10-K 1 c03084e10vk.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, 2005
    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 1-13102
 
FIRST INDUSTRIAL REALTY TRUST, INC.
(Exact name of Registrant as specified in its Charter)
 
     
Maryland
(State or other jurisdiction of
incorporation or organization)
  36-3935116
(I.R.S. Employer
Identification No.)
     
311 S. Wacker Drive, Suite 4000, Chicago, Illinois
(Address of principal executive offices)
  60606
(Zip Code)
 
(312) 344-4300
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Common Stock
(Title of class)
 
New York Stock Exchange
(Name of exchange on which registered)
 
Depositary Shares Each Representing 1/100 of a Share of 8.625% Series C Cumulative Preferred Stock
Depositary Shares Each Representing 1/10,000 of a Share of 7.25% Series J Cumulative Preferred Stock
(Title of class)
 
New York Stock Exchange
(Name of exchange on which registered)
 
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 filerþ     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
 
The aggregate market value of the voting and non-voting stock held by non-affiliates of the Registrant was approximately $1,670 million based on the closing price on the New York Stock Exchange for such stock on June 30, 2005.
 
At March 6, 2006, 44,337,616 shares of the Registrant’s Common Stock, $.01 par value, were outstanding.
 
DOCUMENTS INCORPORATED BY REFERENCE
 
Part III incorporates certain information by reference to the Registrant’s definitive proxy statement expected to be filed with the Securities and Exchange Commission no later than 120 days after the end of the Registrant’s fiscal year.
 


 

 
FIRST INDUSTRIAL REALTY TRUST, INC.
 
TABLE OF CONTENTS
 
             
        Page
 
  Business   3
  Risk Factors   9
  Unresolved SEC Comments   15
  Properties   15
  Legal Proceedings   24
  Submission of Matters to a Vote of Security Holders   24
 
  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities   25
  Selected Financial Data   26
  Management’s Discussion and Analysis of Financial Condition and Results of Operations   29
  Quantitative and Qualitative Disclosures About Market Risk   46
  Financial Statements and Supplementary Data   46
  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure   46
  Controls and Procedures   46
  Other Information   47
 
  Directors and Executive Officers of the Registrant   47
  Executive Compensation   47
  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters   47
  Certain Relationships and Related Transactions   47
  Principal Accountant Fees and Services   47
 
  Exhibits and Financial Statement Schedules   48
  S-30
 Amendment No. 1 to the LP Agreement
 Computation of Ratios of Earnings to Fixed Charges
 Subsidiaries
 Consent of PricewaterhouseCoopers LLP
 Certification of Principal Executive Officer
 Certification of Principal Financial Officer
 Certifications
 
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 Realty Trust, Inc. (the “Company”) 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 Company, are generally identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions. The Company’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 Company 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 Company’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 and 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 Company and its business, including additional factors that could materially affect the Company’s financial results, is included herein in Item 1A, “Risk Factors” and in the Company’s other filings with the Securities and Exchange Commission.


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PART I
 
THE COMPANY
 
Item 1.   Business
 
General
 
First Industrial Realty Trust, Inc. is a Maryland corporation organized on August 10, 1993, and is a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). First Industrial Realty Trust, Inc., (together with its consolidated subsidiaries, the “Company”) is a self-administered and fully integrated real estate company which owns, manages, acquires, sells, redevelops and develops industrial real estate. The Company completed its initial public offering in June 1994 (the “Initial Offering”). Upon consummation of the Initial Offering, the Company owned 226 industrial properties which contained an aggregate of 17.4 million square feet of gross leasable area (“GLA”). As of December 31, 2005, the Company’s in-service portfolio consisted of 420 light industrial properties, 153 R&D/flex properties, 177 bulk warehouse properties, 102 regional warehouse properties and 32 manufacturing properties containing approximately 70.2 million square feet of GLA located in 29 states and one province in Canada. The Company’s in-service portfolio includes 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 Company’s interests in its properties and land parcels are held through (i) partnerships controlled by the Company, including First Industrial, L.P. (the “Operating Partnership”), of which the Company is the sole general partner, as well as, among others, 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., FI Development Services, L.P. and TK-SV, LTD., each of which the sole general partner is a wholly-owned subsidiary of the Company and the sole limited partner is the Operating Partnership; (ii) limited liability companies, of which the Operating Partnership is the sole member; and (iii) First Industrial Development Services, Inc. and wholly owned LLC’s, of which the Operating Partnership is the sole stockholder, all of whose operating data is consolidated with that of the Company as presented herein. The Company, through separate wholly-owned limited liability companies of which the Operating Partnership or First Industrial Development Services, Inc. is the sole member, also owns minority equity interests in, and provides various services to, four joint ventures which invest in industrial properties (the “September 1998 Joint Venture”, the “May 2003 Joint Venture”, the “March 2005 Joint Venture” and the “September 2005 Joint Venture”). The Company, 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 fifth 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 and the September 2005 Joint Venture, the “Joint Ventures”). During the year ended December 31, 2004, the December 2001 Joint Venture sold all of its industrial properties. The operating data of the Joint Ventures is not consolidated with that of the Company as presented herein.
 
The Company 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 fiscal control systems. At March 6, 2006, the Company had 441 employees.
 
The Company 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 SEC. In addition, the Company’s Corporate Governance Guidelines, Code of


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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 shall 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
 
Business Objectives and Growth Plans
 
The Company’s fundamental business objective is to maximize the total return to its stockholders through increases in per share distributions and increases in the value of the Company’s properties and operations. The Company’s growth plans include the following elements:
 
  •  Internal Growth.  The Company 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 Company 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 Company’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 Company builds for, purchases from, and leases and sells industrial properties to companies that need industrial facilities. The Company seeks to grow this business by targeting both large and middle-market public and private companies.
 
Business Strategies
 
The Company utilizes the following six strategies in connection with the operation of its business:
 
  •  Organization Strategy.  The Company 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 Company 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 Company 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 Company’s market strategy is to concentrate on the top industrial real estate markets in the United States. These top markets are based upon one or more of the following characteristics: (i) the strength of the market’s industrial real estate fundamentals, including increased industrial demand expectations; (ii) the history and outlook for continued economic growth and industry diversity; and (iii) a minimum market size of 100 million square feet of industrial space. The Company is currently evaluating industrial real estate investments outside the United States, including Canada.
 
  •  Leasing and Marketing Strategy.  The Company has an operational management strategy designed to enhance tenant satisfaction and portfolio performance. The Company 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 Company also has local and national marketing programs which focus on the business and real estate brokerage communities and national tenants.


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  •  Acquisition/Development Strategy.  The Company’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 884 industrial properties in the Company’s in-service portfolio at December 31, 2005, 131 properties have been developed by the Company or its former management. The Company will continue to leverage the development capabilities of its management, many of whom are leading industrial property developers in their respective markets.
 
  •  Disposition Strategy.  The Company 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 Company plans on utilizing a portion of net sales proceeds from property sales, borrowings under its unsecured lines 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 March 6, 2006, the Company had approximately $212.4 million available in additional borrowings under its unsecured line of credit.
 
Recent Developments
 
In 2005, the Company acquired or placed in-service developments totaling 173 industrial properties and acquired several parcels of land for a total investment of approximately $894.6 million. The Company also sold 96 industrial properties and several parcels of land for a gross sales price of approximately $656.1 million. At December 31, 2005, the Company owned 884 in-service industrial properties containing approximately 70.2 million square feet of GLA.
 
On August 23, 2005, the Company, through the Operating Partnership, amended and restated its $300,000 unsecured line of credit, which was due September 28, 2007, and bore interest at a floating rate of LIBOR plus .7%, or the Prime Rate, at the Company’s election. The amended and restated unsecured line of credit (the “2005 Unsecured Line of Credit I”) will mature 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 Company’s election. In December 2005, the Company, through the Operating Partnership, entered into a non-revolving unsecured line of credit (the “2005 Unsecured Line of Credit II”). The 2005 Unsecured Line of Credit II has a borrowing capacity of $125.0 million and matures on March 15, 2006. The 2005 Unsecured Line of Credit II provides for interest only payments at LIBOR plus .625% or at Prime, at the Company’s election. In January 2006, the Company, through the Operating Partnership, paid off and retired the 2005 Unsecured Line of Credit II. Together, the 2005 Unsecured Line of Credit I and the 2005 Unsecured Line of Credit II, the “Unsecured Lines of Credit.”
 
On January 12, 2005, in conjunction with the acquisition of a parcel of land, the seller provided the Company a mortgage loan in the amount of $1.2 million (the “Acquisition Mortgage Loan XV”). The Acquisition Mortgage Loan XV is collateralized by a land parcel in Lebanon, TN, does not require principal payments prior to maturity on January 12, 2006 (which the Company paid off and retired at maturity) and has a 0% interest rate.
 
On March 31, 2005, the Company assumed a mortgage loan in the amount of $2.0 million (the “Acquisition Mortgage Loan XVI”). The Acquisition Mortgage Loan XVI is collateralized by one property in New Hope, MN, bears interest at a fixed rate of 5.50% and provides for monthly principal and interest payments based on a 20-year amortization schedule. The Acquisition Mortgage Loan XVI matures on September 30, 2024. In conjunction with the assumption of the Acquisition Mortgage Loan XVI, the Company recorded a premium in the amount of $.03 million which will be amortized as an adjustment to interest expense through March 31, 2009. Including the impact of the premium recorded, the Company’s effective interest rate on the Acquisition Mortgage Loan XVI is 5.30%. The Acquisition Mortgage Loan XVI may be prepaid on April 1, 2009 without incurring a prepayment fee.


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On June 27, 2005, the Company assumed a mortgage loan in the amount of $3.1 million (the “Acquisition Mortgage Loan XVII”). The Acquisition Mortgage Loan XVII is collateralized by one property in Villa Rica, GA, bears interest at a fixed rate of 7.38% and provides for monthly principal and interest payments based on a 15-year amortization schedule. The Acquisition Mortgage Loan XVII matures on May 1, 2016. In conjunction with the assumption of the Acquisition Mortgage Loan XVII, the Company recorded a premium in the amount of $.3 million which will be amortized as an adjustment to interest expense through May 1, 2016. Including the impact of the premium recorded, the Company’s effective interest rate on the Acquisition Mortgage Loan XVII is 5.70%. The Acquisition Mortgage Loan XVII may not be prepaid until maturity without incurring a prepayment fee.
 
On June 30, 2005, the Company assumed a mortgage loan in the amount of $6.5 million (the “Acquisition Mortgage Loan XVIII”). The Acquisition Mortgage Loan XVIII is collateralized by one property in Hammonton, NJ, bears interest at a fixed rate of 7.58% and provides for monthly principal and interest payments based on a 20-year amortization schedule. The Acquisition Mortgage Loan XVIII matures on March 1, 2011. In conjunction with the assumption of the Acquisition Mortgage Loan XVIII, the Company recorded a premium in the amount of $.7 million which will be amortized as an adjustment to interest expense through November 30, 2010. Including the impact of the premium recorded, the Company’s effective interest rate on the Acquisition Mortgage Loan XVIII is 4.93%. The Acquisition Mortgage Loan XVIII may be prepaid on December 1, 2010 without incurring a prepayment fee.
 
On September 30, 2004, the Company assumed a mortgage loan in the amount of $12.1 million and borrowed an additional $1.4 million (collectively referred to as the “Acquisition Mortgage Loan XIII”). The Acquisition Mortgage Loan XIII was collateralized by three properties in Phoenix, Arizona, bore interest at a fixed rate of 5.60% and provided for monthly principal and interest payments based on a 30-year amortization schedule. The Acquisition Mortgage Loan XIII matures on November 10, 2012. In conjunction with the assumption of the Acquisition Mortgage Loan XIII, the Company recorded a premium in the amount of $.5 million which was being amortized over the remaining life of the Acquisition Mortgage Loan XIII as an adjustment to interest expense. On July 13, 2005, the Company sold the properties that collateralized the Acquisition Mortgage Loan XIII. In conjunction with the sale, the buyer assumed the Acquisition Mortgage Loan XIII and the Company paid $.3 million in fees related to the assignment of the Acquisition Mortgage Loan XIII. Consequently, the Company wrote-off the remaining premium on the note of $.4 million. Both the $.3 million of fees and $.4 million premium write-off are included in the Gain on Early Retirement of Debt on the Company’s Statement of Operations.
 
On November 8, 2005 and November 18, 2005, the Company issued 600 and 150 Shares, respectively, each representing $.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. Dividends on the Series I Depositary Shares are payable monthly in arrears commencing December 31, 2005 at an initial dividend rate of One-Month LIBOR plus 1.25%, subject to reset on the four-month, six-month and one year anniversary of the date of issuance. 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 $.4 million. In accordance with EITF D-42, due to the redemption of the Series I Preferred Stock, the initial offering costs associated with the issuance of the Series I Preferred Stock of approximately $.7 million is reflected as a deduction from net income to arrive at net income available to common stockholders in determining earnings per share for the three months ended March 31, 2006.
 
On November 20, 1997, the Company, through the Operating Partnership, issued $50 million of senior unsecured debt which matured on November 21, 2005 and bore a coupon interest rate of 6.90%, which was the effective interest rate (the “2005 Notes”). On November 21, 2005 the Company, through the Operating Partnership, paid off and retired the 2005 Notes for $50 million plus accrued interest.
 
On December 9, 2005, the Company issued 1,250,000 shares of $.01 par value common stock (the “December 2005 Equity Offering”). The price per share was $39.45 resulting in gross offering proceeds of


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$49.3 million. Proceeds to the Company, net of underwriters’ discount and total expenses, were approximately $48.8 million.
 
On March 18, 2005, the Company, through a wholly-owned limited liability company in which First Industrial Development Services, Inc. is the sole member, 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 Company, through wholly-owned limited liability companies of the Operating Partnership or First Industrial Development Services, 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. As of December 31, 2005, the March 2005 Joint Venture owned 47 industrial properties comprising approximately 4.2 million square feet (unaudited) of GLA and several land parcels.
 
On September 7, 2005, the Company, through a wholly-owned limited liability company in which First Industrial Development Services, Inc. is the sole member, 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 Company, through wholly-owned limited liability companies of the Operating Partnership or First Industrial Development Services, 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. As of December 31, 2005, the September 2005 Joint Venture owned 217 industrial properties comprising approximately 14.0 million square feet (unaudited) of GLA and several land parcels.
 
From January 1, 2006 to March 6, 2006, the Company acquired 23 industrial properties and several land parcels for a total estimated investment of approximately $149.7 million (approximately $.9 million of which was made through the issuance of limited partnership interests in the Operating Partnership (“Units”)). The Company also sold 16 industrial properties including the industrial property that is accounted for as a build to suit development for sale, for approximately $240.1 million of gross proceeds during this period.
 
On March 8, 2006, the Company declared a first quarter 2006 distribution of $.7000 per common share/unit on its common stock/units which is payable on April 17, 2006. The Company also declared a first quarter 2006 dividend of $53.906 per share ($.53906 per Depositary Share), on its Series C Preferred Stock, totaling, in the aggregate, approximately $1.1 million, which is payable on March 31, 2006; a semi-annual dividend of $3,118 per share ($31.18 per Depositary Share) on its Series F Preferred Stock, totaling, in the aggregate, approximately $1.6 million, which is payable on March 31, 2006; a semi-annual dividend of $3,618 per share ($36.18 per Depositary Share) on its Series G Preferred Stock, totaling, in the aggregate, approximately $.9 million, which is payable on March 31, 2006; and a quarterly dividend of $3,927 per share ($.3927 per Depositary Share) on its Series J Preferred Stock, totaling, in the aggregate, approximately $2.4 million, which is payable on March 31, 2006.
 
On January 10, 2006, the Company, through the Operating Partnership, issued $200 million of senior unsecured debt which matures on January 15, 2016 and bears a coupon interest 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. 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 for a payment of approximately $1.7 million, which is included in other comprehensive income. The debt issue discount and the settlement amount of the interest rate protection agreements are being 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 Company’s effective interest rate on the 2016 Notes is 5.91%. The 2016 Notes contain certain covenants, including limitations on incurrence of debt and debt service coverage.
 
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. Dividends on the Series J Preferred Stock, represented by the Depositary Shares, are cumulative from the date of initial issuance and are


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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 Series J Preferred Stock is outstanding, the Company will increase the dividend on the preferred shares to a rate of 8.25% of the liquidation preference per year. 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 and Series G Preferred Stock. The Series J Preferred Stock is not redeemable prior to January 15, 2011. 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 Series J Preferred Stock is outstanding, then the Series J Preferred Stock 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. 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 $150.0 million 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.
 
Future Property Acquisitions, Developments and Property Sales
 
The Company 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 Company is currently engaged in negotiations relating to the possible acquisition and development of industrial properties.
 
The Company also sells properties based on market conditions and property related factors. As a result, the Company is currently engaged in negotiations relating to the possible sale of certain industrial properties in the Company’s current portfolio.
 
When evaluating potential industrial property acquisitions and developments, as well as potential industrial property sales, the Company 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 Company 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 Company 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, 2005, the occupancy rates for industrial properties in the United States have ranged from 88.5%* to 92.9%*, with an occupancy rate of 90.4%* at December 31, 2005.
 
 
Source: Torto Wheaton Research


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Item 1A.   Risk Factors
 
Risk Factors
 
The Company’s operations involve various risks that could adversely affect its financial condition, results of operations, cash flow, ability to pay distributions on its common stock and the market price of its common stock. These risks, among others contained in the Company’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 Company’s revenues and available cash.
 
