       1,679       1990       (o )
5500 Enterprise Court
  Warren, MI             675       3,737       447       721       4,138       4,859       886       1989       (o )
750 Chicago Road
  Troy, MI             323       1,790       381       345       2,149       2,494       468       1986       (o )
800 Chicago Road
  Troy, MI             283       1,567       519       302       2,067       2,369       577       1985       (o )
850 Chicago Road
  Troy, MI             183       1,016       262       196       1,265       1,461       258       1984       (o )
2805 S. Industrial Highway
  Ann Arbor, MI             318       1,762       402       340       2,142       2,482       474       1990       (o )
6833 Center Drive
  Sterling Heights, MI             467       2,583       220       493       2,777       3,270       613       1998       (o )
32201 North Avis Drive
  Madison Heights, MI             345       1,911       519       349       2,427       2,776       709       1974       (o )
1100 East Mandoline Road
  Madison Heights, MI             888       4,915       1,452       897       6,357       7,255       1,621       1967       (o )
30081 Stephenson Highway
  Madison Heights, MI             271       1,499       389       274       1,884       2,158       418       1967       (o )
1120 John A. Papalas Drive(d)
  Lincoln Park, MI             586       3,241       843       593       4,077       4,670       849       1985       (o )
4872 S. Lapeer Road
  Lake Orion Twsp, MI             1,342       5,441       2,007       1,412       7,378       8,790       1,994       1999       (o )
1400 Allen Drive
  Troy, MI             209       1,154       120       212       1,271       1,483       192       1979       (o )

S-12

Table of Contents

                                                                                     
                          (s)
 		                                     
                          Costs
 		                                     
                          Capitalized
 		                                     
                          Subsequent to
 		                                     
                          Acquisition or
 		    Gross Amount Carried
 		                   
              (b)
 		    Completion
 		    At Close of Period 12/31/06     Accumulated
 		             
    Location
 		  (a)
 		    Initial Cost     and Valuation
 		          Building and
 		          Depreciation
 		    Year Built/
 		    Depreciable
 		 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/06     Renovated     Lives (Years)  
    (Dollars in thousands)  
 
1408 Allen Drive
  Troy, MI             151       834       171       153       1,003       1,156       226       1979       (o )
1305 Stephenson Hwy
  Troy, MI             345       1,907       171       350       2,072       2,423       359       1979       (o )
32505 Industrial Drive
  Madison Heights, MI             345       1,910       418       351       2,322       2,673       449       1979       (o )
1799-1813 Northfield Drive(c)
  Rochester Hills, MI             481       2,665       266       490       2,922       3,412       473       1980       (o )
32200 N. Avis(j)
  Madison Heights, MI             503       3,367       865       503       4,232       4,735       146       1973       (o )
100 Kay Industrial
  Orion, MI             677       2,018       403       685       2,414       3,098       269       1987       (o )
1849 West Maple Road
  Troy, MI             1,688       2,790       29       1,700       2,808       4,507       163       1986       (o )
42555 Merrill Road
  Sterling Heights, MI             1,080       2,300       3,550       1,090       5,840       6,930       175       1979/2006       (o )
28435 Automation Blvd. 
  Wixom, MI             621               3,804       628       3,797       4,425       217       2004       (o )
2441 N. Opdyke Road
  Auburn Hills, MI             530       737       16       538       745       1,283       16       1989/94       (o )
200 Northpointe Drive
  Orion Township, MI             723       2,063       35       734       2,088       2,821       27       1997       (o )
12163 Globe Street(j)
  Detroit, MI             595       979       154       596       1,132       1,728       135       1980       (o )
32500 Capitol Avenue
  Livonia, MI             258       1,032       154       260       1,185       1,444       35       1970       (o )
32650 Capitol Avenue
  Livonia, MI             282       1,128       54       284       1,181       1,464       44       1970       (o )
11800 Sears Drive(j)
  Livonia, MI             693       1,507       1,222       703       2,718       3,422       254       1971       (o )
1099 Church Road
  Troy, MI             702       1,332       45       721       1,358       2,079       147       1980       (o )
Grand Rapids
                                                                                   
5050 Kendrick Court(j)
  Grand Rapids, MI             1,721       11,433       7,167       1,721       18,600       20,320       5,158       1988/94       (o )
5015 52nd Street SE
  Grand Rapids, MI             234       1,321       143       234       1,464       1,698       492       1987       (o )
Houston
                                                                                   
2102-2314 Edwards Street
  Houston, TX             348       1,973       1,174       382       3,113       3,496       631       1961       (o )
4545 Eastpark Drive
  Houston, TX             235       1,331       735       240       2,061       2,301       530       1972       (o )
3351 Rauch St
  Houston, TX             272       1,541       189       278       1,724       2,002       382       1970       (o )
3851 Yale St
  Houston, TX             413       2,343       680       425       3,012       3,437       777       1971       (o )
3337-3347 Rauch Street
  Houston, TX             227       1,287       217       233       1,499       1,731       337       1970       (o )
8505 N Loop East
  Houston, TX             439       2,489       744       449       3,223       3,672       737       1981       (o )
4749-4799 Eastpark Dr
  Houston, TX             594       3,368       1,159       611       4,510       5,121       1,112       1979       (o )
4851 Homestead Road
  Houston, TX             491       2,782       913       504       3,682       4,186       846       1973       (o )
3365-3385 Rauch Street
  Houston, TX             284       1,611       119       290       1,724       2,014       388       1970       (o )
5050 Campbell Road
  Houston, TX             461       2,610       330       470       2,930       3,401       669       1970       (o )
4300 Pine Timbers
  Houston, TX             489       2,769       597       499       3,355       3,854       751       1980       (o )
2500-2530 Fairway Park Drive
  Houston, TX             766       4,342       764       792       5,080       5,872       1,157       1974       (o )
6550 Longpointe
  Houston, TX             362       2,050       549       370       2,591       2,961       589       1980       (o )
1815 Turning Basin Dr
  Houston, TX             487       2,761       522       531       3,239       3,770       731       1980       (o )
1819 Turning Basin Dr
  Houston, TX             231       1,308       567       251       1,854       2,105       424       1980       (o )

S-13

Table of Contents

                                                                                     
                          (s)
 		                                     
                          Costs
 		                                     
                          Capitalized
 		                                     
                          Subsequent to
 		                                     
                          Acquisition or
 		    Gross Amount Carried
 		                   
              (b)
 		    Completion
 		    At Close of Period 12/31/06     Accumulated
 		             
    Location
 		  (a)
 		    Initial Cost     and Valuation
 		          Building and
 		          Depreciation
 		    Year Built/
 		    Depreciable
 		 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/06     Renovated     Lives (Years)  
    (Dollars in thousands)  
 
1805 Turning Basin Drive
  Houston, TX             564       3,197       655       616       3,800       4,415       856       1980       (o )
9835A Genard Road
  Houston, TX             1,505       8,333       3,310       1,581       11,568       13,149       2,245       1980       (o )
9835B Genard Road
  Houston, TX             245       1,357       463       256       1,809       2,065       302       1980       (o )
10325-10415 Landsbury Drive(d)
  Houston, TX             696       3,854       499       704       4,345       5,049       569       1982       (o )
8705 City Park Loop
  Houston, TX             710       2,983       933       714       3,912       4,626       452       1982       (o )
11505 State Highway 225
  LaPorte City, TX             940       4,675       615       940       5,290       6,230       338       2003       (o )
6955 Portwest Drive(j)
  Houston, TX             314       1,686       213       320       1,892       2,213       91       1985       (o )
6925 Portwest Drive(j)
  Houston, TX             402       1,360       230       407       1,585       1,992       112       1985       (o )
600 Kenrick
  Houston, TX             900       1,791       235       913       2,013       2,926       280       1981       (o )
1500 E. Main
  LaPorte City, TX             201       1,328       24       204       1,348       1,553       121       1972/1982       (o )
Indianapolis
                                                                                   
