FIRST INDUSTRIAL REALTY TRUST INC (FR)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements and notes thereto appearing elsewhere in this Form 10-Q. Unless stated otherwise or the context otherwise requires, the terms "we," "our" and "us" refer to First Industrial Realty Trust, Inc. (the "Company") and its subsidiaries, including First Industrial, L.P. (the "Operating Partnership") and its consolidated subsidiaries.

Forward-Looking Statements

The following discussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). We intend for 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. Forward-looking statements are based on certain assumptions and describe our future plans, strategies and expectations, and are generally identifiable by use of the words "believe," "expect," "plan," "intend," "anticipate," "estimate," "project," "seek," "target," "potential," "focus," "may," "will," "should" or similar words. Although we believe the expectations reflected in forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be attained or that results will not materially differ.

Factors that could have a materially adverse effect on our operations and future prospects include, but are not limited to:

•changes in national, international, regional and local economic conditions generally, and real estate markets specifically, including impacts and uncertainties arising from trade disputes and tariffs on goods imported to or exported from the United States;

•changes in legislation/regulation (including laws governing the taxation of real estate investment trusts) and actions of regulatory authorities;

•our ability to qualify and maintain our status as a real estate investment trust;

•the availability, cost and attractiveness of financing (including both public and private capital), increases in or prolonged periods of elevated interest rates, and our ability to raise equity capital on attractive terms;

•the availability and attractiveness of terms of debt repurchases;

•our ability to retain our credit agency ratings;

•our ability to comply with applicable financial covenants;

•changes in the competitive environment in which we operate, including changes in supply, demand and valuation of industrial properties and land in our current and potential markets;

•our ability to identify, acquire, develop and/or manage properties on favorable terms;

•our ability to dispose of properties on favorable terms;

•our ability to successfully integrate acquired properties;

•potential liability relating to environmental matters;

•defaults on or non-renewal of leases by our tenants;

•decreases in rental rates or increases in vacancy rates;

•higher-than-expected real estate construction costs and delays in development or lease-up timelines;

•uncertainty and economic impacts of pandemics, epidemics or other public health emergencies or fear of such events;

•risks associated with cybersecurity breaches, cyberattacks, intrusions or other significant disruptions of our information technology networks or systems;

•potential natural disasters and other catastrophic events, including acts of war or terrorism;

•insufficient or unavailable insurance coverage;

•technological developments, particularly those affecting supply chains and logistics;

•litigation risks, including costs associated with prosecuting or defending claims and potential adverse outcomes;

•risks associated with our investments in joint ventures, including our lack of sole decision-making authority; and

•other risks and uncertainties described in Item 1A, "Risk Factors" and elsewhere in our annual report on Form 10-K for the year ended December 31, 2025 as well as those risks and uncertainties discussed from time to time in our other Exchange Act reports and in our other public filings with the Securities and Exchange Commission (the "SEC").

We caution you not to place undue reliance on forward-looking statements, which reflect our outlook only and speak only as of the date of this report. We assume no obligation to update or supplement forward-looking statements except as may be required by law.

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General

The Company is a self-administered and fully integrated real estate company which owns, manages, acquires, sells, develops and redevelops industrial real estate. The Company is a Maryland corporation organized on August 10, 1993 and a real estate investment trust ("REIT") as defined in the Internal Revenue Code of 1986 (the "Code"). As of June 30, 2026, we owned 419 industrial properties located in 19 states, containing an aggregate of approximately 71.2 million square feet of gross leasable area ("GLA"). Of the 419 properties owned on a consolidated basis, none of them are directly owned by the Company.