The factors that affect the value of the Company’s real estate and the revenues the Company 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 Company’s financial results depend on leasing space in the Company’s real estate to tenants on terms favorable to the Company. The Company’s income and funds available for distribution to its stockholders will decrease if a significant number of the Company’s tenants cannot pay their rent or the Company is unable to lease properties on favorable terms. In addition, if a tenant does not pay its rent, the Company may not be able to enforce its rights as landlord without delays and the Company may 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, 2005, approximately 70.3% of the Company’s gross revenues from continuing operations came from rentals of real property.
 
The Company 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 Company’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 Company’s property portfolio could adversely affect the Company’s financial condition and ability to service debt and make distributions to its stockholders. 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 Company’s ability at any time to sell assets may be restricted.
 
The Company may be unable to sell properties on advantageous terms.
 
The Company has sold to third parties a significant number of properties in recent years and, as part of its business, the Company intends to continue to sell properties to third parties. The Company’s ability to sell properties on advantageous terms depends on factors beyond the Company’s control, including competition


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from other sellers and the availability of attractive financing for potential buyers of the Company’s properties. If the Company is unable to sell properties on favorable terms or redeploy the proceeds of property sales in accordance with the Company’s business strategy, then 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 could be adversely affected.
 
The Company has also sold to its joint ventures a significant number of properties in recent years and, as part of its business, the Company intends to continue to sell properties to its joint ventures as opportunities arise. If the Company 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 no access to capital on favorable terms, then such sales could be delayed or prevented, adversely affecting 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.
 
The Company may be unable to acquire properties on advantageous terms or acquisitions may not perform as the Company expects.
 
The Company acquires and intends to continue to acquire primarily industrial properties. The acquisition of properties entails various risks, including the risks that the Company’s investments may not perform as expected and that the Company’s cost estimates for bringing an acquired property up to market standards may prove inaccurate. Further, the Company faces significant competition for attractive investment opportunities from other well-capitalized real estate investors, including both publicly-traded real estate investment trusts 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 Company may be unable to acquire additional properties as it desires or the purchase price may be elevated. In addition, the Company expects to finance future acquisitions through a combination of borrowings under the 2005 Unsecured Line of Credit I, proceeds from equity or debt offerings by the Company and proceeds from property sales, which may not be available and which could adversely affect the Company’s cash flow. Any of the above risks could adversely affect the Company’s financial condition, results of operations, cash flow and ability to pay dividends on, and the market value of, the Company’s common stock.
 
The Company may be unable to complete development and re-development projects on advantageous terms.
 
As part of its business, the Company develops new and re-develops existing properties. In addition, the Company 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 Company intends to continue to sell such properties to third parties or to sell such properties to the Company’s joint ventures as opportunities arise. The real estate development and re-development business involves significant risks that could adversely affect 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, which include:
 
  •  the Company 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 Company 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 Company’s ability to sell such properties to third parties or to sell such properties to the Company’s joint ventures.
 
The Company may be unable to renew leases or find other lessees.
 
The Company 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,


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may be less favorable than expiring lease terms. If the Company 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 then current rates, the Company’s cash, funds from operations, and ability to make expected distributions to stockholders might be adversely affected. As of December 31, 2005, leases with respect to approximately 14.1 million, 10.6 million and 10.7 million square feet of GLA, representing 23%, 18% and 17%, of GLA expire in the remainder of 2006, 2007 and 2008, respectively.
 
The Company might fail to qualify or remain qualified as a REIT.
 
First Industrial Realty Trust, Inc. intends to operate so as to qualify as a REIT under the Internal Revenue Code of 1986 (the “Code”). Although First Industrial Realty Trust, Inc. 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 First Industrial Realty Trust, Inc.’s control.
 
First Industrial Realty Trust, Inc. (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, First Industrial Realty Trust, Inc. provided services to unrelated third parties and certain payments were made by the unrelated third parties for services provided by certain contractors hired by First Industrial Realty Trust, Inc. First Industrial Realty Trust, Inc. 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 First Industrial Realty Trust, Inc. from satisfying the gross income requirements of the REIT provisions (the “gross income tests”). First Industrial Realty Trust, Inc. has brought this matter to the attention of the Internal Revenue Service, or the IRS. The IRS has not challenged or expressed any interest in challenging First Industrial Realty Trust Inc.’s view on this matter. If the IRS were to challenge such position and were successful, First Industrial Realty Trust, Inc. might be found not to have satisfied the gross income tests in one or more of its taxable years. If First Industrial Realty Trust, Inc. 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 First Industrial Realty Trust, Inc.’s status as a REIT as long as such noncompliance was due to reasonable cause and not to willful neglect, and certain other requirements are met. Although this cannot be assured, First Industrial Realty Trust, Inc. believes that the risk of losing its REIT status as a result of these development agreements is remote.
 
If First Industrial Realty Trust, Inc. 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 First Industrial Realty Trust, Inc. issues. Unless entitled to relief under certain statutory provisions, First Industrial Realty Trust, Inc. also 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 Company sells properties to third parties or sells properties to the Company’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 Internal Revenue Service could contend that certain sales of properties by the Company are prohibited transactions. While the Company’s management does not believe that the Internal Revenue Service would prevail in such a dispute, if the matter was successfully argued by the Internal Revenue Service, the 100% penalty tax could be assessed against the profits from these transactions. In addition, any income from a


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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.
 
First Industrial Realty Trust, Inc. could, in certain instances, have taxable income without sufficient cash to enable First Industrial Realty Trust, Inc. 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 First Industrial Realty Trust, Inc. 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, First Industrial Realty Trust, Inc. 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 Company’s leverage and additional equity offerings may result in substantial dilution of stockholders’ interests.
 
Debt financing, the degree of leverage and rising interest rates could reduce the Company’s cash flow.
 
Where possible, the Company intends to continue to use leverage to increase the rate of return on the Company’s investments and to allow the Company to make more investments than it otherwise could. The Company’s use of leverage presents an additional element of risk in the event that the cash flow from the Company’s properties is insufficient to meet both debt payment obligations and the distribution requirements of the REIT provisions of the Code. In addition, rising interest rates would reduce the Company’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 Company’s properties if the Company 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 Company’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 Company, making it difficult for it to meet both debt payment obligations and the distribution requirements of the REIT provisions of the Code. As of December 31, 2005, none of the Company’s current indebtedness was cross-collateralized.
 
The Company may have to make lump-sum payments on its existing indebtedness.
 
The Company is required to make the following lump-sum or “balloon” payments under the terms of some of its indebtedness, including the Operating Partnership’s:
 
  •  $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”)


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  •  $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”)
 
  •  $150 million aggregate principal amount of 7.00% Notes due 2006 (the “2006 Notes”)
 
  •  a $500 million unsecured revolving credit facility (the “2005 Unsecured Line of Credit I”) under which First Industrial Realty Trust, Inc., through the Operating Partnership, may borrow to finance the acquisition of additional properties and for other corporate purposes, including working capital.
 
  •  a $125 million unsecured non-revolving credit facility (the “2005 Unsecured Line of Credit II”; together with the 2005 Unsecured Line of Credit I, the “Unsecured Lines of Credit”) under which First Industrial Realty Trust, Inc., through the Operating Partnership, may borrow to finance the acquisition of additional properties and for other corporate purposes, including working capital.
 
The Unsecured Lines of Credit provide for the repayment of principal in a lump-sum or “balloon” payment at maturity. The 2005 Unsecured Line of Credit I matures in 2008 and the 2005 Unsecured Line of Credit II matures in 2006. Under the Unsecured Line of Credit I, the Operating Partnership has the right, subject to certain conditions, to increase the aggregate commitment by up to $100 million. As of December 31, 2005, $457.5 million was outstanding under the Unsecured Lines of Credit at a weighted average interest rate of 4.886%.
 
The Company’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 Company has no commitments to refinance the 2006 Notes, the 2007 Notes, the 2009 Notes, the 2011 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 Lines of Credit. Some of the existing debt obligations, other than those discussed above, of the Company, through the Operating Partnership, are secured by the Company’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 Company’s organizational documents.
 
The organizational documents of First Industrial Realty Trust, Inc. do not contain any limitation on the amount or percentage of indebtedness the Company may incur. Accordingly, the Company could become more highly leveraged, resulting in an increase in debt service that could adversely affect the Company’s ability to make expected distributions to stockholders and in an increased risk of default on the Company’s obligations. As of December 31, 2005, the Company’s ratio of debt to its total market capitalization was 44.3%. 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 Company’s Unsecured Line of Credit could decrease the Company’s available cash.
 
The Company’s Unsecured Lines of Credit bear interest at a floating rate. As of December 31, 2005, the Company’s Unsecured Lines of Credit had an outstanding balance of $457.5 million at a weighted average interest rate of 4.886%. The Company’s Unsecured Lines of Credit bear interest at the Prime Rate or at the London Interbank Offered Rate plus .625%. Based on an outstanding balance on the Company’s Unsecured Lines of Credit as of December 31, 2005, a 10% increase in interest rates would increase interest expense by $2.3 million on an annual basis. Increases in the interest rate payable on balances outstanding under the Unsecured Lines of Credit would decrease the Company’s cash available for distribution to stockholders.


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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.
 
The Company 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 a 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 Company’s properties reveal all environmental liabilities, that any prior owner or operator of a property did not create any material environmental condition not known to the Company or that a material environmental condition does not otherwise exist as to any of the Company’s properties.
 
The Company’s insurance coverage does not include all potential losses.
 
The Company 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 Company’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 Company 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 Company’s properties, the Company could experience a significant loss of capital invested and potential revenues in these properties, and could potentially remain obligated under any recourse debt associated with the property.


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The Company is subject to risks and liabilities in connection with its investments in properties through joint ventures.
 
As of December 31, 2005, the Company’s four joint ventures owned approximately 24.3 million square feet of properties. As of December 31, 2005, the Company’s investment in joint ventures exceeded $44 million in the aggregate and for the year ended December 31, 2005 the Company’s equity in income of joint ventures exceeded $3.6 million. The Company’s organizational documents do not limit the amount of available funds that the Company may invest in joint ventures and the Company 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;
 
  •  if co-members or joint venturers 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 Company’s business interests or goals that would affect its ability to operate the property;
 
  •  co-members or joint venturers may have the power to act contrary to the Company’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 Company and its co-members or joint venturers may result in litigation or arbitration that would increase the Company’s expenses and prevent its officers and directors from focusing their time and effort on the Company’s business and result in subjecting the properties owned by the applicable joint venture to additional risk; and
 
  •  the Company may in certain circumstances be liable for the actions of its 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, 2005, the Company owned 884 in-service industrial properties containing an aggregate of approximately 70.2 million square feet of GLA in 29 states and one province in Canada, with a diverse base of more than 2,600 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


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of the properties as of December 31, 2005 was approximately 19 years. The Company maintains insurance on its properties that the Company believes is adequate.
 
The Company classifies its properties into five industrial categories: light industrial, R&D/flex, bulk warehouse, regional warehouse and manufacturing. While some properties may have characteristics which fall under more than one property type, the Company uses what it believes is the most dominant characteristic to categorize the property. The following describes, generally, the different industrial categories:
 
  •  Light industrial properties are of less than 100,000 square feet, have a ceiling height of 16 to 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 that which is occupied by the building.
 
  •  R&D/flex buildings 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.
 
  •  Bulk warehouse buildings 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.
 
  •  Regional warehouses 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 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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Each of the properties is wholly owned by the Company. The following tables summarize certain information as of December 31, 2005 with respect to the Company’s in-service properties.
 
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(k)
    710,554       12       249,832       6       3,234,959       14       383,935       5       1,060,600       5  
Baltimore, MD(e)
    931,426       15       169,660       5       1,373,430       6                   171,000       1  
Central Pennsylvania(g)
    862,230       7                   1,001,000       4       117,599       3              
Chicago, IL
    1,270,061       20       247,447       4       2,553,607       13       209,261       4       589,000       3  
Cincinnati, OH
    443,039       5                   2,042,555       10       450,797       7              
Cleveland, OH
                                                    462,000       1  
Columbus, OH
    217,612       2                   2,235,140       6                          
Dallas, TX
    1,925,213       49       492,503       20       2,406,171       18       843,232       13       224,984       2  
Denver, CO
    1,551,926       30       1,414,101       35       1,311,973       8       526,723       8       126,384       1  
Des Moines, IA
                            150,444       1       88,000       1              
Detroit, MI
    2,403,217       88       487,418       16       530,843       5       747,978       17              
Grand Rapids, MI
    61,250       1                                                  
Houston, TX
    741,042       8       201,363       3       2,233,064       13       437,088       6              
Indianapolis, IN(c,i,m)
    1,064,808       21       118,200       5       3,873,780       16       363,610       9       71,600       2  
Los Angeles, CA(b)
    239,437       8       18,921       4       846,004       4       43,676       1              
Louisville, KY
                            443,500       2                          
Milwaukee, WI
    274,223       5       93,705       2       1,680,089       9       120,150       2              
Minneapolis/St. Paul, MN(d,j)
    1,152,387       18       738,099       10       1,902,386       9       201,813       2       1,057,124       11  
Nashville, TN
    273,843       5                   1,207,926       7                   330,458       2  
N. New Jersey
    1,201,196       21       413,167       7       555,205       4       150,985       2              
Philadelphia, PA
    1,030,494       21       126,692       5       221,937       2       160,828       3       30,000       1  
Phoenix, AZ
    135,415       6                   631,000       2       469,923       6              
Portland, OR
                                                    36,000       1  
Raleigh, NC
                            237,000       1                   160,120       1  
Salt Lake City, UT
    478,782       32       146,937       6       324,568       2                          
San Diego, CA
    65,755       1                   397,760       2       318,106       9              
S. New Jersey(l)
    1,362,825       22       23,050       1                   118,496       2       22,738       1  
St. Louis, MO
    355,535       5                   1,111,072       8       96,392       1              
Tampa, FL(f,h)
    493,029       12       653,348       24       209,500       1                          
Toronto, ON
    57,540       1                   279,000       1                          
Other(a)
    159,000       5                   1,902,366       9       50,000       1              
                                                                                 
Total
    19,461,839       420       5,594,443       153       34,896,279       177       5,898,592       102       4,342,008       32  
                                                                                 
 
 
(a) Properties are located in Wichita, KS, McAllen, TX, Austin, TX, Sparks, NV, Malvern, AK, Kansas City, MO, San Antonio, TX, Byhalia, MS, Birmingham, AL, Shreveport, LA and Greenville, SC.
 
(b) One property collateralizes a $5.3 million mortgage loan which matures on December 1, 2019.
 
(c) Twelve properties collateralize a $2.3 million mortgage loan which matures on September 1, 2009.
 
(d) One property collateralizes a $5.5 million mortgage loan which matures on December 1, 2019.
 
(e) One property collateralizes a $1.9 million mortgage loan which matures on October 1, 2006.
 
(f) One property collateralizes a $2.4 million mortgage loan which matures on September 1, 2006.
 
(g) One property collateralizes a $15.7 million mortgage loan which matures on December 1, 2010.
 
(h) Six properties collateralize a $6.4 million mortgage loan which matures on July 1, 2009.
 
(i) One property collateralizes a $1.8 million mortgage loan which matures on January 1, 2013.
 
(j) One property collateralizes a $2.0 million mortgage loan which matures on September 30, 2024.
 
(k) One property collateralizes a $3.2 million mortgage loan which matures on May 1, 2016.
 
(l) One property collateralizes a $7.1 million mortgage loan which matures on March 1, 2011.
 
(m) One property collateralizes a $2.5 million mortgage loan which matures on January 1, 2012.
 
In addition to the above mortgage loans, the Company has a $1.2 million mortgage loan collateralized by one land parcel (not shown above) in Nashville, TN which matured on January 12, 2006 which the Company paid off and retired on the maturity date.


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Property Summary Totals
 
                                 
    Totals  
                Average
    GLA as a %
 
          Number of
    Occupancy at
    of Total
 
Metropolitan Area
  GLA     Properties(b)     12/31/05(b)     Portfolio(b)  
 
Atlanta, GA
    5,639,880       42       86 %     8.0 %
Baltimore, MD
    2,645,516       27       96 %     3.8 %
Central Pennsylvania
    1,980,829       14       99 %     2.8 %
Chicago, IL
    4,869,376       44       87 %     6.9 %
Cincinnati, OH
    2,936,391       22       94 %     4.2 %
Cleveland, OH
    462,000       1       100 %     0.7 %
Columbus, OH
    2,452,752       8       95 %     3.5 %
Dallas, TX
    5,892,103       102       89 %     8.4 %
Denver, CO
    4,931,107       82       93 %     7.0 %
Des Moines, IA
    238,444       2       87 %     0.3 %
Detroit, MI
    4,169,456       126       91 %     5.9 %
Grand Rapids, MI
    61,250       1       100 %     0.1 %
Houston, TX
    3,612,557       30       94 %     5.1 %
Indianapolis, IN
    5,491,998       53       92 %     7.8 %
Los Angeles, CA
    1,148,038       17       99 %     1.6 %
Louisville, KY
    443,500       2       89 %     0.6 %
Milwaukee, WI
    2,168,167       18       98 %     3.1 %
Minneapolis/St. Paul, MN
    5,051,809       50       92 %     7.2 %
Nashville, TN
    1,812,227       14       92 %     2.6 %
N. New Jersey
    2,320,553       34       92 %     3.3 %
Philadelphia, PA
    1,569,951       32       98 %     2.2 %
Phoenix, AZ
    1,236,338       14       90 %     1.8 %
Portland, OR
    36,000       1       100 %     0.1 %
Raleigh, NC
    397,120       2       100 %     0.6 %
Salt Lake City, UT
    950,287       40       94 %     1.4 %
San Diego, CA
    781,621       12       80 %     1.1 %
S. New Jersey
    1,527,109       26       100 %     2.2 %
St. Louis, MO
    1,562,999       14       96 %     2.2 %
Tampa, FL
    1,355,877       37       88 %     1.9 %
Toronto, ON
    336,540       2       100 %     0.5 %
Other(a)
    2,111,366       15       100 %     3.0 %
                                 
Total or Average
    70,193,161       884       92 %     100.0 %
                                 
 
 
(a) Properties are located in Wichita, KS, McAllen, TX, Austin, TX, Sparks, NV, Malvern, AK, Kansas City, MO, San Antonio, TX, Byhalia, MS, Birmingham, AL, Shreveport, LA and Greenville, SC.
 