7901 West 21st St. 
  Indianapolis, IN             1,048       6,027       427       1,048       6,454       7,502       1,661       1985       (o )
1445 Brookville Way
  Indianapolis, IN             459       2,603       737       476       3,323       3,799       967       1989       (o )
1440 Brookville Way
  Indianapolis, IN             665       3,770       1,080       685       4,831       5,516       1,219       1990       (o )
1240 Brookville Way
  Indianapolis, IN             247       1,402       308       258       1,700       1,958       496       1990       (o )
1345 Brookville Way
  Indianapolis, IN     (o )     586       3,321       910       601       4,215       4,816       1,196       1992       (o )
1350 Brookville Way
  Indianapolis, IN             205       1,161       179       212       1,333       1,544       379       1994       (o )
1341 Sadlier Circle E Dr
  Indianapolis, IN     (p )     131       743       374       136       1,112       1,248       352       1971/1992       (o )
1322-1438 Sadlier Circle E Dr
  Indianapolis, IN     (p )     145       822       283       152       1,099       1,251       337       1971/1992       (o )
1327-1441 Sadlier Circle E Dr
  Indianapolis, IN     (p )     218       1,234       426       225       1,653       1,877       484       1992       (o )
1304 Sadlier Circle E Dr
  Indianapolis, IN     (p )     71       405       153       75       554       629       175       1971/1992       (o )
1402 Sadlier Circle E Dr
  Indianapolis, IN     (p )     165       934       437       171       1,365       1,536       425       1970/1992       (o )
1504 Sadlier Circle E Dr
  Indianapolis, IN     (p )     219       1,238       318       226       1,549       1,774       381       1971/1992       (o )
1311 Sadlier Circle E Dr
  Indianapolis, IN     (p )     54       304       105       57       405       462       105       1971/1992       (o )
1365 Sadlier Circle E Dr
  Indianapolis, IN     (p )     121       688       287       126       970       1,096       240       1971/1992       (o )
1352-1354 Sadlier Circle E Dr
  Indianapolis, IN     (p )     178       1,008       383       184       1,384       1,568       385       1970/1992       (o )
1335 Sadlier Circle E Dr
  Indianapolis, IN     (p )     81       460       139       85       594       679       158       1971/1992       (o )
1327 Sadlier Circle E Dr
  Indianapolis, IN     (p )     52       295       80       55       372       427       120       1971/1992       (o )
1425 Sadlier Circle E Dr
  Indianapolis, IN     (p )     21       117       39       23       154       177       40       1971/1992       (o )
1230 Brookville Way
  Indianapolis, IN             103       586       90       109       672       780       175       1995       (o )
6951 E 30th St
  Indianapolis, IN             256       1,449       238       265       1,678       1,943       486       1995       (o )
6701 E 30th St
  Indianapolis, IN             78       443       43       82       482       564       131       1995       (o )
6737 E 30th St
  Indianapolis, IN             385       2,181       307       398       2,474       2,873       722       1995       (o )
1225 Brookville Way
  Indianapolis, IN             60       —       458       68       450       518       94       1997       (o )
6555 E 30th St
  Indianapolis, IN             484       4,760       1,874       484       6,634       7,118       1,900       1969/1981       (o )

S-14

Table of Contents

                                                                                     
                          (s)
 		                                     
                          Costs
 		                                     
                          Capitalized
 		                                     
                          Subsequent to
 		                                     
                          Acquisition or
 		    Gross Amount Carried
 		                   
              (b)
 		    Completion
 		    At Close of Period 12/31/06     Accumulated
 		             
    Location
 		  (a)
 		    Initial Cost     and Valuation
 		          Building and
 		          Depreciation
 		    Year Built/
 		    Depreciable
 		 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/06     Renovated     Lives (Years)  
    (Dollars in thousands)  
 
8402-8440 E 33rd St
  Indianapolis, IN             222       1,260       638       230       1,890       2,120       518       1977       (o )
8520-8630 E 33rd St
  Indianapolis, IN             326       1,848       706       336       2,545       2,881       733       1976       (o )
8710-8768 E 33rd St
  Indianapolis, IN             175       993       405       187       1,385       1,572       384       1979       (o )
3316-3346 N. Pagosa Court
  Indianapolis, IN             325       1,842       605       335       2,436       2,771       696       1977       (o )
6751 E 30th St
  Indianapolis, IN             728       2,837       256       741       3,079       3,820       740       1997       (o )
8525 E. 33rd Street
  Indianapolis, IN             1,300       2,091       1,230       1,308       3,314       4,621       937       1978       (o )
5705-97 Park Plaza Ct
  Indianapolis, IN     (q )     600       2,194       872       609       3,057       3,666       701       1977       (o )
9319-9341 Castlegate Drive
  Indianapolis, IN             530       1,235       1,111       544       2,332       2,876       478       1983       (o )
9332-9350 Castlegate Drive
  Indianapolis, IN             420       646       663       429       1,300       1,729       290       1983       (o )
2855 Michigan Road
  Madison, IN             504       1,169       49       521       1,201       1,722       625       1962       (o )
1133 Northwest L Street
  Richmond, IN     (r )     201       1,358       26       208       1,378       1,586       150       1955/92       (o )
1380 Perry Road
  Plainfield, IN             781       5,156       35       785       5,187       5,972       352       1997       (o )
9210 East 146th Street
  Noblesville, IN             66       684       799       66       1,483       1,549       520       1978       (o )
4640 Martin Luther King Jr. Boulevard
  Anderson, IN             161       664       6       163       669       831       67       1999       (o )
6512 Production Drive
  Anderson, IN             58       281       3       58       284       342       19       1995       (o )
6628 Production Drive
  Anderson, IN             150       680       7       151       686       837       48       1995       (o )
2902 Enterprise Drive
  Anderson, IN             230       4,573       44       232       4,615       4,847       224       1995       (o )
Los Angeles
                                                                                   
12616 Yukon Ave
  Hawthorne, CA             685       3,884       217       696       4,090       4,786       457       1987       (o )
333 Turnbull Canyon Road
  City of Industry, CA             2,700       1,824       572       2,700       2,396       5,096       362       1968/1985       (o )
350-390 Manville St. 
  Compton, CA             2,300       3,768       103       2,313       3,857       6,171       377       1979       (o )
1944 Vista Bella Way
  Rancho Dominguez, CA             1,746       3,148       586       1,821       3,660       5,480       244       1976       (o )
2000 Vista Bella Way
  Rancho Dominguez, CA             817       1,673       292       852       1,931       2,782       126       1971       (o )
2835 East Ana Street Drive
  Rancho Dominguez, CA             1,682       2,750       133       1,770       2,796       4,565       186       1972/2000       (o )
665 N. Baldwin Park Blvd
  City of Industry, CA             2,124       5,219       53       2,139       5,257       7,396       228       1965/92       (o )
27801 Avenue Scott(j)
  Santa Clarita, CA             2,890       7,020       192       2,899       7,203       10,102       69       1984       (o )
2610 & 2660 Columbia Street
  Torrance, CA             3,008       5,826       36       3,021       5,849       8,870       153       1969       (o )
433 Alaska Avenue
  Torrance, CA             681       168       4       684       169       853       4       1962       (o )
201 West Manville Avenue
  Compton, CA             7,639       5,022       310       7,807       5,164       12,971       434       1956       (o )
14300 Bonelli Street(j)
  City of Industry, CA             2,000       8,000       1,130       2,096       9,034       11,130       309       1973/2002       (o )
4020 S. Compton Ave
  Los Angeles, CA             3,800       7,330       71       3,825       7,376       11,201       109       1986       (o )
Louisville
                                                                                   