We began operations on July 1, 1994. The Company's operations are conducted primarily through the Operating Partnership, of which the Company is the sole general partner (the "General Partner"), with an approximate 96.7% ownership interest ("General Partner Units") at June 30, 2026. The Operating Partnership also conducts operations through several other limited partnerships (the "Other Real Estate Partnerships"), numerous limited liability companies ("LLCs") and certain taxable REIT subsidiaries ("TRSs"), the operating data of which, together with that of the Operating Partnership, is consolidated with that of the Company as presented herein. The Operating Partnership holds at least a 99% limited partnership interest in each of the Other Real Estate Partnerships. The general partners of the Other Real Estate Partnerships are separate corporations, wholly-owned by the Company, each with at least a .01% general partnership interest in the Other Real Estate Partnerships. The Company does not have any significant assets or liabilities other than its investment in the Operating Partnership and its 100% ownership interest in the general partners of the Other Real Estate Partnerships. The noncontrolling interest in the Operating Partnership of approximately 3.3% at June 30, 2026 represents the aggregate partnership interest held by the limited partners thereof ("Limited Partner Units" and together with the General Partner Units, the "Units").

Through a wholly-owned TRS of the Operating Partnership, we own an equity interest in a joint venture (the "Joint Venture"). We also provide various services to the Joint Venture. The Joint Venture is accounted for under the equity method of accounting. The operating data of the Joint Venture is not consolidated with that of the Operating Partnership or the Company as presented herein. During the year ended December 31, 2025, the Joint Venture sold its remaining real estate assets.

Available Information

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to these reports are available without charge on our website at www.firstindustrial.com. These reports can also be accessed through the SEC's website at www.sec.gov. In addition, our Corporate Governance Guidelines, Code of Business Conduct and Ethics, charters of each committee of the Board of Directors, and supplemental financial and operating information are all available without charge on our website or upon request. Amendments to, or waivers from, our Code of Business Conduct and Ethics that apply to our executive officers or directors will also be posted on our website. The information found on, or otherwise accessible through our website, is not incorporated into, and does not form a part of, this report or any other report or document we file with or furnish to the SEC.

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Management's Overview

Business Objectives and Growth Plans

Our fundamental business objective is to maximize the total return to the Company's stockholders and the Operating Partnership's partners by increasing our cash flow and property values. Our long-term business growth plans include the following elements:

•Internal Growth. We seek to grow internally by: (i) increasing revenues by renewing or re-leasing expiring leases at higher rental levels; (ii) obtaining contractual rent escalations on our long-term leases; (iii) increasing occupancy at properties with existing vacancies while maintaining high occupancy across the remainder of the portfolio; (iv) controlling and minimizing property operating expenses, general and administrative expenses and re-leasing costs; and (v) selectively renovating existing properties.

•External Growth. We seek to grow externally through: (i) the development of best-in-class industrial properties and the acquisition of individual assets, portfolios of industrial properties and leased land sites that meet our investment parameters within our 15 key logistics markets; and (ii) the expansion and redevelopment of our existing properties.

•Portfolio Enhancement. We continually seek to upgrade our overall portfolio by making new investments and selling assets that lack strong long-term cash flow growth potential. Our investment focus is on 15 key logistics markets which exhibit desirable long-term growth characteristics and where developable land is relatively scarce.

Our ability to pursue our long-term growth plans is affected by market conditions and our financial condition and operating capabilities.

Business Strategies

We utilize the following strategies in connection with the operation of our business:

•Organizational Strategy. We employ a decentralized property operations strategy through the deployment of experienced regional management teams and local property managers. Our headquarters in Chicago, Illinois provides acquisition, development and financing assistance, asset management oversight and financial reporting functions to our regional operations. We believe the size of our portfolio enables us to realize operating efficiencies by spreading overhead costs among many properties and by negotiating favorable terms and purchasing discounts.

•Market Strategy. Our market strategy focuses on 15 key logistics markets in the United States. These markets exhibit one or more of the following characteristics: (i) favorable industrial real estate fundamentals, including improving industrial demand and constrained future supply that can lead to long-term rent growth; (ii) favorable and diversified economic and business environments that should benefit from increases in distribution activity driven by growth in global trade and local consumption; (iii) population growth, which generally drives industrial demand; (iv) natural barriers to entry and scarcity of land which are key elements in delivering future rent growth; (v) sufficient market size to provide ample opportunity for growth through incremental investments and support asset liquidity; and (vi) favorable governmental, regulatory and tax environment.