(b) Includes only in-service properties.
 
Property Acquisition Activity
 
During 2005, the Company acquired 161 industrial properties totaling approximately 20.1 million square feet of GLA at a total purchase price of approximately $723.4 million, or approximately $35.99 per square


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foot. The Company also purchased several land parcels for an aggregate purchase price of approximately $29.3 million. The 161 industrial properties acquired have the following characteristics:
 
                             
                    Average
 
    Number of
              Occupancy at
 
Metropolitan Area
  Properties     GLA    
Property Type
  12/31/05(c)  
 
Indianapolis, IN(a)
    1       286,555     Bulk Warehouse     N/A  
San Diego, CA
    1       111,920     Bulk Warehouse     N/A  
Philadelphia, PA
    1       178,537     Bulk Warehouse     100 %
Nashville, TN
    1       177,004     Bulk Warehouse     100 %
Cincinnati, OH
    1       176,000     Bulk Warehouse     N/A  
Dallas, TX
    1       99,831     Light Industrial     N/A  
Central PA(a)
    1       249,600     Bulk Warehouse     N/A  
Chicago, IL
    1       97,450     Light Industrial     N/A  
Dallas, TX(a)
    1       73,986     Light Industrial     N/A  
Houston, TX(a)
    1       74,716     Light Industrial     N/A  
Milwaukee, WI
    4       368,462     Light Industrial & Bulk
Warehouse
    89 %
Minneapolis, MN
    1       83,285     R&D/Flex     100 %
Denver, CO
    1       110,400     Bulk Warehouse     100 %
Des Moines(a)
    1       90,000     Regional Warehouse     N/A  
Des Moines(a)
    1       200,000     Bulk Warehouse     N/A  
Des Moines(a)
    1       131,169     Manufacturing     N/A  
Indianapolis
    1       260,400     Bulk Warehouse     100 %
Houston
    1       200,000     Bulk Warehouse     100 %
N. New Jersey
    1       49,707     Light Industrial     100 %
Phoenix, Chicago
    3       331,000     Regional & Bulk Warehouse     100 %
Des Moines(a)
    1       400,000     Bulk Warehouse     N/A  
Phoenix, AZ(a)
    1       56,801     Light Industrial     N/A  
Milwaukee, WI(a)
    1       160,000     Bulk Warehouse     N/A  
Central PA
    1       243,380     Light Industrial     N/A  
Dallas, TX(a)
    1       395,970     Bulk Warehouse     N/A  
Denver, CO
    1       36,828     Light Industrial     100 %
Dallas, TX
    1       41,019     Light Industrial     100 %
Baltimore, MD
    4       115,985     R&D/Flex     87 %
Minneapolis, MN
    1       413,239     Light Industrial     N/A  
Phoenix, AZ
    3       384,683     Bulk Warehouse     N/A  
Detroit, MI
    1       55,000     Light Industrial     N/A  
Atlanta, GA & Columbus, OH
    3       720,953     Bulk Warehouse     100 %
Atlanta, GA
    1       90,000     Light Industrial     100 %
Chicago, IL(a)
    1       74,960     Manufacturing     N/A  
Detroit, MI
    1       53,550     Light Industrial     100 %
Milwaukee, WI
    1       44,342     Light Industrial     100 %
S. New Jersey
    1       355,000     R&D/Flex/Light
Industrial
    100 %
Central PA
    1       332,170     Light Industrial     100 %
Cincinnati, OH
    1       175,250     Light Industrial     N/A  
Los Angeles, CA
    2       119,104     Light Industrial     N/A  


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                    Average
 
    Number of
              Occupancy at
 
Metropolitan Area
  Properties     GLA    
Property Type
  12/31/05(c)  
 
Dallas/ Chicago/ Minneapolis
    18       2,432,884     Light Industrial, R&D/Flex,
Regional & Bulk Warehouse
    99 %
Los Angeles, CA(a)
    1       33,145     Light Industrial     N/A  
Atlanta, GA
    1       152,819     Bulk Warehouse     100 %
Orlando, FL
    1       78,997     Light Industrial     N/A  
Chicago, IL
    2       303,760     Bulk Warehouse     100 %
Chicago, IL
    1       35,000     Regional Warehouse     100 %
Detroit, MI
    3       138,103     Light Industrial     100 %
Detroit, MI
    1       116,937     Bulk Warehouse     N/A  
Milwaukee, WI
    1       100,520     Bulk Warehouse     100 %
Nashville, TN
    1       535,000     Bulk Warehouse     100 %
Atlanta, GA
    1       296,059     Bulk Warehouse     N/A  
Detroit, MI
    1       18,550     R&D/Flex     N/A  
                             
Milwaukee/Cincinnati
    13       1,556,659     Light Industrial/ Regional &
Bulk Warehouse
    100 %
Atlanta, GA
    2       110,529     Light Industrial     90 %
Central PA
    1       81,600     Light Industrial     100 %
Dallas, TX
    1       48,118     Regional Warehouse     N/A  
Central PA
    1       106,637     Bulk Warehouse     N/A  
                             
Various
    24       3,826,582     Lt Ind/R&D Flex/Mfg/
Reg & Bulk Whse
    100 %
Milwaukee, WI
    1       36,608     Light Industrial     N/A  
Nashville, TN
    1       51,528     Regional Warehouse     N/A  
Detroit, MI
    1       40,000     Light Industrial     100 %
                    Light Industrial/R&D
Flex/Regional
       
Indianapolis, IN
    5       325,379     Warehouse     100 %
Chicago, IL
    1       156,621     Light Industrial     100 %
Houston, TX
    1       38,950     R&D/Flex     N/A  
Houston, TX
    1       31,540     R&D/Flex     N/A  
Los Angeles, CA
    1       70,000     Light Industrial     95 %
Atlanta, GA
    2       287,600     Light Industrial/Bulk
Warehouse
    100 %
Denver, CO
    1       126,384     Manufacturing     100 %
Tampa, FL
    1       209,500     Bulk Warehouse     100 %
Detroit, MI(b)
    1       88,700     Light Industrial     N/A  
Baltimore, MD
    16       951,820     Light Industrial/R&D Flex     95 %
San Diego, CA
    1       65,755     Light Industrial     100 %
                             
      161       20,110,540              
                             
 
 
(a) Property was sold in 2005.
 
(b) Property acquired through foreclosure.
 
(c) Includes only in-service properties.

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Table of Contents

Property Development Activity
 
During 2005, the Company placed in-service 12 developments totaling approximately 2.6 million square feet of GLA at a total cost of approximately $141.9 million, or approximately $55.65 per square foot. The placed in-service developments have the following characteristics:
 
                     
              Average
 
              Occupancy
 
Metropolitan Area
  GLA    
Property Type
  at 12/31/05  
 
Phoenix, AZ
    500,000     Bulk Warehouse     100 %
Tampa, FL(a)
    38,780     R&D/Flex     N/A  
St. Louis, MO(a)
    144,400     Bulk Warehouse     N/A  
Denver, CO
    16,120     R&D/Flex     100 %
Cedar Rapids, IA(a)
    750,000     Bulk Warehouse     N/A  
Tampa, FL(a)
    27,980     R&D/Flex     N/A  
Cincinnati, OH
    180,000     Bulk Warehouse     100 %
Cincinnati, OH
    236,250     Bulk Warehouse     100 %
Columbus, OH(a)
    128,537     Bulk Warehouse     N/A  
Detroit, MI
    63,000     Regional Warehouse     100 %
Nashville, TN(a)
    325,000     Bulk Warehouse     N/A  
Malvern, AK
    140,000     Bulk Warehouse     100 %
                     
      2,550,067              
                     
 
 
(a) Property was sold in 2005.
 
At December 31, 2005, the Company had 20 development projects not placed in service, totaling an estimated 4.8 million square feet and with an estimated completion cost of approximately $210.6 million. The Company estimates it will place in service 19 of the 20 projects in fiscal year 2006. There can be no assurance that the Company will place these projects in service in 2006 or that the actual completion cost will not exceed the estimated completion cost stated above.
 
Property Sales
 
During 2005, the Company sold 96 industrial properties totaling approximately 12.8 million square feet of GLA and several land parcels. Total gross sales proceeds approximated $656.1 million. The 96 industrial properties sold have the following characteristics:
 
                     
    Number
           
    of
           
Metropolitan Area
  Properties     GLA    
Property Type
 
St. Louis, MO
    1       248,635     Bulk Warehouse
Cedar Rapids, IA
    1       750,000     Bulk Warehouse
Indianapolis
    1       286,555     Bulk Warehouse
Detroit, MI
    1       127,800     Bulk Warehouse
Milwaukee, WI
    1       104,190     Bulk Warehouse
Cincinnati, OH
    1       143,438     Bulk Warehouse
Miami, FL
    1       268,539     Bulk Warehouse
Minneapolis, MN
    1       49,190     R&D/Flex
Minneapolis, MN
    1       81,927     Light Industrial
Nashville, TN
    1       518,400     Bulk Warehouse
Northern New Jersey
    1       194,258     Bulk Warehouse
Central PA
    1       112,500     Bulk Warehouse


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Table of Contents

                     
    Number
           
    of
           
Metropolitan Area
  Properties     GLA    
Property Type
 
Houston, TX
    1       48,000     Light Industrial
Northern New Jersey
    2       29,000     R&D Flex/Light Industrial
Tampa, FL
    1       27,980     R&D/Flex
Philadelphia, PA
    1       61,157     Light Industrial
Philadelphia, PA
    1       72,000     Regional Warehouse
Phoenix, AZ
    2       99,436     Light Industrial
Cincinnati, OH
    1       345,000     Bulk Warehouse
Northern New Jersey
    1       208,000     Bulk Warehouse
Los Angeles, CA
    2       30,157     Light Industrial
Houston, TX
    1       74,716     Light Industrial
Minneapolis, MN
    1       47,263     Light Industrial
Baltimore, MD
    1       83,934     Light Industrial
Baltimore, MD
    3       172,382     Light Industrial
Central PA
    1       249,640     Bulk Warehouse
Tampa, FL
    1       41,377     Regional Warehouse
Chicago, IL
    1       288,000     Bulk Warehouse
Los Angeles, CA
    3       245,302     Regional & Bulk Warehouse
Baltimore, MD
    2       125,000     Light Industrial
Indianapolis
    1       192,000     Bulk Warehouse
Atlanta, GA
    1       59,959     Light Industrial
Milwaukee, WI
    1       160,000     Bulk Warehouse
Central PA
    1       252,000     Bulk Warehouse
Atlanta, GA
    1       239,435     Manufacturing
Phoenix, AZ
    3       407,205     Bulk Warehouse
Philadelphia, PA
    1       26,827     Manufacturing
Des Moines, IA
    1       90,000     Regional Warehouse
Los Angeles, CA
    1       68,446     Regional Warehouse
St. Louis, MO
    2       318,200     Bulk Warehouse
Atlanta, GA
    1       44,242     R&D/Flex
Southern New Jersey
          25,779     Light Industrial
Atlanta, GA
    1       800,000     Bulk Warehouse
Tampa, FL
    1       38,780     R&D/Flex
Dallas, TX
    3       262,686     Lt Industrial/Regional & Bulk Warehouse
Denver, CO
    1       34,740     Light Industrial
Chicago, IL
    1       31,175     Light Industrial
Chicago, IL
    1       74,960     Manufacturing
Columbus, OH
    1       128,537     Bulk Warehouse
Northern New Jersey
    1       266,338     Bulk Warehouse
Denver, CO
    1       14,822     R&D/Flex
Central PA
    1       100,000     Bulk Warehouse
Central PA
    1       198,386     Bulk Warehouse
Southern New Jersey
    1       14,400     R&D/Flex
Atlanta, GA
    1       36,000     Light Industrial

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Table of Contents

                     
    Number
           
    of
           
Metropolitan Area
  Properties     GLA    
Property Type
 
Los Angeles, CA
    2       73,000     Light Industrial
Los Angeles, CA
    1       33,145     Light Industrial
Salt Lake City, UT
    4       100,072     Light Industrial
Phoenix, AZ
    1       56,801     Light Industrial
Tampa, FL
    6       179,494     R&D/Flex
Philadelphia, PA
    1       40,000     Light Industrial
Des Moines, IA
    3       731,169     Manufacturing/Bulk Warehouse
Other, NH
    1       107,908     R&D/Flex
Chicago, IL
    1       49,730     R&D/Flex
Nashville, TN
    1       325,000     Bulk Warehouse
Northern New Jersey
    1       158,242     Bulk Warehouse
Northern New Jersey
    1       87,500     Regional Warehouse
Tampa, FL
    3       73,723     R&D Flex/Light Industrial
Dallas, TX
    1       395,970     Bulk Warehouse
Atlanta, GA
    1       1,054,500     Bulk Warehouse
Central PA
    1       300,000     Bulk Warehouse
                     
      96       12,784,947      
                     
 
Property Acquisitions, Developments and Sales Subsequent to Year End
 
From January 1, 2006 to March 6, 2006, the Company acquired 23 industrial properties and several land parcels for a total estimated investment of approximately $149.7 million (approximately $.9 million of which was made through the issuance of limited partnership interests in the Operating Partnership (“Units”). The Company also sold 16 industrial properties including the industrial property that is accounted for as a build to suit development for sale, for approximately $240.1 million of gross proceeds during this period.
 
Tenant and Lease Information
 
The Company has a diverse base of more than 2,600 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, 2005, approximately 92% of the GLA of the in-service industrial properties was leased, and no single tenant or group of related tenants accounted for more than 4.5% of the Company’s rent revenues, nor did any single tenant or group of related tenants occupy more than 5.8% of the Company’s total GLA as of December 31, 2005.

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Table of Contents

The following table shows scheduled lease expirations for all leases for the Company’s in-service properties as of December 31, 2005.
 
                                         
    Number of
          Percentage of
    Annual Base Rent
    Percentage of Total
 
Year of
  Leases
    GLA
    GLA
    Under Expiring
    Annual Base Rent
 
Expiration(1)
  Expiring     Expiring(2)     Expiring     Leases     Expiring(2)  
                (In thousands)  
 
2006
    785       14,143,241       22 %     59,650       23 %
2007
    534       10,613,545       16 %     44,994       18 %
2008
    509       10,679,926       16 %     44,491       17 %
2009
    304       5,966,864       9 %     26,294       10 %
2010
    274       6,271,421       10 %     25,843       10 %
2011
    101       3,145,093       5 %     11,487       4 %
2012
    37       1,327,919       2 %     4,436       2 %
2013
    37       2,548,695       4 %     8,409       3 %
2014
    21       1,132,401       2 %     3,961       2 %
2015
    38       3,460,870       5 %     11,867       5 %
Thereafter
    35       5,535,910       9 %     15,104       6 %
                                         
Total
    2,675       64,825,885       100.0 %   $ 256,536       100.0 %
                                         
 
 
(1) Lease expirations as of December 31, 2005 assume tenants do not exercise existing renewal, termination, or purchase options.
 
(2) Does not include existing vacancies of 5,367,276 aggregate square feet.
 
Item 3.   Legal Proceedings
 
The Company 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 Company.
 
Item 4.   Submission of Matters to a Vote of Security Holders
 
None.


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PART II
 
Item 5.   Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
 
Market Information
 
The following table sets forth for the periods indicated the high and low closing prices per share and distributions declared per share for the Company’s common stock, which trades on the New York Stock Exchange under the trading symbol “FR”.
 
                         
                Distribution
 
Quarter Ended
  High     Low     Declared  
 
December 31, 2005
  $ 41.82     $ 37.79     $ 0.7000  
September 30, 2005
  $ 41.80     $ 37.20     $ 0.6950  
June 30, 2005
  $ 42.16     $ 37.35     $ 0.6950  
March 31, 2005
  $ 42.65     $ 37.83     $ 0.6950  
December 31, 2004
  $ 42.11     $ 37.26     $ 0.6950  
September 30, 2004
  $ 40.39     $ 35.81     $ 0.6850  
June 30, 2004
  $ 39.50     $ 32.69     $ 0.6850  
March 31, 2004
  $ 39.62     $ 33.00     $ 0.6850  
 
The Company had 612 common stockholders of record registered with its transfer agent as of March 6, 2006.
 
The Company has determined that, for federal income tax purposes, approximately 11.77% of the total $121.0 million in distributions declared in 2005 represents ordinary dividend income to its stockholders, 7.75% qualify as 25 percent rate capital gain, 6.64% qualify as 15 percent rate qualified dividend income, 15.4% qualify as a 15 percent rate capital gain and the remaining 58.44% represents a return of capital.
 
Additionally, for tax purposes, 27.79% of the Company’s 2005 preferred stock dividends qualify as ordinary income, 18.74% qualify as 25 percent rate capital gain, 16.26% qualify as 15 percent rate qualified dividend income and 37.21% qualify as 15 percent rate capital gain.
 
In order to maintain its status as a REIT, the Company is required to meet certain tests, including distributing at least 90% of its REIT taxable income, or approximately $1.08 per common share for 2005. The Company’s dividend policy is to meet the minimum distribution required to maintain the Company’s REIT qualification under the Internal Revenue Code.
 
On March 4, July 22, October 31, and December 20, 2005, the Operating Partnership issued 37,587, 183,158, 29,688 and 116,039 Units, respectively, having an aggregate market value of approximately $14.7 million in exchange for property.
 