9001 Cane Run Road
  Louisville, KY             524       —       5,817       560       5,781       6,341       1,675       1998       (o )
9101 Cane Run Road
  Louisville, KY             608       —       6,114       608       6,113       6,722       917       2000       (o )
Milwaukee
                                                                                   

S-15

Table of Contents

                                                                                     
                          (s)
 		                                     
                          Costs
 		                                     
                          Capitalized
 		                                     
                          Subsequent to
 		                                     
                          Acquisition or
 		    Gross Amount Carried
 		                   
              (b)
 		    Completion
 		    At Close of Period 12/31/06     Accumulated
 		             
    Location
 		  (a)
 		    Initial Cost     and Valuation
 		          Building and
 		          Depreciation
 		    Year Built/
 		    Depreciable
 		 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/06     Renovated     Lives (Years)  
    (Dollars in thousands)  
 
6523 N Sydney Place
  Glendale, WI             172       976       189       176       1,163       1,338       316       1978       (o )
4560 N 124th Street
  Wauwatosa, WI             118       667       85       129       741       870       177       1976       (o )
4410-80 North 132nd Street
  Butler, WI             355       —       4,023       359       4,019       4,378       680       1999       (o )
5355 South Westridge Drive
  New Berlin, WI             1,630       7,058       92       1,646       7,134       8,780       565       1997       (o )
320-34 W. Vogel
  Milwaukee, WI             506       3,199       41       508       3,238       3,746       375       1970       (o )
4950 S. 6th Avenue
  Milwaukee, WI             299       1,565       85       301       1,648       1,949       230       1970       (o )
1711 Paramount Court
  Waukesha, WI             308       1,762       19       311       1,778       2,089       122       1997       (o )
W 140 N9059 Lilly Road
  Iomonee Falls, WI             343       1,153       242       366       1,372       1,738       100       1995       (o )
200 W. Vogel Ave., Bldg B
  Milwaukee, WI             301       2,150       13       302       2,162       2,464       225       1970       (o )
16600 West Glendale Avenue
  New Berlin, WI             704       1,923       385       715       2,298       3,012       177       1969/84       (o )
4921 S. 2nd Street
  Milwaukee, WI             101       713       2       101       715       816       68       1970       (o )
1500 Peebles Drive
  Richland Center, WI             1,577       1,018       34       1,603       1,027       2,629       358       1967/72       (o )
Minneapolis/St. Paul
                                                                                   
6507-6545 Cecilia Circle
  Bloomington, MN             357       1,320       1,289       386       2,580       2,966       1,444       1980       (o )
6201 West 111th Street
  Bloomington, MN     (s )     1,358       8,622       4,139       1,499       12,620       14,119       6,307       1987       (o )
6403-6545 Cecilia Drive
  Bloomington, MN             366       1,363       1,141       395       2,475       2,870       1,455       1980       (o )
7251-7267 Washington Avenue
  Edina, MN             129       382       715       182       1,044       1,226       769       1972       (o )
7301-7325 Washington Avenue
  Edina, MN             174       391       103       193       475       668       150       1972       (o )
7101 Winnetka Avenue North
  Brooklyn Park, MN             2,195       6,084       3,707       2,228       9,758       11,986       5,183       1990       (o )
7600 Golden Triangle Drive
  Eden Prairie, MN             566       1,394       1,418       615       2,764       3,378       1,489       1989       (o )
9901 West 74th Street
  Eden Prairie, MN             621       3,289       3,211       639       6,482       7,121       3,440       1983/88       (o )
12220-12222 Nicollet Avenue
  Burnsville, MN             105       425       400       114       817       930       518       1989/90       (o )
12250-12268 Nicollet Avenue
  Burnsville, MN             260       1,054       523       296       1,540       1,837       715       1989/90       (o )
12224-12226 Nicollet Avenue
  Burnsville, MN             190       770       715       207       1,468       1,675       650       1989/90       (o )
1030 Lone Oak Road
  Eagan, MN             456       2,703       575       456       3,278       3,734       966       1988       (o )
1060 Lone Oak Road
  Eagan, MN             624       3,700       701       624       4,401       5,026       1,349       1988       (o )
5400 Nathan Lane
  Plymouth, MN             749       4,461       1,302       757       5,754       6,512       2,059       1990       (o )
10120 W 76th Street
  Eden Prairie, MN             315       1,804       1,378       315       3,181       3,496       1,498       1987       (o )
7615 Golden Triangle
  Eden Prairie, MN             268       1,532       785       268       2,317       2,585       612       1987       (o )
7625 Golden Triangle
  Eden Prairie, MN             415       2,375       1,107       415       3,482       3,897       1,129       1987       (o )
2605 Fernbrook Lane North
  Plymouth, MN             443       2,533       672       445       3,203       3,647       835       1987       (o )
12155 Nicollet Ave
  Burnsville, MN             286       —       1,731       288       1,729       2,017       482       1995       (o )
4100 Peavey Road
  Chaska, MN             277       2,261       795       277       3,056       3,333       768       1988       (o )
11300 Hamshire Ave South
  Bloomington, MN             527       2,985       1,460       541       4,430       4,972       980       1983       (o )
375 Rivertown Drive
  Woodbury, MN             1,083       6,135       2,720       1,503       8,435       9,938       1,987       1996       (o )

S-16

Table of Contents

                                                                                     
                          (s)
 		                                     
                          Costs
 		                                     
                          Capitalized
 		                                     
                          Subsequent to
 		                                     
                          Acquisition or
 		    Gross Amount Carried
 		                   
              (b)
 		    Completion
 		    At Close of Period 12/31/06     Accumulated
 		             
    Location
 		  (a)
 		    Initial Cost     and Valuation
 		          Building and
 		          Depreciation
 		    Year Built/
 		    Depreciable
 		 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/06     Renovated     Lives (Years)  
    (Dollars in thousands)  
 
5205 Highway 169
  Plymouth, MN             446       2,525       1,000       740       3,230       3,970       793       1960       (o )
6451-6595 Citywest Parkway
  Eden Prairie, MN             525       2,975       1,258       538       4,220       4,758       1,116       1984       (o )
7100-7198 Shady Oak Road
  Eden Prairie, MN             715       4,054       1,212       736       5,245       5,981       1,747       1982/2002       (o )
7500-7546 Washington Square
  Eden Prairie, MN             229       1,300       795       235       2,090       2,325       515       1975       (o )
7550-7558 Washington Square
  Eden Prairie, MN             153       867       184       157       1,048       1,205       251       1975       (o )
5240-5300 Valley Industrial Blvd S
  Shakopee, MN             362       2,049       1,011       371       3,049       3,421       816       1973       (o )
6477-6525 City West Parkway
  Eden Prairie, MN             810       4,590       984       819       5,564       6,384       1,355       1984       (o )
1157 Valley Park Drive
  Shakopee, MN             760       —       6,160       888       6,032       6,920       1,145       1997       (o )
500-530 Kasota Avenue SE
  Minneapolis, MN             415       2,354       998       432       3,335       3,767       913       1976       (o )
770-786 Kasota Avenue SE
  Minneapolis, MN             333       1,888       512       347       2,386       2,733       504       1976       (o )
800 Kasota Avenue SE
  Minneapolis, MN             524       2,971       743       597       3,641       4,238       872       1976       (o )
2530-2570 Kasota Avenue
  St. Paul, MN             407       2,308       780       465       3,030       3,495       707       1976       (o )
1280 Energy Park Drive
  St. Paul, MN             700       2,779       83       705       2,857       3,562       271       1984       (o )
9600 West 76th Street
  Eden Prairie, MN             1,000       2,450       36       1,034       2,451       3,486       188       1997       (o )
9700 West 76th Street
  Eden Prairie, MN             1,000       2,709       101       1,038       2,772       3,810       227       1984/97       (o )
5017 Boone Avenue North
  New Hope, MN     (t )     1,000       1,599       58       1,009       1,648       2,657       263       1971/74       (o )
2300 West Highway 13(I-35 Dist Ctr)
  Burnsville, MN             2,517       6,069       579       2,524       6,640       9,165       1,218       1970/76       (o )
1087 Park Place
  Shakopee, MN             1,195       4,891       15       1,198       4,903       6,101       372       1996/2000       (o )
5391 12th Avenue SE
  Shakopee, MN             1,392       8,149       230       1,395       8,375       9,771       580       1998       (o )
4701 Valley Industrial Boulevard
  Shakopee, MN             1,296       7,157       (81 )     1,299       7,073       8,372       518       1997       (o )
Park 2000 III(j)
  Shakopee, MN             590       —       4,953       590       4,953       5,543       619       2001       (o )
7600 69th Avenue
  Greenfield, MN             1,500       8,328       1,808       1,510       10,126       11,636       945       2004       (o )
316 Lake Hazeltine Drive
  Chaska, MN             714       944       155       729       1,084       1,813       108       1986       (o )
1225 Highway 169 North
  Plymouth, MN             1,190       1,979       59       1,207       2,022       3,228       39       1968       (o )
Nashville
                                                                                   