•Leasing and Marketing Strategy. We utilize an operational management strategy designed to enhance tenant satisfaction and portfolio performance. We pursue an active leasing strategy that includes broadly marketing available space, seeking to renew existing leases at higher rents while minimizing re-leasing costs and seeking leases which provide for the pass-through of property-related expenses to the tenant. Additionally, we have both local and national marketing programs that target the business and real estate brokerage communities, as well as multi-national tenants.

•Acquisition/Development Strategy. Our investment strategy is primarily focused on developing and acquiring in

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the sections of this Form 10-K titled "Forward-Looking Statements" and the Consolidated Financial Statements and Notes thereto appearing elsewhere in this Form 10-K.

Summary of 2025

Our operating results were strong in 2025, highlighted by a 32.2% average increase in cash rental rates on new and renewal commenced leases, tenant retention of 71.0% and year-end in-service occupancy of 94.4%, demonstrating healthy demand.

At December 31, 2025, we had six projects classified as under development, totaling approximately 1.1 million square feet of GLA with an aggregate estimated investment of approximately $187.1 million. This total includes two projects for which vertical construction commenced in the first quarter of 2026.

During 2025, we completed several significant real estate transactions:

•We acquired three industrial properties located in our Phoenix market, totaling approximately 1.8 million square feet of GLA, from our Joint Venture for an aggregate price of $245.3 million, excluding transaction costs. The purchase price is net of our economic share of gain on sale and incentive fees we earned on the sale as well as other deferred fees. We also acquired a 0.1 million square foot industrial property in our Baltimore/D.C. market for a purchase price of $31.4 million, excluding transaction costs.

•We acquired one income-producing land parcel in our Northern California market for a purchase price of $10.6 million, excluding transaction costs and approximately 61.4 acres of land for development in our Philadelphia market for a purchase price of $15.7 million, excluding transaction costs.

•We sold seven industrial properties totaling approximately 0.3 million square feet of GLA, along with a land parcel, for gross proceeds of $42.3 million.

We also completed the following financing activities during the year ended December 31, 2025:

•We declared an annual cash dividend of $1.78 per common share or Unit, an increase of 20.3% from 2024.

•In May, Fitch Ratings upgraded our long-term issuer default rating and underlying unsecured investments to BBB+ from BBB.

•In May, we issued $450.0 million of senior notes due January 2031, bearing a coupon rate of 5.25%.

•We exercised our first one-year extension option related to our $300.0 million term loan, extending the maturity date to August 2026 and amended our $200.0 million term loan to, among other things, extend the maturity to March 2028, with two optional one-year extensions.

•We entered into forward-starting swaps with an aggregate notional value of $350.0 million to fix SOFR on our unsecured term loans, replacing expiring swaps and extending hedge coverage through the maturity dates of our unsecured term loans.

•We amended our Unsecured Credit Facility to, among other changes, increase the borrowing capacity by $100.0 million to $850.0 million, eliminate the 10 basis point SOFR adjustment and extend the maturity date to March 2029, with two optional six-month extensions.

•At December 31, 2025, we had $664.9 million of available borrowing capacity under our Unsecured Credit Facility and held $72.7 million in cash and cash equivalents, excluding our Joint Venture partner's 6% share that we consolidate and report in our financial statements.

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Results of Operations

Comparison of Year Ended December 31, 2025 to Year Ended December 31, 2024

The tables below summarize our revenues, property expenses and depreciation and other amortization by various categories for the years ended December 31, 2025 and 2024.

Same Store Properties: Same store properties include those that were owned and in service prior to January 1, 2024 and remained in service through December 31, 2025. Same store properties also includes developments and redevelopments placed in service prior to January 1, 2024. A property is considered placed in service when it meets one of the following criteria: (i) acquired properties with occupancy of at least 75% at acquisition, unless we anticipate tenant move-outs within two years of ownership would reduce occupancy below 75%; (ii) acquired properties with occupancy less than 75% at acquisition are placed in service upon reaching the earlier of 90% occupancy or one year subsequent to acquisition; (iii) developments, redevelopments and acquired income-producing land parcels for which our ultimate intent is to redevelop or develop on the land parcel are placed in service upon the earlier of reaching 90% occupancy or one year after construction completion; and (iv) properties acquired with occupancy greater than 75% but with anticipated move out within two years of ownership, are placed in service upon the earlier of reaching 90% occupancy or twelve months after tenant move out. Properties are moved from the same store category to the redevelopment classification when projected capital expenditures are estimated to exceed 20% of the property's undepreciated gross book value.