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 $.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 Company 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, 2005, 2004, 2003, 2002 and 2001 include the results of operations of the Company as derived from the Company’s audited financial statements. The results of operations of properties sold are presented in discontinued operations if they 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 Company as a result of the disposition and (b) the Company 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, 2005, 2004, 2003, 2002, and 2001 include the balances of the Company as derived from the Company’s audited financial statements.
 
                                         
    Year Ended
    Year Ended
    Year Ended
    Year Ended
    Year Ended
 
    12/31/05     12/31/04     12/31/03     12/31/02     12/31/01  
    (In thousands, except per share and property data)  
 
Statement of Operations Data:
                                       
Total Revenues
  $ 367,129     $ 296,701     $ 277,524     $ 257,883     $ 271,422  
Interest Income
    1,486       3,632       2,416       2,378       2,790  
Mark-to-Market/Gain on Settlement of Interest Rate Protection Agreements
    811       1,583                    
Property Expenses
    (121,784 )     (99,889 )     (92,650 )     (84,172 )     (84,731 )
General and Administrative Expense
    (55,812 )     (39,569 )     (26,953 )     (19,610 )     (18,609 )
Interest Expense
    (108,339 )     (98,636 )     (94,895 )     (90,017 )     (82,580 )
Amortization of Deferred Financing Costs
    (2,125 )     (1,931 )     (1,764 )     (1,925 )     (1,809 )
Depreciation and Other Amortization
    (119,608 )     (87,951 )     (69,707 )     (57,871 )     (53,665 )
Expenses from Build to Suit Development for Sale
    (15,574 )                        
Gain (Loss) from Early Retirement from Debt (c)
    82       (515 )     (1,466 )     (888 )     (10,309 )
Valuation Provision on Real Estate (a)
                            (9,500 )
Equity in Income (Loss) of Joint Ventures
    3,699       37,301       539       463       (791 )
Income Tax Benefit
    12,033       7,673       5,147       2,193       197  
Minority Interest Allocable to Continuing Operations
    6,348       547       3,096       2,829       2,703  
                                         
(Loss) Income from Continuing Operations
    (31,654 )     18,946       1,287       11,263       15,118  
Income from Discontinued Operations (Including Gain on Sale of Real Estate of $131,955, $88,245, $79,485 and $58,323 for the Year Ended December 31, 2005, 2004, 2003 and 2002, respectively) (b)
    139,486       105,592       121,872       117,524       62,514  


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    Year Ended
    Year Ended
    Year Ended
    Year Ended
    Year Ended
 
    12/31/05     12/31/04     12/31/03     12/31/02     12/31/01  
    (In thousands, except per share and property data)  
 
Provision for Income Taxes Allocable to Discontinued Operations (Including $19,719, $8,267, $1,988, and $1,435 allocable to Gain on Sale of Real Estate for the years ended December 31, 2005, 2004, 2003 and 2002, respectively)
    (21,754 )     (10,800 )     (3,427 )     (2,465 )     (1,248 )
Minority Interest Allocable to Discontinued Operations
    (15,494 )     (13,005 )     (17,447 )     (17,236 )     (9,392 )
Gain on Sale of Real Estate
    29,734       16,755       15,794       16,476       65,441  
Provision for Income Taxes Allocable to Gain on Sale of Real Estate
    (10,711 )     (5,312 )     (2,322 )     (3,394 )     (43 )
Minority Interest Allocable to Gain on Sale of Real Estate
    (2,503 )     (1,570 )     (1,984 )     (1,960 )     (10,026 )
                                         
Net Income
    87,104       110,606       113,773       120,208       122,364  
Redemption of Preferred Stock
          (7,959 )           (3,707 )     (4,577 )
Preferred Dividends
    (10,688 )     (14,488 )     (20,176 )     (23,432 )     (30,001 )
                                         
Net Income Available to Common Stockholders
  $ 76,416     $ 88,159     $ 93,597     $ 93,069     $ 87,786  
                                         
(Loss) Income from Continuing Operations Available to Common Stockholders Per Weighted Average Common Share Outstanding:
                                       
Basic
  $ (0.61 )   $ 0.16     $ (0.19 )   $ (0.12 )   $ .92  
                                         
Diluted
  $ (0.61 )   $ 0.16     $ (0.19 )   $ (0.12 )   $ .92  
                                         
Net Income Available to Common Stockholders Per Weighted Average Common Share Outstanding:
                                       
Basic
  $ 1.80     $ 2.17     $ 2.43     $ 2.39     $ 2.26  
                                         
Diluted
  $ 1.80     $ 2.16     $ 2.43     $ 2.39     $ 2.24  
                                         
Distributions Per Share
  $ 2.7850     $ 2.7500     $ 2.7400     $ 2.7250     $ 2.6525  
                                         
Weighted Average Number of Common Shares Outstanding:
                                       
Basic
    42,431       40,557       38,542       38,927       38,841  
                                         
Diluted
    42,431       40,888       38,542       38,927       39,150  
                                         
Net Income
  $ 87,104     $ 110,606     $ 113,773     $ 120,208     $ 122,364  

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    Year Ended
    Year Ended
    Year Ended
    Year Ended
    Year Ended
 
    12/31/05     12/31/04     12/31/03     12/31/02     12/31/01  
    (In thousands, except per share and property data)  
 
Other Comprehensive Income (Loss):
                                       
Cumulative Transition Adjustment
                            (14,920 )
Settlement of Interest Rate Protection Agreements
          6,816             1,772       (191 )
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
    (1,414 )     106       251       (126 )     (231 )
Write-off of Unamortized Interest Rate Protection Agreements Due to Early Retirement of Debt
                            2,156  
Amortization of Interest Rate Protection Agreements
    (1,085 )     (512 )     198       176       805  
Other Comprehensive Income Allocable to Minority Interest
    837                          
                                         
Comprehensive Income
  $ 85,283     $ 117,016     $ 114,222     $ 122,030     $ 109,983  
                                         
Balance Sheet Data (End of Period):
                                       
Real Estate, Before Accumulated Depreciation
  $ 3,260,761     $ 2,856,474     $ 2,738,034     $ 2,697,269     $ 2,714,927  
Real Estate, After Accumulated Depreciation
    2,850,195       2,478,091       2,388,782       2,388,781       2,438,107  
Real Estate Held for Sale, Net
    16,840       52,790             7,040       30,750  
Total Assets
    3,226,243       2,721,890       2,648,023       2,629,973       2,621,400  
Mortgage Loans Payable, Net, Unsecured Lines of Credit and Senior Unsecured Debt, Net
    1,813,702       1,574,929       1,453,798       1,442,149       1,318,450  
Total Liabilities
    2,020,361       1,719,463       1,591,732       1,575,586       1,447,361  
Stockholders’ Equity
    1,043,562       845,494       889,173       882,326       995,597  
Other Data:
                                       
Cash Flow From Operating Activities
  $ 49,350     $ 77,657     $ 103,156     $ 132,838     $ 147,134  
Cash Flow From Investing Activities
    (371,654 )     9,992       29,037       33,350       (38,804 )
Cash Flow From Financing Activities
    325,617       (83,546 )     (131,372 )     (166,188 )     (116,061 )
Total In-Service Properties
    884       827       834       908       918  
Total In-Service GLA, in Square Feet
    70,193,161       61,670,735       57,925,466       59,979,894       64,002,809  
In-Service Occupancy Percentage
    92 %     90 %     88 %     90 %     91 %
 

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(a) Represents a valuation provision on real estate relating to certain properties located in Columbus, Ohio, Des Moines, Iowa, Grand Rapids, Michigan and Indianapolis, Indiana.
 
(b) On January 1, 2002, the Company adopted the Financial Accounting Standards Board’s 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 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 Company as a result of the disposal transaction and (b) the Company 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 consolidated statements of operations.
 
(c) In 2005, the Company wrote off $.05 million of financing fees related to the Company’s previous line of credit agreement which was amended and restated on August 23, 2005. In addition, the Company 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 buyers of the related properties on July 13, 2005. In 2004, the Company paid off and retired a mortgage loan. The Company recorded a loss from the early retirement of debt in 2004 of approximately $.5 million, which is comprised of the write-off of unamortized deferred financing costs and prepayment penalties. In 2003, the Company paid off and retired a mortgage loan. The Company recorded a loss from the early retirement of debt in 2003 of approximately $1.5 million, which is comprised of the write-off of unamortized deferred financing costs. In 2002, the Company paid off and retired senior unsecured debt. The Company recorded a loss from the early retirement of debt of approximately $.9 million which is comprised of the amount paid above the carrying amount of the senior unsecured debt, the write-off of pro rata unamortized deferred financing costs and legal costs. In 2001, the Company paid off and retired certain mortgage loans and senior unsecured debt. The Company recorded a loss from the early retirement of debt of approximately $10.3 million, which is comprised of the amount paid above the carrying amount of the senior unsecured debt, the write-off of unamortized deferred financing costs, the write-off of the unamortized portion of an interest rate protection agreement which was used to fix the interest rate on the senior unsecured debt prior to issuance, the settlement of an interest rate protection agreement used to fix the retirement price of the senior unsecured debt, prepayment fees, legal costs and other expenses.
 
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 historical Consolidated Financial Statements and Notes thereto appearing elsewhere in this Form 10-K.
 
In addition, the following discussion 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 Company 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 Company, are generally identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions. The Company’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 Company 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 Company’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 and policies and guidelines applicable to real estate investment trusts. These risks and uncertainties should be


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considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Further information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included herein in Item 1A. “Risk Factors,” and in the Company’s other filings with the Securities and Exchange Commission.
 
First Industrial Realty Trust, Inc. was organized in the state of Maryland on August 10, 1993. First Industrial Realty Trust, Inc. is a real estate investment trust (“REIT”), as defined in the Internal Revenue Code (the “Code”). First Industrial Realty Trust, Inc. (together with its consolidated subsidiaries, the “Company”) began operations on July 1, 1994. The Company’s interests in its properties and land parcels are held through (i) partnerships controlled by the Company, including First Industrial, L.P. (the “Operating Partnership”), of which the Company is the sole general partner, as well as, among others, 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., FI Development Services, L.P. and TK-SV, LTD., each of which the sole general partner is a wholly-owned subsidiary of the Company and the sole limited partner is the Operating Partnership; (ii) limited liability companies, of which the Operating Partnership is the sole member; and (iii) First Industrial Development Services, Inc., of which the Operating Partnership is the sole stockholder, all of whose operating data is consolidated with that of the Company as presented herein. The Company, through separate, wholly-owned limited liability companies of which the Operating Partnership or First Industrial Development Services, Inc. is the sole member, also owns minority equity interests in, and provides services to, four joint ventures which invest in industrial properties (the “September 1998 Joint Venture” , the “May 2003 Joint Venture”, the “March 2005 Joint Venture” and the “September 2005 Joint Venture”). The Company, 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 fifth 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 and the September 2005 Joint venture; the “Joint Ventures”). During the year ended December 31, 2004, the December 2001 Joint Venture sold all of its industrial properties. The operating data of the Joint Ventures is not consolidated with that of the Company as presented herein.
 
Management believes the Company’s financial condition and results of operations are, primarily, a function of the Company’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 Company 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 Company’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 Company’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 Company’s and its joint ventures’ properties (as discussed below), for the Company’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 Company. The leasing of property also entails various risks, including the risk of tenant default. If the Company were unable to maintain or increase occupancy rates and rental rates at the Company’s and its joint ventures’ properties or to maintain tenant recoveries and operating and certain other expenses consistent with historical levels and proportions, the Company’s revenue growth would be limited. Further, if a significant number of the Company’s and its joint ventures’ tenants were unable to pay rent (including tenant recoveries) or if the Company or its joint ventures were unable to rent their properties on favorable terms, the Company’s financial condition, results of


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operations, cash flow and ability to pay dividends on, and the market price of, the Company’s common stock would be adversely affected.
 
The Company’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 Company 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 Company’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 Company. The acquisition and development of properties also entails various risks, including the risk that the Company’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 Company 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 Company and its joint ventures face significant competition for attractive acquisition and development opportunities from other well-capitalized real estate investors, including both publicly-traded real estate investment trusts and private investors. Further, as discussed below, the Company and its joint ventures may not be able to finance the acquisition and development opportunities they identify. If the Company 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 Company’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 Company also generates income from the sale of its and its joint ventures’ properties (including existing buildings, buildings which the Company or its joint ventures have developed or re-developed on a merchant basis, and land). The Company 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 Company 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 Company’s income and are a significant source of funds, in addition to revenues generated from rental income and tenant recoveries, for the Company’s distributions. Also, a significant portion of the Company’s proceeds from such sales is used to fund the 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 Company. The sale of properties also entails various risks, including competition from other sellers and the availability of attractive financing for potential buyers of the Company’s and its joint ventures’ properties. Further, the Company’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 Company and its joint ventures were unable to sell properties on favorable terms, the Company’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 Company utilizes a portion of the net sales proceeds from property sales, borrowings under its unsecured lines of credit and proceeds from the issuance, when and as warranted, of additional equity securities to finance 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 Company’s financial condition and results of operations, as it impacts the Company’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


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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 Company’s significant accounting policies are described in more detail in Note 3 to the Consolidated Financial Statements. The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.
 
  •  The Company maintains an allowance for doubtful accounts which is based on estimates of potential losses which could result from the inability of the Company’s tenants to satisfy outstanding billings with the Company. The allowance for doubtful accounts is an estimate based on the Company’s assessment of the creditworthiness of its tenants.
 
  •  Properties are classified as held for sale when the Company has entered into a binding contract to sell such properties. When properties are classified as held for sale, the Company 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 Company decides not to sell a property previously classified as held for sale, the Company will reclassify such property as held and used. The Company 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 contract price of the property the estimated costs to close the sale.
 
  •  The Company reviews its properties on a quarterly basis for possible impairment and provides a provision if impairments are determined. The Company utilizes the guidelines established under Financial Accounting Standards Board’s (“FASB”) 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 Company 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 Company will recognize an impairment charge equal to the amount of carrying value of the property that exceeds the 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 Company 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 Company 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 Company also must allocate purchase price on multi-property portfolios to individual properties. The allocation of purchase price is based on the Company’s assessment of various characteristics of the markets where the property is located and the expected cash flows of the property.


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RESULTS OF OPERATIONS
 
Comparison of Year Ended December 31, 2005 to Year Ended December 31, 2004
 
The Company’s net income available to common stockholders was $76.4 million and $88.2 million for the years ended December 31, 2005 and 2004, respectively. Basic and diluted net income available to common stockholders were $1.80 and $1.80 per share, respectively, for the year ended December 31, 2005, and $2.17 and $2.16 per share, respectively, for the year ended December 31, 2004.
 
The tables below summarize the Company’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 acquired 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 Company’s maintenance company, fees earned from the Company’s joint ventures, fees earned for developing properties for third parties and other miscellaneous revenues. Other expenses are derived from the operations of the Company’s maintenance company and other miscellaneous regional expenses.
 
The Company’s future financial condition and results of operations, including rental revenues, may be impacted by the future acquisition and sale of properties. The Company’s future revenues and expenses may vary materially from historical rates.
 
At December 31, 2005 and 2004, the occupancy rates of the Company’s same store properties were 90.1% and 89.5%, respectively.
 
                                 
    2005     2004     $ Change     % Change  
    ($ in 000’s)  
 
REVENUES
                               
Same Store Properties
  $ 251,046     $ 249,309     $ 1,737       0.7 %
Acquired Properties
    55,098       11,912       43,186       362.5 %
Sold Properties
    24,482       49,395       (24,913 )     (50.4 )%
Properties Not In-service
    42,199       23,617       18.582       78.7 %
Other
    19,436       8,880       10,556       118.9 %
                                 
      392,261       343,113       49,148       14.3 %
Discontinued Operations
    (25,132 )     (46,412 )     21,280       (45.9 )%
                                 
Total Revenues
  $ 367,129     $ 296,701     $ 70,428       23.7 %
                                 
 
Revenues from same store properties remained relatively unchanged. Revenues from acquired properties increased $43.2 million due to the 240 industrial properties totaling approximately 29.3 million square feet of GLA acquired subsequent to December 31, 2003. Revenues from sold properties decreased $24.9 million due to the 193 industrial properties totaling approximately 20.2 million square feet of GLA 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


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$10.6 million due primarily to an increase in joint venture fees due to new joint ventures (as discussed further) and assignment fees.
 
                                 
    2005     2004     $ Change     % Change  
    ($ in 000’s)  
 
PROPERTY EXPENSES
                               
Same Store Properties
  $ 83,636     $ 80,051     $ 3,585       4.5 %
Acquired Properties
    15,702       3,756       11,946       318.1 %
Sold Properties
    8,823       16,661       (7,838 )     (47.0 )%
Properties Not In-service
    26,161       8,739       17,422       199.4 %
Other
    11,871       6,543       5,328       81.4 %
                                 
      146,193       115,750       30,443       26.3 %
Discontinued Operations
    (8,835 )     (15,861 )     7,026       (44.3 )%
                                 
Total Property Expenses
  $ 137,358     $ 99,889     $ 37,469       37.5 %
                                 
 
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 $3.6 million or 4.5% primarily due to an increase of $.9 million in utility expense attributable to increases in gas and electric costs, an increase of $1.3 million in repair and maintenance attributable to increases in snow removal expense and an increase of $.9 million in real estate tax expense. Property expenses from acquired properties increased by $12.0 million due to properties acquired subsequent to December 31, 2003. Property expenses from sold properties decreased by $7.8 million due to properties sold subsequent to December 31, 2003. Property expenses from properties not in service increased by approximately $17.4 million due primarily to build-to-suit-for-sale costs of $15.6 million. Other expenses increased $5.3 million due primarily to increases in employee compensation.
 