3099 Barry Drive
  Portland, TN             418       2,368       192       421       2,557       2,978       702       1995       (o )
3150 Barry Drive
  Portland, TN             941       5,333       477       981       5,770       6,750       1,447       1993       (o )
5599 Highway 31 West
  Portland, TN             564       3,196       211       571       3,400       3,971       950       1995       (o )
1650 Elm Hill Pike
  Nashville, TN             329       1,867       172       332       2,036       2,368       486       1984       (o )
1931 Air Lane Drive
  Nashville, TN             489       2,785       273       493       3,054       3,547       722       1984       (o )
470 Metroplex Drive(c)
  Nashville, TN             619       3,507       1,216       626       4,716       5,342       1,405       1986       (o )
1150 Antiock Pike
  Nashville, TN             661       3,748       523       669       4,264       4,932       1,033       1987       (o )
4640 Cummings Park
  Nashville, TN             360       2,040       181       365       2,216       2,581       390       1986       (o )
556 Metroplex Drive
  Nashville, TN             227       1,285       124       231       1,405       1,636       234       1983       (o )
1740 River Hills Drive
  Nashville, TN             848       4,383       515       888       4,858       5,746       614       1978       (o )

S-17

Table of Contents

                                                                                     
                          (s)
 		                                     
                          Costs
 		                                     
                          Capitalized
 		                                     
                          Subsequent to
 		                                     
                          Acquisition or
 		    Gross Amount Carried
 		                   
              (b)
 		    Completion
 		    At Close of Period 12/31/06     Accumulated
 		             
    Location
 		  (a)
 		    Initial Cost     and Valuation
 		          Building and
 		          Depreciation
 		    Year Built/
 		    Depreciable
 		 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/06     Renovated     Lives (Years)  
    (Dollars in thousands)  
 
Northern New Jersey
                                                                                   
14 World’s Fair Drive
  Franklin, NJ             483       2,735       553       503       3,268       3,771       787       1980       (o )
12 World’s Fair Drive
  Franklin, NJ             572       3,240       539       593       3,757       4,350       920       1981       (o )
22 World’s Fair Drive
  Franklin, NJ             364       2,064       302       375       2,355       2,730       528       1983       (o )
26 World’s Fair Drive
  Franklin, NJ             361       2,048       293       377       2,325       2,703       553       1984       (o )
24 World’s Fair Drive
  Franklin, NJ             347       1,968       487       362       2,441       2,802       620       1984       (o )
20 World’s Fair Drive Lot 13
  Sumerset, NJ             9       —       2,632       691       1,950       2,641       365       1999       (o )
45 Route 46
  Pine Brook, NJ             969       5,491       790       978       6,272       7,250       1,045       1974/1987       (o )
43 Route 46
  Pine Brook, NJ             474       2,686       454       479       3,136       3,614       582       1974/1987       (o )
39 Route 46
  Pine Brook, NJ             260       1,471       179       262       1,647       1,909       286       1970       (o )
26 Chapin Road
  Pine Brook, NJ             956       5,415       520       965       5,925       6,890       970       1983       (o )
30 Chapin Road
  Pine Brook, NJ             960       5,440       592       969       6,023       6,992       997       1983       (o )
20 Hook Mountain Road
  Pine Brook, NJ             1,507       8,542       1,050       1,534       9,566       11,100       1,488       1972/1984       (o )
30 Hook Mountain Road
  Pine Brook, NJ             389       2,206       368       396       2,567       2,963       424       1972/1987       (o )
55 Route 46
  Pine Brook, NJ             396       2,244       211       403       2,448       2,851       396       1978/1994       (o )
16 Chapin Road
  Pine Brook, NJ             885       5,015       323       901       5,323       6,223       881       1987       (o )
20 Chapin Road
  Pine Brook, NJ             1,134       6,426       523       1,154       6,929       8,083       1,144       1987       (o )
Sayreville Lot 3
  Sayreville, NJ             996       —       5,301       996       5,301       6,297       318       2002       (o )
Sayreville Lot 4
  Sayreville, NJ             944       —       4,749       944       4,749       5,693       532       2001       (o )
400 Raritan Center Parkway
  Edison, NJ             829       4,722       552       851       5,253       6,104       769       1983       (o )
300 Columbus Circle
  Edison, NJ             1,257       7,122       950       1,277       8,052       9,329       1,180       1983       (o )
400 Apgar
  Franklin Township, NJ             780       4,420       624       822       5,002       5,824       639       1987       (o )
500 Apgar
  Franklin Township, NJ             361       2,044       440       368       2,476       2,845       367       1987       (o )
201 Circle Dr. North
  Piscataway, NJ             840       4,760       696       857       5,439       6,296       634       1987       (o )
1 Pearl Ct. 
  Allendale, NJ             623       3,528       1,304       649       4,806       5,454       498       1978       (o )
2 Pearl Ct. 
  Allendale, NJ             255       1,445       1,280       403       2,577       2,980       267       1979       (o )
3 Pearl Ct. 
  Allendale, NJ             440       2,491       203       458       2,675       3,133       327       1978       (o )
4 Pearl Ct. 
  Allendale, NJ             450       2,550       613       469       3,144       3,613       440       1979       (o )
5 Pearl Ct. 
  Allendale, NJ             505       2,860       510       526       3,349       3,875       403       1977       (o )
59 Route 17
  Allendale, NJ             518       2,933       1,122       539       4,033       4,572       631       1979       (o )
309-319 Pierce Street
  Somerset, NJ             1,300       4,628       340       1,309       4,958       6,268       412       1986       (o )
Orlando
                                                                                   
Lake Point IV
  Tampa, FL             909       4,613       137       920       4,739       5,659       348       1987       (o )
Philadelphia
                                                                                   
3240 S.78th Street
  Philadelphia, PA             515       1,245       70       539       1,291       1,830       73       1980       (o )

S-18

Table of Contents

                                                                                     
                          (s)
 		                                     
                          Costs
 		                                     
                          Capitalized
 		                                     
                          Subsequent to
 		                                     
                          Acquisition or
 		    Gross Amount Carried
 		                   
              (b)
 		    Completion
 		    At Close of Period 12/31/06     Accumulated
 		             
    Location
 		  (a)
 		    Initial Cost     and Valuation
 		          Building and
 		          Depreciation
 		    Year Built/
 		    Depreciable
 		 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/06     Renovated     Lives (Years)  
    (Dollars in thousands)  
 