Acquired Properties: Acquired properties are properties that were purchased subsequent to December 31, 2023 and held as an operating property through December 31, 2025.

Sold Properties: Sold properties are properties that were disposed of subsequent to December 31, 2023.

Developments and Redevelopments: Developments and redevelopments (collectively referred to as "(Re)Developments") include properties that were either: (i) not substantially complete 12 months prior to January 1, 2024; or (ii) not stabilized prior to January 1, 2024.

Other Revenues and Property Expenses: Other revenues are derived from the operations of properties not placed in service under one of the categories discussed above, the operations of our maintenance company, interest income, joint venture fees and other miscellaneous revenues. Other property expenses are derived from the operations of properties not placed in service under one of the categories discussed above, the operations of our maintenance company, vacant land expenses and other miscellaneous regional expenses.

During the year ended December 31, 2025, one industrial property, totaling approximately 0.1 million square feet of GLA, was taken out of service with the intent for future redevelopment. As a result of taking this industrial property out of service, the results of operations associated with this property were reclassified from the same store property classification to the other classification.

Our future financial condition and results of operations, including rental revenues, may be impacted by the future acquisition, (re)development and sale of properties. Our future revenues and expenses may vary materially from historical rates.

Our net income was $264.1 million and $296.0 million for the years ended December 31, 2025 and 2024, respectively.

For the years ended December 31, 2025 and 2024, the average daily occupancy rate of our same store properties was 94.9% and 95.4%, respectively.

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Revenues from same store properties increased $34.1 million primarily due to increases in rental rates and tenant recoveries, offset by a decrease in occupancy. Revenues from acquired properties increased $10.9 million due to the nine industrial properties acquired subsequent to December 31, 2023 totaling approximately 2.1 million square feet of GLA. Revenues from sold properties decreased $9.7 million due to the 29 industrial properties sold subsequent to December 31, 2023 totaling approximately 1.5 million square feet of GLA. Revenues from (re)developments increased $24.1 million due to an increase in occupancy and tenant recoveries. Revenues from other decreased $2.0 million due to a decrease in interest income, a decrease in revenues from properties that were previously occupied and a decrease in joint venture fees, offset by legal settlement proceeds.

Property expenses include real estate taxes, repairs and maintenance, property management, utilities, insurance and other property related expenses. Property expenses from same store properties increased $8.1 million primarily due to increases in real estate taxes and repairs and maintenance expenses. Property expenses from acquired properties increased $1.6 million due to properties acquired subsequent to December 31, 2023. Property expenses from sold properties decreased $2.1 million due to properties sold subsequent to December 31, 2023. Property expenses from (re)developments increased $3.1 million primarily due to the substantial completion of developments. Property expenses from other decreased $2.1 million primarily due to the capitalization of real estate taxes related to ongoing construction preparation activities on certain land parcels during the year ended December 31, 2025 as well as demolition costs incurred during the year ended December 31, 2024 to prepare certain land sites for construction.

General and administrative expense remained relatively unchanged.

Joint Venture development services expense, representing payments made to a third party for property development assistance within the Joint Venture, decreased by $0.9 million, or 58.9%. This decrease is primarily attributable to a reduction in development activities by our Joint Venture during the year ended December 31, 2025, compared to the year ended December 31, 2024.

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Depreciation and other amortization from same store properties remained relatively unchanged. Depreciation and other amortization from acquired properties increased $8.1 million due to properties acquired subsequent to December 31, 2023. Depreciation and other amortization from sold properties decreased $1.6 million due to properties sold subsequent to December 31, 2023. Depreciation and other amortization from (re)developments increased $6.9 million primarily due to an increase in

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