General and administrative expense increased by approximately $16.2 million, or 41.0%, due primarily to increases in employee compensation related to compensation for new employees as well as an increase in incentive compensation.
 
Amortization of deferred financing costs remained relatively unchanged.
 
                                 
    2005     2004     $ Change     % Change  
    ($ in 000’s)  
 
DEPRECIATION AND OTHER AMORTIZATION
                               
Same Store Properties
  $ 77,329     $ 72,016     $ 5,313       7.4 %
Acquired Properties
    29,278       3,797       25,481       671.1 %
Sold Properties
    7,795       13,713       (5,918 )     (43.2 )%
Properties Not In-service and Other
    12,228       9,740       2,488       25.5 %
Corporate Furniture, Fixtures and Equipment
    1,371       1,280       91       7.1 %
                                 
      128,001       100,546       27,455       27.3 %
Discontinued Operations
    (8,393 )     (12,595 )     4,202       (33.4 )%
                                 
Total Depreciation and Other Amortization
  $ 119,608     $ 87,951     $ 31,657       36.0 %
                                 
 
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 $25.5 million due to properties acquired subsequent to December 31, 2003. Depreciation and other amortization from sold properties decreased by $5.9 million due to properties sold subsequent to December 31, 2003. Depreciation and other amortization for properties not in service and other increased $2.5 million due to developments substantially


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completed in 2004 and 2005. Amortization of corporate furniture, fixtures and equipment remained relatively unchanged.
 
Interest income decreased by approximately $2.1 million due primarily to a decrease in the average mortgage loans receivable outstanding during the year ended December 31, 2005, as compared to the year ended December 31, 2004.
 
Interest expense increased by approximately $9.7 million due primarily to an increase in the weighted average debt balance outstanding for the year ended December 31, 2005 ($1,690.2 million) as compared to the year ended December 31, 2004 ($1,522.9 million), an increase in the weighted average interest rate for the year ended December 31, 2005 (6.63%) as compared to the year ended December 31, 2004 (6.60%), partially offset by an increase in capitalized interest for the year ended December 31, 2005 due to an increase in development activities.
 
The Company recognized a $.08 million gain on the early retirement of debt for the year ended December 31, 2005. This includes $.05 million write-off of financing fees associated with the Company’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 $.3 million of fees and a write-off of loan premium of $.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 $.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 (the “Acquisition Mortgage Loan XI”).
 
The Company recognized a $.6 million gain related to the settlement/mark-to-market of two interest rate protection agreements that the Company entered into during 2005 in order to hedge the change in value of a build to suit development project as well as $.2 million in deferred gain that was reclassed out of other comprehensive income relating to a settled interest rate protection agreement that no longer qualified for hedge accounting.
 
In March 2004, the Company, through the 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 Company 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 Company settled an interest rate protection agreement for $.3 million that had been designated as a cash flow hedge of $50.0 million of a forecasted debt issuance. Hedge ineffectiveness in the amount of $.1 million, due to a mismatch in the forecasted debt issuance dates, was recognized in net income. The remaining $.2 million was included in other comprehensive income and was reclassed into net income for the year ended December 31, 2005 as the hedge no longer qualified for hedge accounting.
 
Income tax benefit increased by $4.4 million due primarily to an increase in general and administrative expense (“G&A”) due to additional G&A costs, which increases the loss from continuing operations, incurred in the year ended December 31, 2005 compared to the year ended December 31, 2004 associated with additional investment activity in the Company’s taxable REIT subsidiary. The increase in the income tax benefit is partially offset by an increase in state tax expense.
 
Equity in income of joint ventures decreased by approximately $33.6 million due primarily to the Company’s allocation of gain from the sale of all the properties in the December 2001 Joint Venture and the Company’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 $29.7 million gain on sale of real estate for the year ended December 31, 2005 resulted from the sale of ten industrial properties and several land parcels that do not meet the criteria established by FAS 144 for inclusion in discontinued operations. The $16.8 million gain on sale of real estate for the year ended December 31, 2004 resulted from the sale of five 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 Company for the year ended December 31, 2005 and December 31, 2004.
 
                 
    Year Ended
 
    December 31,  
    2005     2004  
    ($ in 000’s)  
 
Total Revenues
  $ 25,132     $ 46,412  
Operating Expenses
    (8,835 )     (15,861 )
Interest Expense
    (373 )     (609 )
Depreciation and Amortization
    (8,393 )     (12,595 )
Provision for Income Taxes Allocable to Operations
    (2,035 )     (2,533 )
Gain on Sale of Real Estate
    131,955       88,245  
Provision for Income Taxes Allocable to Gain on Sale
    (19,719 )     (8,267 )
                 
Income from Discontinued Operations
  $ 117,732     $ 94,792  
                 
 
Income from discontinued operations, net of income taxes, for the year ended December 31, 2005 reflects the results of operations and gain on sale of real estate of $132.0 million relating to 86 industrial properties that were sold during the year ended December 31, 2005 and the results of operations of five properties that were identified as held for sale at December 31, 2005.
 
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, 2005, five properties that were identified as held for sale at December 31, 2005, industrial properties that were sold during the year ended December 31, 2004, as well as the gain on sale of real estate of $88.2 million from the 92 industrial properties which were sold during the year ended December 31, 2004.
 
Comparison of Year Ended December 31, 2004 to Year Ended December 31, 2003
 
The Company’s net income available to common stockholders was $88.2 million and $93.6 million for the years ended December 31, 2004 and 2003, respectively. Basic and diluted net income available to common stockholders were $2.17 and $2.16 per share, respectively, for the year ended December 31, 2004, and $2.43 and $2.43 per share, respectively, for the year ended December 31, 2003.
 
The tables below summarize the Company’s revenues, property expenses and depreciation and other amortization by various categories for the years ended December 31, 2004 and December 31, 2003. Same store properties are in-service properties owned prior to January 1, 2003. Acquired properties are properties that were acquired subsequent to December 31, 2002. Sold properties are properties that were sold subsequent to December 31, 2002. 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, 2002 or acquisitions acquired prior to January 1, 2003 that were not placed in service as of December 31, 2002. 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 Company’s maintenance company, fees earned from the Company’s joint ventures, fees earned for developing properties for third parties and other miscellaneous revenues. Other expenses are derived from the operations of the Company’s maintenance company and other miscellaneous regional expenses.
 
The Company’s future financial condition and results of operations, including rental revenues, may be impacted by the future acquisition and sale of properties. The Company’s future revenues and expenses may vary materially from historical rates.


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At December 31, 2004 and 2003, the occupancy rates of the Company’s same store properties were 88.6% and 87.8%, respectively.
 
                                 
    2004     2003     $ Change     % Change  
    ($ in 000’s)  
 
REVENUES
                               
Same Store Properties
  $ 253,710     $ 268,270     $ (14,560 )     (5.4 )%
Acquired Properties
    43,864       10,178       33,686       331.0 %
Sold Properties
    20,512       57,588       (37,076 )     (64.4 )%
Properties Not In-service
    16,178       16,375       (197 )     (1.2 )%
Other
    8,849       9,148       (299 )     (3.3 )%
                                 
      343,113       361,559       (18,446 )     (5.1 )%
Discontinued Operations
    (46,412 )     (84,035 )     37,623       (44.8 )%
                                 
Total Revenues
  $ 296,701     $ 277,524     $ 19,177       6.9 %
                                 
 
Revenues from same store properties decreased $14.6 million due primarily to a $10.7 million lease termination fee the Company recognized in 2003. Revenues from acquired properties increased $33.7 million due to the 143 industrial properties totaling approximately 15.9 million square feet of GLA acquired subsequent to December 31, 2002. Revenues from sold properties decreased $37.1 million due to the 227 industrial properties totaling approximately 14.8 million square feet of GLA sold subsequent to December 31, 2002.
 
                                 
    2004     2003     $ Change     % Change  
    ($ in 000’s)  
 
PROPERTY EXPENSES
                               
Same Store Properties
  $ 82,008     $ 85,141     $ (3,133 )     (3.7 )%
Acquired Properties
    13,036       3,083       9,953       322.8 %
Sold Properties
    6,612       18,256       (11,644 )     (63.8 )%
Properties Not In-service
    7,584       5,956       1,628       27.3 %
Other
    6,510       4,427       2,083       47.1 %
                                 
      115,750       116,863       (1,113 )     (1.0 )%
Discontinued Operations
    (15,861 )     (24,213 )     8,352       (34.5 )%
                                 
Total Property Expenses
  $ 99,889     $ 92,650     $ 7,239       7.8 %
                                 
 
Property expenses include real estate taxes, repairs and maintenance, property management, utilities, insurance and other property related expenses. Property expenses from same store properties decreased by approximately $3.1 million primarily due to a decrease in bad debt expense. Property expenses from acquired properties increased by $10.0 million due to properties acquired subsequent to December 31, 2002. Property expenses from sold properties decreased by $11.6 million due to properties sold subsequent to December 31, 2002. Property expenses from properties not in-service increased $1.6 million due primarily to an increase in bad debt expense. Other expense increased $2.1 million due primarily to increases in compensation.
 
General and administrative expense increased by approximately $12.6 million, or 46.8%, due primarily to increases in employee incentive compensation and an increase in outside professional service fees.


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Amortization of deferred financing costs remained relatively unchanged.
 
                                 
    2004     2003     $ Change     % Change  
    ($ in 000’s)  
 
DEPRECIATION AND OTHER AMORTIZATION
                               
Same Store Properties
  $ 70,484     $ 65,433     $ 5,051       7.7 %
Acquired Properties
    16,398       3,839       12,559       327.1 %
Sold Properties
    4,523       11,886       (7,363 )     (61.9 )%
Properties Not In-service and Other
    7,861       4,187       3,674       87.7 %
Corporate Furniture, Fixtures and Equipment
    1,280       1,236       44       3.6 %
                                 
      100,546       86,581       13,965       16.1 %
Discontinued Operations
    (12,595 )     (16,874 )     4,279       (25.4 )%
                                 
Total Depreciation and Other Amortization
  $ 87,951     $ 69,707     $ 18,244       26.2 %
                                 
 
The increase in depreciation and other amortization for the same store properties is primarily due to a net increase in leasing commissions and, building and tenant improvements paid in 2004 and 2003. Depreciation and other amortization from acquired properties increased by $12.6 million due to properties acquired subsequent to December 31, 2002. Depreciation and other amortization from sold properties decreased by $7.4 million due to properties sold subsequent to December 31, 2002. Depreciation and other amortization for properties not in-service and other increased by $3.7 million due primarily to depreciation expense being recognized in 2004 for developments that were substantially completed.
 
Interest income increased by approximately $1.2 million due primarily to an increase in the average mortgage loans receivable outstanding during the year ended December 31, 2004, as compared to the year ended December 31, 2003, as well as an increase in the average restricted cash balance for the year ended December 31, 2004, as compared to the year ended December 31, 2003.
 
In March 2004, the Company, through the 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 Company 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 Company settled an interest rate protection agreement for $.3 million that had been designated as a cash flow hedge of $50.0 million of a forecasted debt issuance. Hedge ineffectiveness in the amount of $.1 million, due to a mismatch in the forecasted debt issuance dates, was recognized in net income. The remaining $.2 million was included in other comprehensive income and was reclassed into net income for the year ended December 31, 2005 as the hedge no longer qualified for hedge accounting.
 
Interest expense increased by approximately $3.7 million due primarily to an increase in the weighted average debt balance outstanding for the year ended December 31, 2004 ($1,522.9 million) as compared to the year ended December 31, 2003 ($1,455.8 million). This was partially offset by a decrease in the weighted average interest rate for the year ended December 31, 2004 (6.60%) as compared to the year ended December 31, 2003 (6.61%), and an increase in capitalized interest for the year ended December 31, 2004 due to an increase in development activities.
 
The loss on early retirement of debt of approximately $.5 million for the year ended December 31, 2004 is comprised of the write-off of unamortized deferred financing costs and a prepayment penalty related to the early pay off and retirement of the Acquisition Mortgage Loan XI. The loss on early retirement of debt of approximately $1.5 million for the year ended December 31, 2003 is comprised of the write-off of unamortized deferred financing costs related to the early pay off and retirement of a $37.5 million mortgage loan.
 
Income tax benefit increased by $2.5 million due primarily to an increase in general and administrative expense (“G&A”), which increases the loss from continuing operations, due to additional G&A costs incurred


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in 2004 compared to 2003 associated with additional investment activity in the Company’s taxable REIT subsidiary.
 
Equity in income of joint ventures increased by approximately $36.8 million due primarily to the Company’s allocation of gain from the sale of all of the properties in the December 2001 Joint Venture and the Company’s recognition of the deferred gain on it’s initial sale of 30 of the 36 properties to the December 2001 Joint Venture in the year ended December 31, 2004.
 
The $16.8 million gain on sale of real estate for the year ended December 31, 2004 resulted from the sale of five industrial properties and several land parcels that do not meet the criteria established by FAS 144 for inclusion in discontinued operations. The $15.8 million gain on sale of real estate for the year ended December 31, 2003 resulted from the sale of ten industrial properties and several land parcels that do not meet the criteria established by FAS 144 for inclusion in discontinued operations. The following table summarizes certain information regarding the industrial properties included in discontinued operations by the Company for the year ended December 31, 2004 and December 31, 2003.
 
                 
    Year Ended
 
    December 31,  
    2004     2003  
    ($ in 000’s)  
 
Total Revenues
  $ 46,412     $ 84,035  
Operating Expenses
    (15,861 )     (24,213 )
Interest Expense
    (609 )     (561 )
Depreciation and Amortization
    (12,595 )     (16,874 )
Provision for Income Taxes Allocable to Operations
    (2,533 )     (1,439 )
Gain on Sale of Real Estate
    88,245       79,485  
Provision for Income Taxes Allocable to Gain on Sale
    (8,267 )     (1,988 )
                 
Income from Discontinued Operations
  $ 94,792     $ 118,445  
                 
 
Income from discontinued operations, net of income taxes, for the year ended December 31, 2004 reflects the results of operations and gain on sale of real estate of $88.2 million relating to 92 industrial properties that were sold during the year ended December 31, 2004 and the results of operations of nine properties that were identified as held for sale at December 31, 2004.
 
Income from discontinued operations, net of income taxes, for the year ended December 31, 2003 reflects the results of operations of industrial properties that were sold during the year ended December 31, 2004, nine properties that were identified as held for sale at December 31, 2004, industrial properties that were sold during the year ended December 31, 2003, as well as the gain on sale of real estate of $79.5 million from the 120 industrial properties which were sold during the year ended December 31, 2003.
 
LIQUIDITY AND CAPITAL RESOURCES
 
At December 31, 2005, the Company’s cash and cash equivalents, as well as restricted cash, was approximately $37.8 million. Restricted cash is comprised of gross proceeds from the sales of certain industrial properties. These sales proceeds will be disbursed as the Company exchanges industrial properties under Section 1031 of the Internal Revenue Code.
 
The Company 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 Company’s 7.0% Notes due in 2006, in the aggregate principal amount of $150 million are due on December 1, 2006 (the “2006 Notes”). The Company expects to satisfy the maturity of the 2006 Notes with the issuance of additional debt. With the exception of the 2006 Notes, the Company believes that its principal short-term liquidity needs are to fund normal recurring expenses, debt service requirements and the minimum distribution required to maintain the Company’s REIT qualification under the Internal Revenue Code. The Company anticipates that these needs will be met with cash flows provided by operating activities.


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The Company 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 the issuance of additional equity securities. As of December 31, 2005 $415.4 million of common stock, preferred stock and depositary shares and approximately $500.0 million of debt securities were registered and unissued under the Securities Act of 1933, as amended. As of March 6, 2006 $265.4 million of common stock, preferred stock and depositary shares and approximately $300.0 million of debt securities were registered and unissued under the Securities Act of 1933, as amended. The Company also may finance the development or acquisition of additional properties through borrowings under the 2005 Unsecured Line of Credit I. At December 31, 2005, borrowings under the Unsecured Lines of Credit bore interest at a weighted average interest rate of 4.886%. The Unsecured Lines of Credit bear interest at a floating rate of LIBOR plus .625% or the Prime Rate, at the Company’s election. As of March 6, 2006, the Company had approximately $212.4 million available in additional borrowings under the 2005 Unsecured Line of Credit I. The Unsecured Lines of Credit contains certain financial covenants relating to debt service coverage, market value net worth, dividend payout ratio and total funded indebtedness. The Company’s access to borrowings may be limited if it fails to meet any of these covenants. Also, the Company’s borrowing rate on its 2005 Unsecured Line of Credit I may increase in the event of a downgrade on the Company’s unsecured notes by the rating agencies.
 
The Company currently has credit ratings from Standard & Poor’s, Moody’s and Fitch Ratings of BBB/Baa3/BBB, respectively. The Company’s goal is to maintain its existing credit ratings. In the event of a downgrade, management believes the Company would continue to have access to sufficient capital; however, the Company’s cost of borrowing would increase and its ability to access certain financial markets may be limited.
 
Year Ended December 31, 2005
 
Net cash provided by operating activities of approximately $49.4 million for the year ended December 31, 2005 was comprised primarily of net income before minority interest of approximately $98.8 million and net distributions from joint ventures of $.1 million offset by adjustments for non-cash items of approximately $34.4 million and the net change in operating assets and liabilities of approximately $15.1 million. The adjustments for the non-cash items of approximately $34.4 million are primarily comprised of depreciation and amortization of approximately $135.2 million and an increase of the bad debt provision of approximately $1.8 million, offset by the gain on sale of real estate of approximately $161.7 million, $.2 million of other and straight-lining of rental income of approximately $9.5 million.
 