Phoenix
                                                                                   
1045 South Edward Drive
  Tempe, AZ             390       2,160       86       394       2,242       2,636       433       1976       (o )
46 N. 49th Ave. 
  Phoenix, AZ             283       1,704       732       283       2,436       2,719       459       1986       (o )
240 N. 48th Ave. 
  Phoenix, AZ             482       1,913       96       482       2,009       2,491       293       1977       (o )
220 N. 48th Ave. 
  Phoenix, AZ             530       1,726       252       531       1,977       2,508       257       1977       (o )
54 N. 48th Ave. 
  Phoenix, AZ             130       625       50       131       674       805       94       1977       (o )
64 N. 48th Ave. 
  Phoenix, AZ             180       458       55       181       512       693       79       1977       (o )
236 N. 48th Ave. 
  Phoenix, AZ             120       322       42       120       363       484       50       1977       (o )
10 S. 48th Ave. 
  Phoenix, AZ             510       1,687       170       513       1,855       2,367       249       1977       (o )
115 E. Watkins St. 
  Phoenix, AZ             170       816       112       171       928       1,098       120       1979       (o )
135 E. Watkins St. 
  Phoenix, AZ             380       1,962       127       382       2,087       2,469       280       1977       (o )
10220 S. 51st Street
  Phoenix, AZ             400       1,493       42       406       1,529       1,935       174       1985       (o )
50 South 56th Street
  Chandler, AZ             1,200       3,333       (49 )     1,207       3,277       4,484       236       1991/97       (o )
4701 W. Jefferson
  Phoenix, AZ             926       2,195       628       929       2,820       3,749       322       1984       (o )
7102 W. Roosevelt(j)
  Phoenix, AZ             1,613       6,451       88       1,620       6,532       8,152       65       1998       (o )
4137 West Adams Street
  Phoenix, AZ             990       2,661       131       1,029       2,753       3,782       30       1985/92       (o )
Portland
                                                                                   
2315 NW 21st Place
  Portland, OR             301       1,247       38       309       1,277       1,586       59       1966/79       (o )
Salt Lake City
                                                                                   
512 Lawndale Drive
  Salt Lake City, UT             2,705       15,749       2,985       2,705       18,733       21,438       4,806       1981       (o )
1270 West 2320 South
  West Valley, UT             138       784       144       143       924       1,067       232       1986/92       (o )
1275 West 2240 South
  West Valley, UT             395       2,241       473       408       2,702       3,109       652       1986/92       (o )
1288 West 2240 South
  West Valley, UT             119       672       180       123       849       971       249       1986/92       (o )
2235 South 1300 West
  West Valley, UT             198       1,120       259       204       1,373       1,577       376       1986/92       (o )
1293 West 2200 South
  West Valley, UT             158       896       202       163       1,093       1,256       309       1986/92       (o )
1279 West 2200 South
  West Valley, UT             198       1,120       56       204       1,170       1,374       270       1986/92       (o )
1272 West 2240 South
  West Valley, UT             336       1,905       437       347       2,331       2,677       694       1986/92       (o )
1149 West 2240 South
  West Valley, UT             217       1,232       99       225       1,324       1,549       294       1986/92       (o )
1142 West 2320 South
  West Valley, UT             217       1,232       139       225       1,364       1,588       346       1997       (o )
1152 West 2240 South
  West Valley, UT             2,067       —       3,549       2,114       3,503       5,617       542       1999       (o )
369 Orange Street
  Salt Lake City, UT             600       2,855       170       602       3,022       3,625       375       1980       (o )
4625 West 1730 South
  Salt Lake City, UT             903       4,005       17       907       4,018       4,925       43       1997       (o )
1815-1957 South 4650 West
  Salt Lake City, UT             1,707       10,873       161       1,713       11,028       12,741       101       1997       (o )
1330 W. 3300 South Avenue
  Ogden, UT             1,100       2,353       654       1,100       3,007       4,107       448       1982       (o )
4517 West 1730 South
  Salt Lake City, UT             704       2,737       220       748       2,913       3,661       29       1989       (o )

S-19

Table of Contents

                                                                                     
                          (s)
 		                                     
                          Costs
 		                                     
                          Capitalized
 		                                     
                          Subsequent to
 		                                     
                          Acquisition or
 		    Gross Amount Carried
 		                   
              (b)
 		    Completion
 		    At Close of Period 12/31/06     Accumulated
 		             
    Location
 		  (a)
 		    Initial Cost     and Valuation
 		          Building and
 		          Depreciation
 		    Year Built/
 		    Depreciable
 		 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/06     Renovated     Lives (Years)  
    (Dollars in thousands)  
 
San Diego
                                                                                   
9051 Siempre Viva Rd. 
  San Diego, CA             540       1,598       189       541       1,786       2,327       224       1989       (o )
9163 Siempre Viva Rd. 
  San Diego, CA             430       1,621       210       431       1,830       2,261       227       1989       (o )
9295 Siempre Viva Rd. 
  San Diego, CA             540       1,569       123       541       1,691       2,232       195       1989       (o )
9255 Customhouse Plaza
  San Diego, CA             3,230       11,030       902       3,234       11,928       15,162       1,401       1989       (o )
16275 Technology Drive
  San Diego, CA             2,848       8,641       42       2,859       8,672       11,531       367       1963/85       (o )
6305 El Camino Real(j)
  Carlsbad, CA             1,590       6,360       0       1,590       6,360       7,950       85       1980       (o )
42374 Avenida Alvarado(c)
  Temecula, CA             447       2,529       336       462       2,849       3,311       283       1987       (o )
9375 Customhouse Plaza
  San Diego, CA             430       1,384       287       431       1,670       2,101       227       1989       (o )
9465 Customhouse Plaza
  San Diego, CA             430       1,437       226       431       1,662       2,093       237       1989       (o )
9485 Customhouse Plaza
  San Diego, CA             1,200       2,792       286       1,201       3,077       4,278       364       1989       (o )
2675 Customhouse Court
  San Diego, CA             590       2,082       388       591       2,469       3,060       259       1989       (o )
2325 Camino Vida Roble(j)
  Carlsbad, CA             1,441       1,239       37       1,446       1,271       2,717       52       1981/98       (o )
2335 Camino Vida Roble
  Carlsbad, CA             817       762       27       820       786       1,606       39       1981/98       (o )
2345 Camino Vida Roble
  Carlsbad, CA             562       456       28       564       481       1,046       25       1981/98       (o )
2355 Camino Vida Roble
  Carlsbad, CA             481       365       33       483       396       879       23       1981/98       (o )
2365 Camino Vida Roble
  Carlsbad, CA             1,098       630       8       1,102       634       1,736       43       1981/98       (o )
2375 Camino Vida Roble(j)
  Carlsbad, CA             1,210       874       121       1,214       991       2,205       50       1981/98       (o )
6451 El Camino Real(j)
  Carlsbad, CA             2,885       1,931       52       2,894       1,973       4,868       98       1986/98       (o )
Southern New Jersey
                                                                                   
