CFRA Keeps Hold Opinion on Shares of First Industrial Realty Trust, Inc.

FR

Recommendation

Recommendation

48

USD

Target Price

Stars Rank

We lower our target price by $7 to $48, applying a forward P/FFO of 18.5x our 2024 FFO estimate, in line with industrial REIT peers. We trim our 2024 FFO estimate by $0.04 to $2.57 and 2025’s by $0.03 to $2.88. FR reported Q1 2024 FFO of $0.60 vs. $0.59, in line with consensus on revenues that rose 9% Y/Y. Same-store net operating income (NOI) growth remained strong at 10% Y/Y as FR was able to push blended cash rental rate growth of 44.8%. Occupancy dropped 320 bps Y/Y to 95.5%, although it remained flat sequentially. Higher interest rates and an influx of new supply weigh on markets, especially in Southern California, where vacancies have risen quickly and FR realizes 24% of its annual NOI. However, vacancy rates remain slightly below historical averages and limited new construction starts over the last year should allow supply and demand to reach more of an equilibrium as we look toward 2025, allowing for improved pricing power. FR made no acquisitions in Q1, while completing dispositions worth $49M.