Net cash used in investing activities of approximately $371.7 million for the year ended December 31, 2005 was comprised primarily of the acquisition of real estate, development of real estate, capital expenditures related to the expansion and improvement of existing real estate, contributions to, and investments in, the Company’s industrial real estate joint ventures and an increase in restricted cash that is held by an intermediary for Section 1031 exchange purposes partially offset by the net proceeds from the sale of real estate, the repayment of mortgage loans receivable and distributions from the Company’s industrial real estate joint ventures.
 
During the year ended December 31, 2005, the Company acquired 161 industrial properties comprising approximately 20.1 million square feet of GLA and several land parcels. The purchase price of these acquisitions totaled approximately $752.7 million, excluding costs incurred in conjunction with the acquisition of the industrial properties and land parcels. The Company also substantially completed the development of five industrial properties comprising approximately 1.8 million square feet of GLA at an estimated cost of approximately $97.5 million.
 
The Company, through wholly-owned limited liability companies in which the Operating Partnership is the sole member, contributed approximately $43.3 million to, and received distributions of approximately $6.8 million from, the Company’s industrial real estate joint ventures. As of December 31, 2005, the Company’s industrial real estate joint ventures owned 316 industrial properties comprising approximately 24.2 million square feet of GLA.


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During the year ended December 31, 2005, the Company sold 96 industrial properties comprising approximately 12.8 million square feet of GLA and several land parcels. Gross proceeds from the sales of the 96 industrial properties and several land parcels were approximately $656.1 million.
 
Net cash provided by financing activities of approximately $325.6 million for the year ended December 31, 2005 was comprised primarily from the net proceeds from the sale of preferred stock, net borrowings under the Unsecured Lines of Credit, proceeds from the issuance of mortgage loan payable, the net proceeds from the exercise of stock options and the issuance of common stock partially offset by the payoff and retirement of senior unsecured debt, common and preferred stock dividends and unit distributions, the repurchase of restricted stock from employees of the Company to pay for withholding taxes on the vesting of restricted stock and repayments on mortgage loans payable.
 
On August 23, 2005, the Company, through the Operating Partnership, amended and restated its $300.0 million unsecured line of credit (the “Unsecured Line of Credit”), which was due September 28, 2007, and bore interest at a floating rate of LIBOR plus .7%, or the Prime Rate, at the Company’s election. The amended and restated unsecured line of credit (the “2005 Unsecured Line of Credit I”) will mature on September 28, 2008, has a borrowing capacity of $500.0 million, with the right, subject to certain conditions, to increase the borrowing capacity up to $600.0 million and bears interest at a floating rate of LIBOR plus .625%, or the Prime Rate, at the Company’s election.
 
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 were approximately $6.7 million.
 
During the year ended December 31, 2005, the Company awarded 189,878 shares of restricted common stock to certain employees and 10,164 shares of restricted common stock to certain Directors. These shares of restricted common stock had a fair value of approximately $8.4 million on the date of grant. The restricted common stock vests over periods from one to ten years. Compensation expense will be charged to earnings over the respective vesting periods.
 
On November 8, 2005 and November 18, 2005, the Company issued 600 and 150 Shares, respectively, each representing $.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. Dividends on the Series I Depositary Shares were payable monthly in arrears commencing December 31, 2005 at an initial dividend rate of One-Month LIBOR plus 1.25%, subject to reset on the four-month, six-month and one year anniversary of the date of issuance. With respect to the payment of dividends and amounts upon liquidation, dissolution or winding up, the Series I 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 and Series G Preferred Stock. Refer to the Subsequent Events section (hereinafter) for the redemption of the Series I Preferred Stock.
 
On December 9, 2005, the Company issued 1,250,000 shares of $.01 par value common stock (the “December 2005 Equity Offering”). The price per share was $39.45 resulting in gross offering proceeds of $49.3 million. Proceeds to the Company, net of underwriters’ discount and total expenses, were approximately $48.8 million.
 
On March 31, 2005, the Company paid first quarter 2005 dividends of $53.906 per share ($.53906 per Depositary Share) on its 8.625%, $.01 par value, Series C Preferred Stock, totaling, in the aggregate, approximately $1.1 million; semi-annual dividends of $3,118 per share ($31.18 per Depositary Share) on its Series F Preferred Stock, totaling, in the aggregate, approximately $1.6 million; and semi-annual dividends of $3,618.00 per share ($36.18 per Depositary Share) on its Series G Preferred Stock, totaling, in the aggregate, approximately $.9 million. On June 30, 2005, the Company paid a second quarter 2005 dividend of $53.906 per share ($.53906 per Depositary Share) on its Series C Preferred Stock, totaling approximately $1.1 million; and accrued dividends of approximately $.8 million on its Series F Preferred Stock and approximately $.5 million on its Series G Preferred Stock. On September 30, 2005, the Company paid third quarter 2005 dividends of $53.906 per share ($.53906 per Depositary Share) on its 8.625%, $.01 par value, Series C Preferred Stock, totaling, in the aggregate, approximately $1.1 million; semi-annual dividends of


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$3,118 per share ($31.18 per Depositary Share) on its Series F Preferred Stock, totaling, in the aggregate, approximately $1.6 million; and semi-annual dividends of $3,618.00 per share ($36.18 per Depositary Share) on its Series G Preferred Stock, totaling, in the aggregate, approximately $.9 million. On December 31, 2005, the Company accrued fourth quarter 2005 dividends, in the aggregate, of approximately $1.1 million on its Series C Preferred Stock, $.8 million on its Series F Preferred Stock, $.5 million on its Series G Preferred Stock and $1.5 million on its Series I Preferred Stock.
 
On January 24, 2005, the Company and the Operating Partnership paid a fourth quarter 2004 dividend/distribution of $.6950 per common share/Unit, totaling approximately $34.3 million. On April 18, 2005, the Company and the Operating Partnership paid a first quarter 2005 dividend/distribution of $.6950 per common share/Unit, totaling approximately $34.3 million. On July 18, 2005, the Company and the Operating Partnership paid a second quarter 2005 dividend/distribution of $.6950 per common share/ Unit, totaling approximately $34.5 million. On October 17, 2005, the Company and the Operating Partnership paid a third quarter 2005 dividend/distribution of $.6950 per common share/Unit, totaling approximately $34.6 million.
 
Contractual Obligations and Commitments
 
The following table lists our contractual obligations and commitments as of December 31, 2005 (In thousands):
 
                                         
          Payments Due by Period  
          Less Than
                   
    Total     1 Year     1-3 Years     3-5 Years     Over 5 Years  
 
Operating and Ground Leases*
  $ 40,660     $ 1,678     $ 3,185     $ 3,167     $ 32,630  
Real Estate Development*
    93,784       93,784                    
Long-term Debt
    1,826,330       282,381       486,986       147,435       909,528  
Interest Expense on Long-Term Debt*
    858,867       95,800       152,739       137,137       473,191  
                                         
Total
  $ 2,819,641     $ 473,643     $ 642,910     $ 287,739     $ 1,415,349  
                                         
 
 
* 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, 2005 the Company has $7.6 million in outstanding letters of credit, none of which are reflected as liabilities on the Company’s balance sheet. The Company has no other off-balance sheet arrangements other than those disclosed on the previous Contractual Obligations and Commitments table.
 
Environmental
 
The Company incurred environmental costs of approximately $.4 million and $.5 million in 2005 and 2004, respectively. The Company estimates 2006 costs of approximately $1.0 million. The Company estimates that the aggregate cost which needs to be expended in 2006 and beyond with regard to currently identified environmental issues will not exceed approximately $1.7 million, a substantial amount of which will be the primary responsibility of the tenant, the seller to the Company or another responsible party.
 
Inflation
 
For the last several years, inflation has not had a significant impact on the Company because of the relatively low inflation rates in the Company’s markets of operation. Most of the Company’s leases require the tenants to pay their share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing the Company’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


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Company to replace existing leases with new leases at higher base rentals if rents of existing leases are below the then-existing market rate.
 
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
 
The ratio of earnings to fixed charges and preferred stock dividends was 0.74, 1.05 and 0.92 for the years ended December 31, 2005, 2004 and 2003, respectively. The ratio of earnings to fixed charges and preferred stock dividends decreased in 2005 compared to 2004 due to a decrease in income from continuing operations due to a decrease in the equity in income of joint ventures and an increase in depreciation and amortization expense, as discussed in “Results of Operations” above. The ratio of earnings to fixed charges and preferred stock dividends increased in 2004 compared to 2003 due to increased income from continuing operations due to an increase in rental revenues and tenant recoveries and other income and an increase in the equity in income of joint ventures, as discussed in “Results of Operations” above.
 
Market Risk
 
The following discussion about the Company’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 Company at December 31, 2005 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.
 
In the normal course of business, the Company 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, 2005, $1,356.2 million (approximately 74.8% of total debt at December 31, 2005) of the Company’s debt was fixed rate debt and $457.5 million (approximately 25.2% of total debt at December 31, 2005) was variable rate debt. Currently, the Company 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 Company. Conversely, for variable rate debt, changes in the interest rate generally do not impact the fair value of the debt, but would affect the Company’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 Company until the Company is required to refinance such debt. See Note 5 to the consolidated financial statements for a discussion of the maturity dates of the Company’s various fixed rate debt.
 
Based upon the amount of variable rate debt outstanding at December 31, 2005, a 10% increase or decrease in the interest rate on the Company’s variable rate debt would decrease or increase, respectively, future net income and cash flows by approximately $2.3 million per year. A 10% increase in interest rates would decrease the fair value of the fixed rate debt at December 31, 2005 by approximately $45.9 million to $1,428.2 million. A 10% decrease in interest rates would increase the fair value of the fixed rate debt at December 31, 2005 by approximately $50.8 million to $1,524.9 million.
 
Subsequent Events
 
On January 10, 2006, the Company, through the Operating Partnership, issued $200 million of senior unsecured debt which matures on January 15, 2016 and bears a coupon interest 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. The Company also entered into interest rate protection agreements which were used to fix the interest rate on the 2016 Notes prior to issuance. On January 9, 2006 the Company settled the interest rate protection agreements for a payment of approximately $1.7 million, which will be included in other comprehensive income. The debt issue discount and the settlement amount of the interest rate protection


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agreements are being 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 Company’s effective interest rate on the 2016 Notes is 5.91%. The 2016 Notes contain certain covenants, including limitations on incurrence of debt and debt service coverage.
 
On January 3, 2006, the Company paid fourth quarter 2005 dividends of $53.906 per share ($.53906 per Depositary Share) on its 8.625%, $.01 par value, Series C Preferred Stock, totaling, in the aggregate, approximately $1.1 million; and a monthly dividend of $1,930.243 per share on its Series I Preferred Stock, totaling, in the aggregate, approximately $1.5 million.
 
On January 5, 2006, the Company, through First Industrial Development Services, Inc. settled the interest rate protection agreement entered into in October 2005 with a notional value of $50 million for a settlement payment of $.2 million.
 
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 $.4 million. In accordance with EITF D-42, due to the redemption of the Series I Preferred Stock, the initial offering costs associated with the issuance of the Series I Preferred Stock of approximately $.7 million is reflected as a deduction from net income to arrive at net income available to common stockholders in determining earnings per share for the three months ended March 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 Flexible Cumulative Redeemable Preferred Stock (the “Series J Preferred Stock”), at an initial offering price of $25.00 per Depositary Share. 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. 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 and Series G Preferred Stock. The Series J Preferred Stock is not redeemable prior to January 15, 2011. 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. 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 January 23, 2006, the Company and the Operating Partnership paid a fourth quarter 2005 distribution of $.70 per share, totaling approximately $35.8 million.
 
On March 1, 2006, the Company paid off and retired a $2.4 million mortgage loan.
 
On March 8, 2006, the Company declared a first quarter 2006 distribution of $.7000 per common share/unit on its common stock/units which is payable on April 17, 2006. The Company also declared first quarter 2006 dividends of $53.906 per share ($.53906 per Depositary Share), on its Series C Preferred Stock, totaling, in the aggregate, approximately $1.1 million, which is payable on March 31, 2006; semi-annual dividends of $3,118.00 per share ($31.18 per Depositary Share) on its Series F Preferred Stock, totaling, in the aggregate, approximately $1.6 million, which is payable on March 31, 2006; semi-annual dividends of $3,618.00 per share ($36.18 per Depositary Share) on its Series G Preferred Stock, totaling, in the aggregate, approximately $.9 million, which is payable on March 31, 2006; and prorated quarterly dividends of $3,927.08 per share


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($.3927 per Depositary Share) on its Series J Preferred Stock, totaling, in the aggregate, approximately $2.4 million, which is payable on March 31, 2006.
 
From January 1, 2006 to March 8, 2006, the Company awarded 303,142 shares of restricted common stock to certain employees and 1,169 shares of restricted common stock to certain Directors. These shares of restricted common stock had a fair value of approximately $12.0 million on the date of grant. The restricted common stock vests over periods from one to ten years. Compensation expense will be charged to earnings over the respective vesting period.
 
From January 1, 2006 to March 6, 2006, the Company acquired 23 industrial properties and several land parcels for a total estimated investment of approximately $149.7 million (approximately $.9 million of which was made through the issuance of limited partnership interests in the Operating Partnership (“Units”)). The Company also sold 16 industrial properties including the industrial property that is accounted for as a build to suit development for sale, for approximately $240.1 million of gross proceeds during this period.
 
Related Party Transactions
 
The Company 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, 2005 and 2004, this relative received approximately $.3 and $.03 million in brokerage commissions.
 
Other
 
In December, 2004, the FASB issued Statement of Financial Accounting Standards No. 153, “Exchanges of Nonmonetary Assets — An Amendment of APB Opinion No. 29” (“FAS 153”). The amendments made by FAS 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have “commercial substance.” FAS 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The Company does not believe that the adoption of FAS 153 will have a material effect on the Company’s consolidated financial statements.
 
In December 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment” (SFAS 123(R)”). SFAS 123(R) is an amendment of SFAS 123 and requires that the compensation cost relating to share-based payment transactions be recognized in the financial statements. The cost is required to be measured based on the fair value of the equity of liability instruments issued. SFAS 123(R) also contains additional minimum disclosure requirements that including, but not limited to, the valuation method and assumptions used, amounts of compensation capitalized and modifications made. The effective date of SFAS 123(R) was subsequently amended by the SEC to be as of the beginning of the first interim or annual reporting period of the first fiscal year that begins on or after June 15, 2005, and allows several different methods of transition. The Company expects to adopt the pronouncement as required on January 1, 2006 using the prospective method and does not believe that the adoption of SFAS 123(R) will have a material impact on its financial position, results of operations or cash flows.
 
In March 2005, the FASB issued FASB Interpretation (FIN) No. 47, Accounting for Conditional Asset Retirement Obligations, an Interpretation of FASB Statement No. 143. A conditional asset retirement obligation refers to a legal obligation to retire assets where the timing and/or method of settlement are conditioned on future events. FIN No. 47 requires an entity to recognize a liability for the fair value of a conditional asset retirement obligation when incurred if the liability’s fair value can be reasonably estimated. The Company adopted the provisions of FIN 47 in 2005. The adoption of this Interpretation did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.
 
In May, 2005, the FASB issued Statement of Financial Accounting Standards No. 154, “Accounting Changes and Error Corrections” (“FAS 154”) which supersedes APB Opinion No. 20, “Accounting Changes” and Statement of Financial Accounting Standards No. 3, “Reporting Accounting Changes in Interim Financial


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Statements”. FAS 154 changes the requirements for the accounting for and reporting of changes in accounting principle. The statement requires the retroactive application to prior periods’ financial statements of changes in accounting principles, unless it is impracticable to determine either the period specific effects or the cumulative effect of the change. FAS 154 does not change the guidance for reporting the correction of an error in previously issued financial statements or the change in an accounting estimate. FAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.
 
In June 2005, the FASB ratified the consensus reached by the Emerging Issues Task Force (“EITF”) regarding EITF 04-05, “Investor’s Accounting for an Investment in a Limited Partnership When the Investor is the Sole General Partner and the Limited Partners Have Certain Rights.” The conclusion provides a framework for addressing the question of when a sole general partner, as defined in EITF 04-05, should consolidate a limited partnership. The EITF has concluded that the general partner of a limited partnership should consolidate a limited partnership unless (1) the limited partners possess substantive kick-out rights as defined in paragraph B20 of FIN 46R, or (2) the limited partners possess substantive participating rights similar to the rights described in Issue 96-16, “Investor’s Accounting for an Investee When the Investor has a Majority of the Voting Interest by the Minority Shareholder or Shareholders Have Certain Approval or Veto Rights.” In addition, the EITF concluded that the guidance should be expanded to include all limited partnerships, including those with multiple general partners. The Company adopted EITF 04-05 as of December 31, 2005. The adoption of the EITF had no impact on the Company’s results of operations, financial position or liquidity.
 
In June 2005, the FASB ratified the consensus reached by the EITF regarding EITF No. 05-6, “Determining the Amortization Period for Leasehold Improvements.” The guidance requires that leasehold improvements acquired in a business combination, or purchased subsequent to the inception of a lease, be amortized over the lesser of the useful life of the assets or a term that includes renewals that are reasonably assured at the date of the business combination or purchase. The guidance is effective for periods beginning after June 29, 2005. EITF 05-6 does not impact the Company’s results of operations, financial position, or liquidity.
 
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 page F-1 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 Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’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 Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required financial disclosure.
 
The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based upon this evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’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 Company is responsible for establishing and maintaining adequate internal control over financial reporting. The 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.
 
Management of the Company has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005. 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 Company has concluded that, as of December 31, 2005, the Company’s internal control over financial reporting was effective.
 
Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005 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 page F-2.
 
Changes in Internal Control Over Financial Reporting
 
There has been no change in the Company’s internal control over financial reporting that occurred during the fourth quarter of 2005 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
 
Item 9B.   Other Information
 
None.
 