5 North Olnev Ave. 
  Cherry Hill, NJ             157       1,524       (451 )     157       1,073       1,229       204       1963/1985       (o )
4 Springdale Road(c)
  Cherry Hill, NJ             332       1,853       1,271       332       3,124       3,456       594       1963/85       (o )
8 Springdale Road
  Cherry Hill, NJ             258       1,436       874       258       2,311       2,568       505       1966       (o )
2050 Springdale Road
  Cherry Hill, NJ             277       1,545       1,149       277       2,693       2,970       626       1965       (o )
16 Springdale Road
  Cherry Hill, NJ             240       1,336       134       240       1,471       1,710       312       1967       (o )
5 Esterbrook Lane
  Cherry Hill, NJ             240       1,336       236       240       1,572       1,812       329       1966/88       (o )
2 Pin Oak Lane
  Cherry Hill, NJ             314       1,757       695       314       2,452       2,766       552       1968       (o )
28 Springdale Road
  Cherry Hill, NJ             190       1,060       211       190       1,272       1,462       270       1967       (o )
3 Esterbrook Lane
  Cherry Hill, NJ             198       1,102       486       198       1,588       1,786       328       1968       (o )
4 Esterbrook Lane(j)
  Cherry Hill, NJ             232       1,294       44       232       1,338       1,570       291       1969       (o )
26 Springdale Road
  Cherry Hill, NJ             226       1,257       555       226       1,811       2,037       375       1968       (o )
1 Keystone Ave. 
  Cherry Hill, NJ             218       1,223       973       218       2,196       2,415       473       1969       (o )
21 Olnev Ave. 
  Cherry Hill, NJ             68       380       75       68       455       523       93       1969       (o )
19 Olnev Ave. 
  Cherry Hill, NJ             200       1,119       1,160       200       2,279       2,479       444       1971       (o )
2 Keystone Ave. 
  Cherry Hill, NJ             214       1,194       559       214       1,753       1,967       404       1970       (o )

S-20

Table of Contents

                                                                                     
                          (s)
 		                                     
                          Costs
 		                                     
                          Capitalized
 		                                     
                          Subsequent to
 		                                     
                          Acquisition or
 		    Gross Amount Carried
 		                   
              (b)
 		    Completion
 		    At Close of Period 12/31/06     Accumulated
 		             
    Location
 		  (a)
 		    Initial Cost     and Valuation
 		          Building and
 		          Depreciation
 		    Year Built/
 		    Depreciable
 		 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/06     Renovated     Lives (Years)  
    (Dollars in thousands)  
 
18 Olnev Ave. 
  Cherry Hill, NJ             247       1,382       428       247       1,810       2,057       327       1974       (o )
2030 Springdale Rod
  Cherry Hill, NJ             523       2,914       1,417       523       4,331       4,854       972       1977       (o )
111 Whittendale Drive
  Morrestown, NJ             522       2,916       130       522       3,046       3,568       547       1991/96       (o )
9 Whittendale
  Morrestown, NJ             337       1,911       100       343       2,005       2,348       277       2000       (o )
7851 Airport
  Pennsauken, NJ             160       508       382       163       888       1,050       157       1966       (o )
103 Central
  Mt. Laurel, NJ             610       1,847       1,561       619       3,398       4,018       625       1970       (o )
7890 Airport Hwy/7015 Central
  Pennsauken, NJ             300       989       1,062       425       1,926       2,351       442       1969       (o )
999 Grand Avenue
  Hammonton, NJ     (u )     969       8,793       713       979       9,495       10,475       940       1980       (o )
7860-7870 Airport
  Pennsauken, NJ             120       366       286       122       650       772       114       1968       (o )
855 Hylton Road(j)
  Pennsauken, NJ             264       1,025       105       269       1,125       1,394       37       1986       (o )
St. Louis
                                                                                   
10431-10449 Midwest Industrial Blvd
  Olivette, MO             237       1,360       524       237       1,884       2,121       689       1967       (o )
10751 Midwest Industrial Boulevard
  Olivette, MO             193       1,119       355       194       1,474       1,667       527       1965       (o )
6951 N Hanley(c)
  Hazelwood, MO             405       2,295       1,398       419       3,679       4,098       922       1965       (o )
1037 Warson — Bldg A(j)
  St. Louis, MO             246       1,359       364       251       1,718       1,969       178       1968       (o )
1037 Warson — Bldg B(j)
  St. Louis, MO             380       2,103       1,604       388       3,698       4,086       330       1968       (o )
1037 Warson — Bldg C
  St. Louis, MO             303       1,680       1,085       310       2,759       3,068       309       1968       (o )
1037 Warson — Bldg D(j)
  St. Louis, MO             353       1,952       364       360       2,308       2,668       253       1968       (o )
6821-6857 Hazelwood Ave. 
  Berkeley, MO             985       6,205       702       985       6,907       7,892       868       2001       (o )
13701 Rider Trail North
  Earth City, MO             800       2,099       545       804       2,640       3,444       516       1985       (o )
1908-2000 Innerbelt
  Overland, MO             1,590       9,026       826       1,591       9,852       11,442       1,454       1987       (o )
8449-95 Mid-County Industrial(c)
  Vinita Park, MO             520       1,590       217       520       1,807       2,327       294       1988       (o )
84104-76 Mid County Industrial
  Vinita Park, MO             540       2,109       50       540       2,159       2,699       312       1989       (o )
2001 Innerbelt Business Center
  Overland, MO             1,050       4,451       169       1,050       4,620       5,670       673       1987       (o )
9060 Latty Avenue
  Berkeley, MO             687       1,947       38       698       1,974       2,672       193       1965       (o )
21-25 Gateway Commerce Center
  Edwardsville, IL     (v )     1,874       31,958       942       1,927       32,847       34,774       392       2003/06       (o )
Tampa
                                                                                   
6202 Benjamin Road
  Tampa, FL             203       1,151       512       211       1,655       1,866       486       1981       (o )
6204 Benjamin Road
  Tampa, FL             432       2,445       560       454       2,982       3,436       689       1982       (o )
6206 Benjamin Road
  Tampa, FL             397       2,251       481       416       2,713       3,129       667       1983       (o )
6302 Benjamin Road
  Tampa, FL             214       1,212       236       224       1,438       1,662       338       1983       (o )
6304 Benjamin Road
  Tampa, FL             201       1,138       216       209       1,346       1,555       333       1984       (o )
6306 Benjamin Road
  Tampa, FL             257       1,457       261       269       1,706       1,975       386       1984       (o )
6308 Benjamin Road
  Tampa, FL             345       1,958       313       362       2,254       2,616       531       1984       (o )
5313 Johns Road
  Tampa, FL             204       1,159       220       257       1,326       1,583       301       1991       (o )

S-21

Table of Contents

                                                                                     
                          (s)
 		                                     
                          Costs
 		                                     
                          Capitalized
 		                                     
                          Subsequent to
 		                                     
                          Acquisition or
 		    Gross Amount Carried
 		                   
              (b)
 		    Completion
 		    At Close of Period 12/31/06     Accumulated
 		             
    Location
 		  (a)
 		    Initial Cost     and Valuation
 		          Building and
 		          Depreciation
 		    Year Built/
 		    Depreciable
 		 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/06     Renovated     Lives (Years)  
    (Dollars in thousands)  
 
