First Industrial Realty Trust

November 20, 2008

Brian BirdRyan Foelske

Overview

• Company Overview

• Industry Overview

• Macroeconomic

• Financials

• Valuation

• RCMP Portfolio

• Recommendation

Company Overview

• Headquartered in Chicago, Illinois• First Industrial Realty-Trust (FR), founded in

1994, is an established REIT and owner of industrial real estate serving customers worldwide.

• FR engages in the buying, selling, leasing, development and management of industrial real estate solutions for every stage of the industrial supply chain.

• Their mission is to create industrial real estate solutions that mutually benefit their customers and their investors.

Description of a REIT

• A Real Estate Investment Trust (REIT) is a company that owns and operates income-producing real estates.

• REITs’ shares are traded publicly on major stock exchanges, giving anyone the ability to invest in large-scale real estate.

• REITs are required to distribute 90% of their taxable income annually in the form of dividends, giving high yields to its investors

• Diversification advantage of REIT• Give individual investors opportunity to access real

estate market• Typically, relatively low correlation between REITs

and other stocks and bonds

First Industrial’s Portfolio

From FR Annual Report

Industry Overview

• Real Estate Investment Trust (REIT): a company that owns and operates income-producing real estate.

• REIT shares are publicly traded on major stock exchanges, giving anyone the ability to invest in large-scale real estate.

• REITs are required to distribute 90% of their annual income in the form of dividends, giving high dividend yields to its investors.

• Diversification advantage of REIT• Give individual investors opportunity to access

real estate market.• Fairly low correlation between REITs and other

risky assets.

Macroeconomic Outlook

• Increasing borrowing rates make expanding property holdings more difficult.

• Decline in property values means fewer will be sold, especially at a gain.

• Ability to meet current debt obligations in question as sale of property is a major part of income.

Macroeconomic Outlook

• Customers (occupants) of industrial property having financial issues:

– Automotive Manufacturers downsizing if not heading towards bankruptcy.

– Retail Industry expecting declining sales, meaning less need for warehouses.

SWOT Analysis

Strengths:Geographic Diversification

Most debt not mature until 2011

Large in-place joint ventures

Weaknesses:Large amounts of debt

Poor credit rating

Small player in industry

Opportunities:Purchase undervalued property

Continue to grow revenues related to contracting

Threats:Ability to raise capital

Meeting current debt obligations without selling properties at huge losses

Relative Valuation

FR PLD AMB DRE

Market Cap (Millions)

226.05 908.78 1,100.00 897.37

P/E 1.60 1.63 4.80 9.76

P/B 0.24 0.13 0.44 0.49

P/S 0.52 0.24 1.89 0.91

Book/Share 21.70 27.50 25.38 12.52

Relative ValuationFootball Chart

4.76

2.73

2.99

2.00

9.56

12.52

12.00

17.60

29.01

10.57

23.54

27.50

-1.00 4.00 9.00 14.00 19.00 24.00 29.00 34.00

P/E

P/B

P/S

Book/Share

DDM

DCF

Price

$2.75 $10.57

Current Position

• Purchased on Dec 10, 1999– 500 shares at $24.625 and 500 shares for

$24.75– Original Book Value of $24,687.50

• The current stock price is $5.88– Unrealized loss of $18,807.50

• 82.6 % Held by insiders

Portfolio CompositionPortfolio Composition

AEE12%

AEO10%

CPRT9%

DO7%

FR5%JKHY

6%

KMB16%

SRCL22%

WAG11%

WFR2%

Portfolio Correlation

Income Statement

From FR Supplemental Info

Debt Maturity Schedule• DEBT MATURITY• Debt Maturity By Year as of 9/30/08

– 2008 884– 2009 33,297– 2010 15,815– 2011 407,657– 2012 601,028– 2013 2,523– 2014 148,334– 2015 1,704– 2016 196,594– 2017 219,968– 2018 4,388– Thereafter 269,124– Total Debt $ 2,001,316

From FR Supplemental Info

WACC

Weight CostEquity 10.36% 14.20% Risk Free Rate 0.04Debt 89.64% 10.00% Beta 1.7

WACC 10.43499% Mkt Risk Prem. 0.06

Calculating Revenue

Values assumed are the minimum values the company needs to remain profitable.

Valuation

Values assumed are the minimum values the company needs to remain profitable.

Recommendation

• We recommend a market sale of 1000 shares of First Industrial. It is our belief that the values assumed are not capable under current economic conditions.

• This yielded an approximate loss of $18,807.50