PART III
 
Item 10, 11, 12, 13 and 14.   Directors and Executive Officers of the Registrant, Executive Compensation, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, Certain Relationships and Related Transactions and Principal Accountant Fees and Services
 
The information required by Item 10, Item 11, Item 12, Item 13 and Item 14 will be contained in the Company’s definitive proxy statement expected to be filed with the Securities and Exchange Commission no later than 120 days after the end of the Registrant’s fiscal year, and thus is incorporated herein by reference in accordance with General Instruction G(3) to Form 10-K. Information contained in the parts of such proxy statement captioned “Stock Performance Graph”, “Report of the Compensation Committee”, “Report of the Audit Committee” and in statements with respect to the independence of the Audit Committee (except as such statements specifically relate to the independence of such committee’s financial expert) and regarding the Audit Committee Charter are specifically not incorporated herein by reference.


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The following information is required by section 201(d) of Regulation S-K:
 
                         
    Number of Securities
          Number of Securities
 
    to be Issued Upon
    Weighted-Average
    Remaining Available
 
    Exercise of
    Exercise Price of
    for Further Issuance
 
    Outstanding Options,
    Outstanding Options,
    Under Equity
 
Plan Category
  Warrants and Rights     Warrants and Rights     Compensation Plans  
 
Equity Compensation Plans Approved by Security Holders
    8,500     $ 23.41       2,356,500  
Equity Compensation Plans Not Approved by Security Holders(1)
    538,223     $ 31.39       252,615  
                         
Total
    546,723     $ 31.27       2,609,115  
                         
 
 
(1) See Notes 3 and 13 of the Notes to Consolidated Financial Statements contained herein for a description of the plan.
 
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 F-1.
 
(3) Exhibits:
 
         
Exhibits
 
Description
 
  3 .1   Amended and Restated Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 1996, File No. 1-13102)
  3 .2   Amended and Restated Bylaws of the Company, dated September 4, 1997 (incorporated by reference to Exhibit 1 of the Company’s Form 8-K, dated September 4, 1997, as filed on September 29, 1997, File No. 1-13102)
  3 .3   Articles of Amendment to the Company’s Articles of Incorporation, dated June 20, 1994 (incorporated by reference to Exhibit 3.2 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 1996, File No. 1-13102)
  3 .4   Articles of Amendment to the Company’s Articles of Incorporation, dated May 31, 1996 (incorporated by reference to Exhibit 3.3 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 1996, File No. 1-13102)
  3 .5   Articles Supplementary relating to the Company’s 85/8% Series C Cumulative Preferred Stock, $.01 par value (incorporated by reference to Exhibit 4.1 of the Form 8-K of the Company dated June 6, 1997, File No. 1-13102)
  3 .6   Articles Supplementary relating to the Company’s 6.236% Series F Flexible Cumulative Redeemable Preferred Stock, $.01 par value (incorporated by reference to Exhibit 3.1 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  3 .7   Articles Supplementary relating to the Company’s 7.236% Series G Flexible Cumulative Redeemable Preferred Stock, $.01 par value (incorporated by reference to Exhibit 3.2 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  3 .8   Articles Supplementary relating to the Company’s Junior Participating Preferred Stock, $.01 par value (incorporated by reference to Exhibit 4.10 of Form S-3 of the Company and First Industrial, L.P. dated September 24, 1997, Registration No. 333-29879)
  3 .9   Articles Supplementary relating to the Company’s 7.25% Series J Cumulative Redeemable Preferred Stock, $.01 par value (incorporated by reference to Exhibit 4.1 of the Form 8-K of the Company filed January 17, 2006, File No. 1-13102)


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Exhibits
 
Description
 
  4 .1   Deposit Agreement, dated June 6, 1997, by and among the Company, First Chicago Trust Company of New York and holders from time to time of Series C Depositary Receipts (incorporated by reference to Exhibit 4.2 of the Form 8-K of the Company, dated June 6, 1997, File No. 1-13102)
  4 .2   Deposit Agreement, dated May 27, 2004, by and among the Company, EquiServe Inc. and EquiServe Trust Company, N.A. and holders from time to time of Series F Depositary Receipts (incorporated by reference to Exhibit 4.1 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  4 .3   Deposit Agreement, dated May 27, 2004, by and among the Company, EquiServe Inc. and EquiServe Trust Company, N.A. and holders from time to time of Series G Depositary Receipts (incorporated by reference to Exhibit 4.2 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  4 .4   Remarketing Agreement, dated May 27, 2004, relating to 50,000 depositary shares, each representing 1/100 of a share of the Series F Flexible Cumulative Redeemable Preferred Stock, by and among Lehman Brothers Inc., the Company and First Industrial, L.P. (incorporated by reference to Exhibit 1.2 of the Form 8-K of the Company, dated May 27, 2004, File No. 1-13102).
  4 .5   Remarketing Agreement, dated May 27, 2004, relating to 25,000 depositary shares, each representing 1/100 of a share of the Series G Flexible Cumulative Redeemable Preferred Stock, by and among Lehman Brothers Inc., the Company and First Industrial, L.P. (incorporated by reference to Exhibit 1.3 of the Form 8-K of the Company, dated May 27, 2004, File No. 1-13102).
  4 .6   Deposit Agreement, dated January 13, 2006, by and among the Company, Computershare Shareholder Services, Inc. and Computershare Trust Company, N.A., as depositary, and holders from time to time of Series J Depositary Receipts (incorporated by reference to Exhibit 10.1 of the Form 8-K of the Company, filed January 17, 2006, File No. 1-13102)
  4 .7   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 .8   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 .9   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-Q of First Industrial, L.P. for the fiscal quarter ended March 31, 1997, File No. 333-21873)
  4 .10   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 First Industrial, L.P., dated November 3, 1997, as filed November 3, 1997, File No. 333-21873)
  4 .11   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 .12   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 .13   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-Q of First Industrial, L.P. for the fiscal quarter ended March 31, 1997, File No. 333-21873)
  4 .14   Rights Agreement, dated as of September 16, 1997, between the Company and First Chicago Trust Company of New York, as Rights Agent (incorporated by reference to Exhibit 99.1 of Form 8-A12B as filed on September 24, 1997, File No. 1-13102)

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Exhibits
 
Description
 
  4 .15   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 First Industrial, L.P. dated July  15, 1998, File No. 333-21873)
  4 .16   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, 2008 (incorporated by reference to Exhibit 4.1 of the Form 8-K of First Industrial, L.P. dated July 15, 1998, File No. 333-21873)
  4 .17   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 First Industrial, L.P.’s Annual Report on Form 10-K for the year ended December 31, 2000, File No. 333-21873)
  4 .18   Supplemental Indenture No. 6, dated as of March 19, 2001, between First Industrial, L.P. and the 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 First Industrial, L.P.’s Annual Report on Form 10-K for the year ended December 31, 2000, File No. 333-21873)
  4 .19   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 First Industrial, L.P.’s Annual Report on Form 10-K for the year ended December 31, 2000, File No. 333-21873)
  4 .20   Supplemental Indenture No. 7 dated as of April 15, 2002, between First Industrial, L.P. and the 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 Form 8-K of First Industrial, L.P. dated April 4, 2002, File No. 333-21873)
  4 .21   Form of 6.875% Notes due in 2012 in the principal amount of $200 million issued by First Industrial, L.P. (incorporated by reference to Exhibit 4.2 of the Form 8-K of First Industrial, L.P., dated April 4, 2002, File No. 333-21873)
  4 .22   Form of 7.75% Notes due 2032 in the principal amount of $50.0 million issued by First Industrial, L.P. (incorporated by reference to Exhibit 4.3 of the Form 8-K of First Industrial, L.P., dated April 4, 2002, File No. 333-21873)
  4 .23   Supplemental Indenture No. 8, dated as of May 17, 2004, 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 First Industrial, L.P., dated May  27, 2004, File No. 333-21873)
  4 .24   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 First Industrial, L.P., dated June 17, 2004, File No. 333-21873)
  4 .25   Amendment No. 1, dated as of February 25, 2004, to Rights Agreement, dated as of September 16, 1997, between the Company and Equiserve Trust Company, N.A. (f/k/a First Chicago Trust Company of New York), as Rights Agent (incorporated by reference to Exhibit 4.23 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2003, File No. 1-13102)
  4 .26   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)
  10 .1   Tenth Amended and Restated Limited Partnership Agreement of First Industrial, L.P. (the “LP Agreement”), dated January 13, 2006 (incorporated by reference to Exhibit 10.2 of the Form 8-K of the Company, filed January 17, 2006, File No. 1-13102)
  10 .2   Sales Agreement by and among the Company and 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 Company, dated September 16, 2004, File No. 1-13102).

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Table of Contents

         
Exhibits
 
Description
 
  10 .3   Registration Rights Agreement, dated April 29, 1998, relating to the Company’s Common Stock, par value $.01 per share, between the Company, the Operating Partnership and Merrill Lynch, Pierce, Fenner & Smith Incorporated (incorporated by reference to Exhibit 4.1 of the Form 8-K of the Company dated May 1, 1998, File No. 1-13102)
  10 .4   Non-Competition Agreement between Jay H. Shidler and First Industrial Realty Trust, Inc. (incorporated by reference to Exhibit 10.16 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1994, File No. 1-13102)
  10 .5   Form of Non-Competition Agreement between each of Michael T. Tomasz, Paul T. Lambert, Michael J. Havala, Michael W. Brennan, Michael G. Damone, Duane H. Lund, and Johannson L. Yap and First Industrial Realty Trust, Inc. (incorporated by reference to Exhibit 10.14 to the Company’s Registration Statement on Form S-11, File No. 33-77804)
  10 .6†   1994 Stock Incentive Plan (incorporated by reference to Exhibit 10.37 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1994, File No. 1-13102)
  10 .7†   First Industrial Realty Trust, Inc. Deferred Income Plan (incorporated by reference to Exhibit 10 of the Form 10-Q of the Company for the fiscal quarter ended March 31, 1996, File No. 1-13102)
  10 .8   Contribution Agreement, dated March 19, 1996, among FR Acquisitions, Inc. and the parties listed on the signature pages thereto (incorporated by reference to Exhibit 10.1 of the Form 8-K of the Company, dated April 3, 1996, File No. 1-13102)
  10 .9   Contribution Agreement, dated January 31, 1997, among FR Acquisitions, Inc. and the parties listed on the signature pages thereto (incorporated by reference to Exhibit 10.58 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1996, File No. 1-13102)
  10 .10†   Employment Agreement, dated June 21, 2005, between the Company and Michael W. Brennan (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed June 24, 2005 File No. 1-13102)
  10 .11†   1997 Stock Incentive Plan (incorporated by reference to Exhibit 10.62 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1996, File No. 1-13102)
  10 .12†   2001 Stock Incentive Plan (incorporated by reference to Exhibit 10.34 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2001, File No. 1-13102)
  10 .13†   Employment Agreement, dated March 31, 2002, between First Industrial Realty Trust, Inc. and Michael J. Havala (incorporated by reference to Exhibit 10.1 of the Form 10-Q of First Industrial Realty Trust, Inc. for the fiscal quarter ended March 31, 2002, File No. 1-13102)
  10 .14†   Employment Agreement, dated March 31, 2002, between First Industrial Realty Trust, Inc. and Johannson L. Yap (incorporated by reference to Exhibit 10.2 of the Form 10-Q of First Industrial Realty Trust, Inc. for the fiscal quarter ended March 31, 2002, File No. 1-13102)
  10 .15†   Employment Agreement, dated March 25, 2002, between First Industrial Realty Trust, Inc. and David P. Draft (incorporated by reference to Exhibit 10.3 of the Form 10-Q of First Industrial Realty Trust, Inc. for the fiscal quarter ended March 31, 2002, File No. 1-13102)
  10 .16†   Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.3 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  10 .17†   Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.4 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  10 .18†   Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.5 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  10 .19†   Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.6 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  10 .20*   Amendment No. 1 dated January 20, 2006 to the LP Agreement.
  10 .21   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 and preferred stock dividends of the Company

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Exhibits
 
Description
 
  21 .1*   Subsidiaries of the Registrant
  23 *   Consent of PricewaterhouseCoopers LLP
  31 .1*   Certification of Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
  31 .2*   Certification of Principal Financial Officer 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.
 
Indicates a compensatory plan or arrangement contemplated by Item 15 a (3) of Form 10-K.

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EXHIBIT INDEX
 
         
Exhibits
 
Description
 
  3 .1   Amended and Restated Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 1996, File No. 1-13102)
  3 .2   Amended and Restated Bylaws of the Company, dated September 4, 1997 (incorporated by reference to Exhibit 1 of the Company’s Form 8-K, dated September 4, 1997, as filed on September 29, 1997, File No. 1-13102)
  3 .3   Articles of Amendment to the Company’s Articles of Incorporation, dated June 20, 1994 (incorporated by reference to Exhibit 3.2 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 1996, File No. 1-13102)
  3 .4   Articles of Amendment to the Company’s Articles of Incorporation, dated May 31, 1996 (incorporated by reference to Exhibit 3.3 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 1996, File No. 1-13102)
  3 .5   Articles Supplementary relating to the Company’s 85/8% Series C Cumulative Preferred Stock, $.01 par value (incorporated by reference to Exhibit 4.1 of the Form 8-K of the Company dated June 6, 1997, File No. 1-13102)
  3 .6   Articles Supplementary relating to the Company’s 6.236% Series F Flexible Cumulative Redeemable Preferred Stock, $.01 par value (incorporated by reference to Exhibit 3.1 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  3 .7   Articles Supplementary relating to the Company’s 7.236% Series G Flexible Cumulative Redeemable Preferred Stock, $.01 par value (incorporated by reference to Exhibit 3.2 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  3 .8   Articles Supplementary relating to the Company’s Junior Participating Preferred Stock, $.01 par value (incorporated by reference to Exhibit 4.10 of Form S-3 of the Company and First Industrial, L.P. dated September 24, 1997, Registration No. 333-29879)
  3 .9   Articles Supplementary relating to the Company’s 7.25% Series J Cumulative Redeemable Preferred Stock, $.01 par value (incorporated by reference to Exhibit 4.1 of the Form 8-K of the Company filed January 17, 2006, File No. 1-13102)
  4 .1   Deposit Agreement, dated June 6, 1997, by and among the Company, First Chicago Trust Company of New York and holders from time to time of Series C Depositary Receipts (incorporated by reference to Exhibit 4.2 of the Form 8-K of the Company, dated June 6, 1997, File No. 1-13102)
  4 .2   Deposit Agreement, dated May 27, 2004, by and among the Company, EquiServe Inc. and EquiServe Trust Company, N.A. and holders from time to time of Series F Depositary Receipts (incorporated by reference to Exhibit 4.1 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  4 .3   Deposit Agreement, dated May 27, 2004, by and among the Company, EquiServe Inc. and EquiServe Trust Company, N.A. and holders from time to time of Series G Depositary Receipts (incorporated by reference to Exhibit 4.2 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  4 .4   Remarketing Agreement, dated May 27, 2004, relating to 50,000 depositary shares, each representing 1/100 of a share of the Series F Flexible Cumulative Redeemable Preferred Stock, by and among Lehman Brothers Inc., the Company and First Industrial, L.P. (incorporated by reference to Exhibit 1.2 of the Form 8-K of the Company, dated May 27, 2004, File No. 1-13102).
  4 .5   Remarketing Agreement, dated May 27, 2004, relating to 25,000 depositary shares, each representing 1/100 of a share of the Series G Flexible Cumulative Redeemable Preferred Stock, by and among Lehman Brothers Inc., the Company and First Industrial, L.P. (incorporated by reference to Exhibit 1.3 of the Form 8-K of the Company, dated May 27, 2004, File No. 1-13102).
  4 .6   Deposit Agreement, dated January 13, 2006, by and among the Company, Computershare Shareholder Services, Inc. and Computershare Trust Company, N.A., as depositary, and holders from time to time of Series J Depositary Receipts (incorporated by reference to Exhibit 10.1 of the Form 8-K of the Company, filed January 17, 2006, File No. 1-13102)


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Exhibits
 
Description
 
  4 .7   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 .8   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 .9   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-Q of First Industrial, L.P. for the fiscal quarter ended March 31, 1997, File No. 333-21873)
  4 .10   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 First Industrial, L.P., dated November 3, 1997, as filed November 3, 1997, File No. 333-21873)
  4 .11   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 .12   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 .13   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-Q of First Industrial, L.P. for the fiscal quarter ended March 31, 1997, File No. 333-21873)
  4 .14   Rights Agreement, dated as of September 16, 1997, between the Company and First Chicago Trust Company of New York, as Rights Agent (incorporated by reference to Exhibit 99.1 of Form 8-A12B as filed on September 24, 1997, File No. 1-13102)
  4 .15   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 First Industrial, L.P. dated July  15, 1998, File No. 333-21873)
  4 .16   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, 2008 (incorporated by reference to Exhibit 4.1 of the Form 8-K of First Industrial, L.P. dated July 15, 1998, File No. 333-21873)
  4 .17   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 First Industrial, L.P.’s Annual Report on Form 10-K for the year ended December 31, 2000, File No. 333-21873)
  4 .18   Supplemental Indenture No. 6, dated as of March 19, 2001, between First Industrial, L.P. and the 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 First Industrial, L.P.’s Annual Report on Form 10-K for the year ended December 31, 2000, File No. 333-21873)
  4 .19   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 First Industrial, L.P.’s Annual Report on Form 10-K for the year ended December 31, 2000, File No. 333-21873)
  4 .20   Supplemental Indenture No. 7 dated as of April 15, 2002, between First Industrial, L.P. and the 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 Form 8-K of First Industrial, L.P. dated April 4, 2002, File No. 333-21873)