5525 Johns Road
  Tampa, FL             192       1,086       389       200       1,468       1,667       266       1993       (o )
5709 Johns Road
  Tampa, FL             192       1,086       160       200       1,239       1,438       318       1990       (o )
5711 Johns Road
  Tampa, FL             243       1,376       174       255       1,537       1,793       341       1990       (o )
5453 W Waters Avenue
  Tampa, FL             71       402       116       82       507       589       125       1987       (o )
5455 W Waters Avenue
  Tampa, FL             307       1,742       377       326       2,101       2,426       475       1987       (o )
5553 W Waters Avenue
  Tampa, FL             307       1,742       262       326       1,986       2,312       448       1987       (o )
5501 W Waters Avenue
  Tampa, FL             154       871       169       142       1,051       1,194       276       1990       (o )
5503 W Waters Avenue
  Tampa, FL             71       402       40       66       447       513       108       1990       (o )
5555 W Waters Avenue
  Tampa, FL             213       1,206       140       221       1,337       1,559       325       1990       (o )
5557 W Waters Avenue
  Tampa, FL             59       335       47       62       379       442       86       1990       (o )
5461 W Waters
  Tampa, FL             261       —       1,226       265       1,222       1,487       240       1998       (o )
5481 W. Waters Avenue
  Tampa, FL             558       —       2,307       561       2,304       2,865       453       1999       (o )
4515-4519 George Road
  Tampa, FL             633       3,587       491       640       4,072       4,712       616       1985       (o )
6301 Benjamin Road
  Tampa, FL             292       1,657       84       295       1,738       2,033       254       1986       (o )
5723 Benjamin Road
  Tampa, FL             406       2,301       251       409       2,548       2,958       326       1986       (o )
6313 Benjamin Road
  Tampa, FL             229       1,296       267       231       1,561       1,792       245       1986       (o )
5801 Benjamin Road
  Tampa, FL             564       3,197       163       569       3,355       3,924       477       1986       (o )
5802 Benjamin Road
  Tampa, FL             686       3,889       607       692       4,491       5,183       672       1986       (o )
5925 Benjamin Road
  Tampa, FL             328       1,859       370       331       2,227       2,557       323       1986       (o )
6089 Johns Road
  Tampa, FL     (w )     180       987       93       186       1,074       1,260       103       1985       (o )
6091 Johns Road
  Tampa, FL     (w )     140       730       33       144       759       903       72       1986       (o )
6103 Johns Road
  Tampa, FL     (w )     220       1,160       60       226       1,214       1,440       114       1986       (o )
6201 Johns Road
  Tampa, FL     (w )     200       1,107       96       205       1,198       1,403       134       1981       (o )
6203 Johns Road
  Tampa, FL     (w )     300       1,460       111       311       1,560       1,871       179       1987       (o )
6205 Johns Road
  Tampa, FL     (w )     270       1,363       32       278       1,388       1,665       92       2000       (o )
6101 Johns Road
  Tampa, FL             210       833       71       216       898       1,114       97       1981       (o )
4908 Tampa West Blvd
  Tampa, FL             2,622       8,643       36       2,635       8,666       11,301       558       1979/83       (o )
11701 Belcher Road South(j)
  Largo, FL             1,657       2,768       109       1,669       2,864       4,533       123       1985       (o )
4900-4914 Creekside Drive(j)(aa)
  Clearwater, FL             3,702       7,338       108       3,730       7,418       11,148       325       1985       (o )
4908 Creekside Drive
  Clearwater, FL             506       645       17       509       659       1,168       30       1985       (o )
7381-7431 114th Avenue North(j)(z)
  Largo, FL             1,711       6,662       12       1,362       7,023       8,385       432       1986       (o )
12345 Starkey Road(j)
  Largo, FL             898       2,078       15       905       2,087       2,992       77       1980       (o )
Toronto
                                                                                   
135 Dundas Street
  Cambridge Ontario, Canada             3,128       4,958       137       3,179       5,044       8,223       724       1953/59       (o )
678 Erie Street
  Stratford Ontario, Canada             786       557       77       828       592       1,420       261       1955/76       (o )

S-22

Table of Contents

                                                                                     
                          (s)
 		                                     
                          Costs
 		                                     
                          Capitalized
 		                                     
                          Subsequent to
 		                                     
                          Acquisition or
 		    Gross Amount Carried
 		                   
              (b)
 		    Completion
 		    At Close of Period 12/31/06     Accumulated
 		             
    Location
 		  (a)
 		    Initial Cost     and Valuation
 		          Building and
 		          Depreciation
 		    Year Built/
 		    Depreciable
 		 
Building Address
 
(City/State)
  Encumbrances     Land     Buildings     Provision     Land     Improvements     Total     12/31/06     Renovated     Lives (Years)  
    (Dollars in thousands)  
 
777 Bayly Street West
  Ajax Ontario, Canada             7,224       13,156       828       7,539       13,669       21,208       120       1987       (o )
Other
                                                                                   
3501 Maple Street(j)
  Abilene, TX             67       1,057       1,422       266       2,280       2,546       1,057       1980       (o )
4200 West Harry Street(d)
  Wichita, KS             193       2,224       1,777       532       3,662       4,194       2,040       1972       (o )
6601 S. 33rd Street
  McAllen, TX             231       1,276       166       233       1,440       1,673       304       1975       (o )
6266 Hurt Road
  Horn Lake, MS             427       —       3,211       427       3,212       3,638       346       1963       (o )
6266 Hurt Road Building B(j)
  Horn Lake, MS             —       —       868       99       769       868       48       1963       (o )
6266 Hurt Road Building C
  Horn Lake, MS             —       —       292       278       14       292       1       1963       (o )
7601 NW 107th Terrace
  Kansas City, MO             746       4,712       30       750       4,738       5,488       578       1982/87       (o )
12626 Silicon Drive
  San Antonio, TX             768       3,448       22       779       3,459       4,238       253       1981/95       (o )
3100 Pinson Valley Parkway
  Birmingham, AL             303       742       20       310       756       1,065       45       1970       (o )
1245 N. Hearne Avenue
  Shreveport, LA             99       1,263       32       102       1,292       1,394       91       1981/2004       (o )
10330 I Street
  Omaha, NE             1,808       8,340       5       1,809       8,344       10,153       448       1979/2005       (o )
                                                                                     
Redevelopments / Developments / Developable Land
                59,729       2,775       59,483       63,783       58,207       121,990       649                  
                                                                                     
                  497,742     $ 1,908,366     $ 494,595     $ 514,254     $ 2,386,453     $ 2,900,707     $ 410,961 (k)                
                                                                                     

S-23

Table of Contents

NOTES:
 
(a) See description of encumbrances in Note 6 to Notes to Consolidated Financial Statements.
 
(b) Initial cost for each respective property is tangible purchase price allocated in accordance with SFAS No. 141.
 
(c) Comprised of two properties.
 
(d) Comprised of three properties.
 
(e) Comprised of four properties.
 
(f) Comprised of 28 properties.
 
(g) These properties represent developable land and redevelopments that have not been placed in service.
 
(h) Improvements are net of write-off of fully depreciated assets.
 
(j) Property is not in-service as of December 31, 2006.
 
(k)
 
                         
                Gross Amount Carried
 
    Amounts included
 		    Amounts within
    At Close of Period
 		 
    in Real Estate
 		    Net Investment in
 		    December 31,
 		 
    Held for Sale     Real Estate     2006  
 
Land
  $ 16,229     $ 498,025     $ 514,254  
Buildings & Improvements
    88,465       2,297,988       2,386,453  
Accumulated Depreciation
    (8,464 )     (402,497 )     (410,961 )
                         
Subtotal
    96,230       2,393,516       2,489,746  
Construction in Progress
    6,960       30,575       37,535  
Leasing Commissions, Net and Deferred Leasing Intangibles
    12,771       —       12,771  
                         
Balance Sheet at December 31, 2006
  $ 115,961     $ 2,424,091     $ 2,540,052  
                         
 
(l) This property collateralizes a $3.0 million mortgage loan which matures on May 1, 2016.
 
(m) This property collateralizes a $15.2 million mortgage loan which matures on December 1, 2010.
 
(n) This property collateralizes a $5.1 million mortgage loan which matures on December 1, 2019.
 
(o) This property collateralizes a $1.6 million mortgage loan which matures on January 1, 2013.
 
(p) These properties collateralize a $1.8 million mortgage loan which matures on September 1, 2009.
 
(q) This property collateralizes a $2.4 million mortgage loan which matures on January 1, 2012.
 
(r) This property collateralizes a $1.9 million mortgage loan which matures on June 1, 2014.
 
(s) This property collateralizes a $5.3 million mortgage loan which matures on December 1, 2019.
 
(t) This property collateralizes a $1.9 million mortgage loan which matures on September 30, 2024.
 
(u) This property collateralizes a $6.7 million mortgage loan which matures on March 1, 2011.
 
(v) This property collateralizes a $14.2 million mortgage loan and a $12.0 million mortgage loan which both mature on January 1, 2014.
 
(w) These properties collateralize a $6.0 million mortgage loan which matures on July 1, 2009.
 