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Exhibits
 
Description
 
  4 .21   Form of 6.875% Notes due in 2012 in the principal amount of $200 million issued by First Industrial, L.P. (incorporated by reference to Exhibit 4.2 of the Form 8-K of First Industrial, L.P., dated April 4, 2002, File No. 333-21873)
  4 .22   Form of 7.75% Notes due 2032 in the principal amount of $50.0 million issued by First Industrial, L.P. (incorporated by reference to Exhibit 4.3 of the Form 8-K of First Industrial, L.P., dated April 4, 2002, File No. 333-21873)
  4 .23   Supplemental Indenture No. 8, dated as of May 17, 2004, 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 First Industrial, L.P., dated May  27, 2004, File No. 333-21873)
  4 .24   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 First Industrial, L.P., dated June 17, 2004, File No. 333-21873)
  4 .25   Amendment No. 1, dated as of February 25, 2004, to Rights Agreement, dated as of September 16, 1997, between the Company and Equiserve Trust Company, N.A. (f/k/a First Chicago Trust Company of New York), as Rights Agent (incorporated by reference to Exhibit 4.23 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2003, File No. 1-13102)
  4 .26   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)
  10 .1   Tenth Amended and Restated Limited Partnership Agreement of First Industrial, L.P. (the “LP Agreement”), dated January 13, 2006 (incorporated by reference to Exhibit 10.2 of the Form 8-K of the Company, filed January 17, 2006, File No. 1-13102)
  10 .2   Sales Agreement by and among the Company and 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 Company, dated September 16, 2004, File No. 1-13102).
  10 .3   Registration Rights Agreement, dated April 29, 1998, relating to the Company’s Common Stock, par value $.01 per share, between the Company, the Operating Partnership and Merrill Lynch, Pierce, Fenner & Smith Incorporated (incorporated by reference to Exhibit 4.1 of the Form 8-K of the Company dated May 1, 1998, File No. 1-13102)
  10 .4   Non-Competition Agreement between Jay H. Shidler and First Industrial Realty Trust, Inc. (incorporated by reference to Exhibit 10.16 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1994, File No. 1-13102)
  10 .5   Form of Non-Competition Agreement between each of Michael T. Tomasz, Paul T. Lambert, Michael J. Havala, Michael W. Brennan, Michael G. Damone, Duane H. Lund, and Johannson L. Yap and First Industrial Realty Trust, Inc. (incorporated by reference to Exhibit 10.14 to the Company’s Registration Statement on Form S-11, File No. 33-77804)
  10 .6†   1994 Stock Incentive Plan (incorporated by reference to Exhibit 10.37 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1994, File No. 1-13102)
  10 .7†   First Industrial Realty Trust, Inc. Deferred Income Plan (incorporated by reference to Exhibit 10 of the Form 10-Q of the Company for the fiscal quarter ended March 31, 1996, File No. 1-13102)
  10 .8   Contribution Agreement, dated March 19, 1996, among FR Acquisitions, Inc. and the parties listed on the signature pages thereto (incorporated by reference to Exhibit 10.1 of the Form 8-K of the Company, dated April 3, 1996, File No. 1-13102)
  10 .9   Contribution Agreement, dated January 31, 1997, among FR Acquisitions, Inc. and the parties listed on the signature pages thereto (incorporated by reference to Exhibit 10.58 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1996, File No. 1-13102)
  10 .10†   Employment Agreement, dated June 21, 2005, between the Company and Michael W. Brennan (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed June 24, 2005 File No. 1-13102)


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Exhibits
 
Description
 
  10 .11†   1997 Stock Incentive Plan (incorporated by reference to Exhibit 10.62 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1996, File No. 1-13102)
  10 .12†   2001 Stock Incentive Plan (incorporated by reference to Exhibit 10.34 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2001, File No. 1-13102)
  10 .13†   Employment Agreement, dated March 31, 2002, between First Industrial Realty Trust, Inc. and Michael J. Havala (incorporated by reference to Exhibit 10.1 of the Form 10-Q of First Industrial Realty Trust, Inc. for the fiscal quarter ended March 31, 2002, File No. 1-13102)
  10 .14†   Employment Agreement, dated March 31, 2002, between First Industrial Realty Trust, Inc. and Johannson L. Yap (incorporated by reference to Exhibit 10.2 of the Form 10-Q of First Industrial Realty Trust, Inc. for the fiscal quarter ended March 31, 2002, File No. 1-13102)
  10 .15†   Employment Agreement, dated March 25, 2002, between First Industrial Realty Trust, Inc. and David P. Draft (incorporated by reference to Exhibit 10.3 of the Form 10-Q of First Industrial Realty Trust, Inc. for the fiscal quarter ended March 31, 2002, File No. 1-13102)
  10 .16†   Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.3 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  10 .17†   Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.4 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  10 .18†   Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.5 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  10 .19†   Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.6 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 2004, File No. 1-13102)
  10 .20*   Amendment No. 1 dated January 20, 2006 to the LP Agreement.
  10 .21   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 and preferred stock dividends of the Company
  21 .1*   Subsidiaries of the Registrant
  23 *   Consent of PricewaterhouseCoopers LLP
  31 .1*   Certification of Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
  31 .2*   Certification of Principal Financial Officer 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.
 
Indicates a compensatory plan or arrangement contemplated by Item 15 a (3) of Form 10-K.


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FIRST INDUSTRIAL REALTY TRUST, INC.
 
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
 
         
    Page
 
FINANCIAL STATEMENTS
   
  F-2
  F-4
  F-5
  F-6
  F-7
  F-8
  F-9
FINANCIAL STATEMENT SCHEDULE
   
Schedule III: Real Estate and Accumulated Depreciation
  S-1


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Report of Independent Registered Public Accounting Firm
 
To the Board of Directors and Stockholders of
  First Industrial Realty Trust, Inc.:
 
We have completed integrated audits of First Industrial Realty Trust, Inc.’s 2005 and 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2005 and an audit of its 2003 consolidated financial statements 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 Realty Trust, Inc. and its subsidiaries (“the Company”) at December 31, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2005 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 Company’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.
 
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 Company maintained effective internal control over financial reporting as of December 31, 2005 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 Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005 based on criteria established in Internal Control — Integrated Framework issued by the COSO. The Company’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 Company’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.
 
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


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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 16, 2006


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FIRST INDUSTRIAL REALTY TRUST, INC.
 
 
                 
    December 31,
    December 31,
 
    2005     2004  
    (Dollars in thousands, except share and per share data)  
 
ASSETS
Assets:
               
Investment in Real Estate:
               
Land
  $ 541,406     $ 472,126  
Buildings and Improvements
    2,653,281       2,361,256  
Construction in Progress
    66,074       23,092  
Less: Accumulated Depreciation
    (410,566 )     (378,383 )
                 
Net Investment in Real Estate
    2,850,195       2,478,091  
                 
Real Estate Held for Sale, Net of Accumulated Depreciation and Amortization of $1,622 and $3,374 at December 31, 2005 and December 31, 2004
    16,840       52,790  
Cash and Cash Equivalents
    8,237       4,924  
Restricted Cash
    29,581       25  
Tenant Accounts Receivable, Net
    8,897       6,986  
Investments in Joint Ventures
    44,241       5,489  
Deferred Rent Receivable, Net
    24,910       18,314  
Deferred Financing Costs, Net
    10,909       11,574  
Deferred Leasing Intangibles, Net
    78,537       38,956  
Prepaid Expenses and Other Assets, Net
    153,896       104,741  
                 
Total Assets
  $ 3,226,243     $ 2,721,890  
                 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
               
Mortgage Loans Payable, Net
  $ 57,309     $ 59,905  
Senior Unsecured Debt, Net
    1,298,893       1,347,524  
Unsecured Lines of Credit
    457,500       167,500  
Accounts Payable and Accrued Expenses
    110,560       69,729  
Deferred Leasing Intangibles, Net
    24,307       8,697  
Rents Received in Advance and Security Deposits
    32,283       30,621  
Dividends Payable
    39,509       35,487  
                 
Total Liabilities
    2,020,361       1,719,463  
                 
Commitments and Contingencies
           
Minority Interest
    162,320       156,933  
Stockholders’ Equity:
               
Preferred Stock ($.01 par value, 10,000,000 shares authorized, 20,000, 500, 250 and 750 shares of Series C, F, G and I Cumulative Preferred Stock, respectively, issued and outstanding at December 31, 2005, having a liquidation preference of $2,500 per share ($50,000), $100,000 per share ($50,000), $100,000 per share ($25,000) and $250,000 per share ($187,500), respectively. At December 31, 2004, 10,000,000 shares authorized, 20,000, 500 and 250 shares of Series C, F and G Cumulative Preferred Stock, respectively, were issued and outstanding, having a liquidation preference of $2,500 per share ($50,000), $100,000 per share ($50,000) and $100,000 per share ($25,000), respectively
           
Common Stock ($.01 par value, 100,000,000 shares authorized, 46,971,110 and 45,360,491 shares issued and 44,444,710 and 42,834,091 shares outstanding at December 31, 2005 and December 31, 2004, respectively)
    470       454  
Additional Paid-in-Capital
    1,384,712       1,142,356  
Distributions in Excess of Accumulated Earnings
    (248,686 )     (203,417 )
Unearned Value of Restricted Stock Grants
    (16,825 )     (19,611 )
Accumulated Other Comprehensive Loss
    (5,521 )     (3,700 )
Treasury Shares at Cost (2,526,400 shares at December 31, 2005 and December 31, 2004)
    (70,588 )     (70,588 )
                 
Total Stockholders’ Equity
    1,043,562       845,494  
                 
Total Liabilities and Stockholders’ Equity
  $ 3,226,243     $ 2,721,890  
                 
 
The accompanying notes are an integral part of the financial statements.


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FIRST INDUSTRIAL REALTY TRUST, INC.
 
 
                         
    Year Ended
    Year Ended
    Year Ended
 
    December 31,
    December 31,
    December 31,
 
    2005     2004     2003  
    (In thousands except per Share data)  
 
Revenues:
                       
Rental Income
  $ 257,933     $ 223,518     $ 211,925  
Tenant Recoveries and Other Income
    92,955       73,183       65,599  
Revenues from Build to Suit Development for Sale
    16,241              
                         
Total Revenues
    367,129       296,701       277,524  
                         
Expenses:
                       
Real Estate Taxes
    52,915       45,317       42,453  
Repairs and Maintenance
    27,565       23,435       21,563  
Property Management
    18,483       12,995       10,322  
Utilities
    12,726       10,585       8,922  
Insurance
    2,658       3,243       2,788  
Other
    7,437       4,314       6,602  
General and Administrative
    55,812       39,569       26,953  
Amortization of Deferred Financing Costs
    2,125       1,931       1,764  
Depreciation and Other Amortization
    119,608       87,951       69,707  
Expenses from Build to Suit Development for Sale
    15,574              
                         
Total Expenses
    314,903       229,340       191,074  
                         
Other Income/Expense:
                       
Interest Income
    1,486       3,632       2,416  
Mark-to-Market/Gain on Settlement of Interest Rate Protection Agreements
    811       1,583        
Interest Expense
    (108,339 )     (98,636 )     (94,895 )
Gain (Loss) From Early Retirement of Debt
    82       (515 )     (1,466 )
                         
Total Other Income/Expense
    (105,960 )     (93,936 )     (93,945 )
Loss from Continuing Operations Before Equity in Income of Joint Ventures, Income Tax Benefit and Income Allocated To Minority Interest
    (53,734 )     (26,575 )     (7,495 )
Equity in Income of Joint Ventures
    3,699       37,301       539  
Income Tax Benefit
    12,033       7,673       5,147  
Minority Interest Allocable to Continuing Operations
    6,348       547       3,096  
                         
(Loss) Income from Continuing Operations
    (31,654 )     18,946       1,287  
Income from Discontinued Operations (Including Gain on Sale of Real Estate of $131,955, $88,245 and $79,485 for the Years Ended December 31, 2005 2004 and 2003, respectively)
    139,486       105,592       121,872  
Provision for Income Taxes Allocable to Discontinued Operations (including $19,719, $8,267 and $1,988 allocable to Gain on Sale of Real Estate for the Years Ended December 31, 2005, 2004 and 2003, respectively)
    (21,754 )     (10,800 )     (3,427 )
Minority Interest Allocable to Discontinued Operations
    (15,494 )     (13,005 )     (17,447 )
                         
Income Before Gain on Sale of Real Estate
    70,584       100,733       102,285  
Gain on Sale of Real Estate
    29,734       16,755       15,794  
Provision for Income Taxes Allocable to Gain on Sale of Real Estate
    (10,711 )     (5,312 )     (2,322 )
Minority Interest Allocable to Gain on Sale of Real Estate
    (2,503 )     (1,570 )     (1,984 )
                         
Net Income
    87,104       110,606       113,773  
Less: Preferred Dividends
    (10,688 )     (14,488 )     (20,176 )
Less: Redemption of Preferred Stock
          (7,959 )      
                         
Net Income Available to Common Stockholders
  $ 76,416     $ 88,159     $ 93,597  
                         
Basic Earnings Per Share:
                       
(Loss) Income from Continuing Operations Available to Common Stockholders
  $ (0.61 )   $ 0.16     $ (0.19 )
                         
Income from Discontinued Operations
  $ 2.41     $ 2.02     $ 2.62  
                         
Net Income Available to Common Stockholders
  $ 1.80     $ 2.17     $ 2.43  
                         
Weighted Average Shares Outstanding
    42,431       40,557       38,542  
                         
Diluted Earnings Per Share:
                       
(Loss) Income from Continuing Operations Available to Common Stockholders
  $ (0.61 )   $ 0.16     $ (0.19 )
                         
Income from Discontinued Operations
  $ 2.41     $ 2.00     $ 2.62  
                         
Net Income Available to Common Stockholders
  $ 1.80     $ 2.16     $ 2.43  
                         
Weighted Average Shares Outstanding
    42,431       40,888       38,542  
                         
Dividends/Distributions declared per Common Share Outstanding
  $ 2.7850     $ 2.7500     $ 2.7400  
                         
 
The accompanying notes are an integral part of the financial statements.
 


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FIRST INDUSTRIAL REALTY TRUST, INC.
 
 
                         
    Year Ended
    Year Ended
    Year Ended
 
    December 31,
    December 31,
    December 31,
 
    2005     2004     2003  
    (Dollars in thousands)  
 
Net Income
  $ 87,104     $ 110,606     $ 113,773  
Other Comprehensive (Loss) Income:
                       
Settlement of Interest Rate Protection Agreements
          6,816        
Reclassification of Settlement of Interest Rate Protection Agreements to Net Income
    (159 )            
Mark-to-Market of Interest Rate Protection Agreements
    (1,414 )     106       251  
Amortization of Interest Rate Protection Agreements
    (1,085 )     (512 )     198  
Other Comprehensive Income Allocable to Minority Interest
    837              
                         
Comprehensive Income
  $ 85,283     $ 117,016     $ 114,222  
                         
 
The accompanying notes are an integral part of the financial statements.


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FIRST INDUSTRIAL REALTY TRUST, INC.
 
 
                         
    Year Ended
    Year Ended
    Year Ended
 
    December 31,
    December 31,
    December 31,
 
    2005     2004     2003  
    (Dollars in thousands, except for per share data) (Dollars in thousands)  
 
Preferred Stock — Beginning of Year
  $     $ 1     $ 1  
Issuance of Preferred Stock
                 
Redemption of Preferred Stock
          (1 )      
                         
Preferred Stock — End of Year
  $     $     $ 1  
                         
Common Stock — Beginning of Year
  $ 454     $ 424     $ 411  
Net Proceeds from the Issuance of Common Stock
    15       30       6  
Issuance of Restricted Stock
    2       2       7  
Repurchase and Retirement of Common Stock
    (1 )     (1 )     (1 )
Restricted Stock Forfeitures
    (1 )     (4 )      
Conversion of Units to Common Stock
    1       3       1  
                         
Common Stock — End of Year
  $ 470     $ 454     $ 424  
                         
Additional Paid-In-Capital — Beginning of Year
  $ 1,142,356     $ 1,161,373     $ 1,124,622  
Net Proceeds from the Issuance of Common Stock
    56,109       99,250       15,111  
Issuance of Restricted Stock
    8,379       8,377       20,634  
Repurchase and Retirement of Restricted Stock/Common Stock
    (2,741 )     (3,094 )     (1,797 )
Restricted Stock Forfeitures
    (2,825 )     (10,629 )      
Amortization of Stock Based Compensation
                54  
Net Proceeds from the Issuance of Preferred Stock
    181,484       194,424        
Redemption of Preferred Stock
          (313,537 )      
Conversion of Units to Common Stock
    1,950       6,192       2,749  
                         
Additional Paid-In-Capital — End of Year
  $ 1,384,712     $ 1,142,356     $ 1,161,373  
                         
Dist. In Excess of Accum. Earnings — Beginning of Year
  $ (203,417 )   $ (172,892 )   $ (158,251 )
Preferred Stock Dividends ($215.624 per Series C Preferred Share, $6,236.000 per Series F Preferred Share, $7,236.000 per Series G Preferred Share and $1,930.2431 per Series I Preferred Share at December 31, 2005, $215.624 per Series C Preferred Share, $86.678 per Series D Preferred Share, $86.132 per Series E Preferred Share, $3,724.280 per Series F Preferred Share, $4,321.500 per Series G Preferred Share and $629.555 per Series H Preferred Share at December 31, 2004, $215.624 per Series C Preferred Share, $198.748 per Series D Preferred Share and $197.500 per Series E Preferred Share at December 31, 2003)
    (10,688 )     (14,488 )     (20,176 )
Distributions ($2.7850, $2.7500 and $2.7400 per Share/Unit at December 31, 2005, 2004 and 2003, respectively)
    (139,168 )     (132,585 )     (126,699 )
Redemption of Preferred Stock
          (7,959 )     &