(x) This property collateralizes a $0.8 million mortgage loan which matures on February 1, 2017.
 
(y) Consists of five properties.
 
(z) Consists of six properties.
 
(aa) Consists of eight properties.
 
At December 31, 2006, the aggregate cost of land and buildings and equipment for federal income tax purpose was approximately $2.8 billion (excluding construction in progress.)


S-24

Table of Contents

FIRST INDUSTRIAL LP

SCHEDULE III:
REAL ESTATE AND ACCUMULATED DEPRECIATION (continued)
As of December 31, 2006
 
The changes in total real estate assets for the three years ended December 31, 2006 are as follows:
 
                         
    2006     2005     2004  
    (Dollars in thousands)  
 
Balance, Beginning of Year
  $ 2,914,916     $ 2,537,513     $ 2,352,026  
Acquisition, Construction Costs and Improvements
    711,029       810,266       493,012  
Disposition of Assets
    (672,099 )     (403,651 )     (288,433 )
Write-off of Fully Depreciated Assets
    (15,604 )     (29,212 )     (19,092 )
                         
Balance, End of Year
  $ 2,938,242     $ 2,914,916     $ 2,537,513  
                         
 
The changes in accumulated depreciation for the three years ended December 31, 2006 are as follows:
 
                         
    2006     2005     2004  
 
Balance, Beginning of Year
  $ 357,228     $ 323,493     $ 295,688  
Depreciation for Year
    107,352       86,587       71,779  
Disposition of Assets
    (38,014 )     (24,088 )     (24,882 )
Write-off of Fully Depreciated Assets
    (15,604 )     (28,764 )     (19,092 )
                         
Balance, End of Year
  $ 410,962     $ 357,228     $ 323,493  
                         


S-25

Table of Contents

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
FIRST INDUSTRIAL, L.P.
 
  By:  FIRST INDUSTRIAL REALTY TRUST, INC.
as general partner
 
  By: 
/s/  Michael W. Brennan
Michael W. Brennan
President, Chief Executive Officer and Director
(Principal Executive Officer)
 
Date: February 28, 2007
 
  By: 
/s/  Michael J. Havala
Michael J. Havala
Chief Financial Officer
(Principal Financial Officer)
 
Date: February 28, 2007
 
  By: 
/s/  Scott A. Musil
Scott A. Musil
Chief Accounting Officer
(Principal Accounting Officer)
 
Date: February 28, 2007
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
 
             
Signature
 
Title
 
Date
 
/s/  Jay H. Shidler

Jay H. Shidler 		  Chairman of the Board of Directors   February 28, 2007
         
/s/  Michael W. Brennan

Michael W. Brennan 		  President, Chief Executive Officer and Director   February 28, 2007
         
/s/  Michael G. Damone

Michael G. Damone 		  Director of Strategic Planning and Director   February 28, 2007
         
/s/  Kevin W. Lynch

Kevin W. Lynch 		  Director   February 28, 2007


S-26

Table of Contents

             
Signature
 
Title
 
Date
 
/s/  Robert D. Newman

Robert D. Newman 		  Director   February 28, 2007
         
/s/  John E. Rau

John E. Rau 		  Director   February 28, 2007
         
/s/  Robert J. Slater

Robert J. Slater 		  Director   February 28, 2007
         
/s/  W. Edwin Tyler

W. Edwin Tyler 		  Director   February 28, 2007
         
/s/  J. Steven Wilson

J. Steven Wilson 		  Director   February 28, 2007


S-27

EX-12.1 2 c12588exv12w1.htm COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES exv12w1
 

Exhibit 12.1
FIRST INDUSTRIAL, LP
Ratio of Earnings to Fixed Charges
(Dollars in Thousands)
                                         
    2006     2005     2004     2003     2002  
(Loss) Income from Continuing Operations before Income Taxes from Continuing Operations
     (36,884 )     (457 )     28,774       16,759       49,128  
Plus:
                                        
Interest expense
     121,130       108,537       99,067       95,198       87,439  
Rentals Deemed Representative of an Interest Factor
     643       577       433       496       572  
Amortization of DFC and IRPA
     2,664       2,122       1,928       1,761       1,858  
 
                              
Net Earnings
     87,553       110,779       130,202       114,214       138,997  
 
                              
Interest Expense
     121,130       108,537       99,067       95,198       87,439  
Rentals Deemed Representative of an Interest Factor
     643       577       433       496       572  
Capitalized Interest
     5,063       3,271       1,304       761       7,792  
Amortization of deferred financing costs and IRPA
     2,664       2,122       1,928       1,761       1,858  
 
                              
Fixed Charges
     129,500       114,507       102,732       98,216       97,661  
 
                              
Ratio of Earnings to Fixed Charges
     (b )     (b )     1.27       1.16       1.42  
 
                              
 
(a)   For purposes of computing the ratios of earnings to fixed charges, earnings have been calculated by adding fixed charges (excluding capitalized interest) to income from continuing operations before income taxes allocable to continuing operations. Fixed charges consist of interest costs, whether expensed or capitalized, portion of rent expense representative of interest factor, and amortization of deferred financing costs.
 
(b)   For the years ended December 31, 2006 and 2005, the ratio coverage is less that 1:1. The Consolidated Operating Partnership must generate additional earnings of $41,947 and $3,728 for the years ended December 31, 2006 and 2005, respectively, to achieve a ratio coverage of 1:1.

118

EX-23 3 c12588exv23.htm CONSENT OF PRICEWATERHOUSECOOPERS LLP exv23
 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (File No. 333-117842) and Registration Statement on Form S-8 (File No. 333-100630) of First Industrial, L.P. of our report dated March 1, 2007 relating to the consolidated financial statements, financial statement schedule, management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.
PricewaterhouseCoopers, LLP
Chicago, Illinois
March 1, 2007

 

EX-31.1 4 c12588exv31w1.htm CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER exv31w1
 

EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Michael W. Brennan, certify that:
1.   I have reviewed this annual report on Form 10-K of First Industrial, L.P.;
 
2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in the report;
 
4.   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
  a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
  b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
  c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
  d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
  a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
  b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: February 28, 2007
         
 
  /s/ Michael W. Brennan    
 
 
 
Michael W. Brennan 		   
 
  President and Chief Executive Officer    
 
  First Industrial Realty Trust, Inc.    

120

EX-31.2 5 c12588exv31w2.htm CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER exv31w2
 

EXHIBIT 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Michael J. Havala, certify that:
1.   I have reviewed this annual report on Form 10-K of First Industrial, L.P.;
2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in the report;
4.   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
  a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
  b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
  c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
  d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
  a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
  b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: February 28, 2007
         
     
  /s/ Michael J. Havala    
  Michael J. Havala   
  Chief Financial Officer
First Industrial Realty Trust, Inc. 		  
 

121

EX-32 6 c12588exv32.htm SECTION 906 CERTIFICATION exv32
 

EXHIBIT 32
CERTIFICATION
Accompanying Form 10-K Report
of First Industrial, L.P.
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Chapter 63, Title 18 U.S.C. §1350(a) and (b))
     Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chapter 63, Title 18 U.S.C. §1350(a) and (b)), each of the undersigned hereby certifies, to his knowledge, that the Annual Report on Form 10-K for the period ended December 31, 2006 of First Industrial, L.P. fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: February _____, 2007
         
     
  /s/ Michael W. Brennan    
  Michael W. Brennan   
  Chief Executive Officer (Principal Executive Officer)
First Industrial Realty Trust, Inc. 		  
 
Dated: February _____, 2007
         
     
  /s/ Michael J. Havala    
  Michael J. Havala   
  Chief Financial Officer (Principal Financial Officer)
First Industrial Realty Trust, Inc. 		  
 
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. The information contained in this written statement shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference to such filing.

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