Art Harmon - VP of IR Bruce W. Duncan - President and CEO Scott Musil - CFO Johannson Yap - Chief Investment Officer Christopher Schneider - SVP Operations and Chief Information Officer Peter Schultz - Executive Vice President, East.

Craig Mailman - KeyBanc Capital Markets Ki Bin Kim - SunTrust Robinson Humphrey Eric Frankel - Green Street Advisors Stephen Dye - Robert W. Baird & Co. Michael Mueller - JPMorgan Bill Crow - Raymond James & Associates Jon Petersen - MLV & Company.

Good morning. My name is Felicia and I will be your conference operator today. At this time I would like to welcome everyone to the First Industrial Fourth Quarter and Full Year 2014 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session.

[Operator Instructions]. Thank you. I would now like to turn the conference over to Mr. Art Harmon, VP of Investor Relations. Please go ahead, sir..

Thanks a lot, Felicia. Hello everyone and welcome to our call. Before we discuss our fourth quarter and full year 2014 results let me remind everyone that our call may include forward-looking statements as defined by Federal Securities laws. These are based on management's expectations, plans and estimation of our prospects.

Today's statements maybe time sensitive and accurate only as of today's date, February 20, 2015. We assume no obligation to update our statements or the other information we provide. Actual results may differ materially from our forward looking statements and factors which could cause this are described in our 10-K and other SEC filings.

You can find a reconciliation of non-GAAP financial measures discussed in today's call in our supplemental report and in our earnings release. None of today’s statements constitute an offer of any securities for sale. The supplemental report, earnings release and our SEC filings are available at firstindustrial.com under our Investor Relations tab.

Our call today will begin with remarks by Bruce Duncan, our President and CEO; as well as Scott Musil, our CFO, after which we will open it up for your questions.

Also on the call today are Jojo Yap, our Chief Investment Officer; Peter Schultz; Executive Vice President for our East Region; Chris Schneider, Senior Vice President of Operations; and Bob Walter, Senior Vice President of Capital Markets and Asset Management. Now let me turn the call over to Bruce..

Thanks, Art and thank you all for joining us today. The fourth quarter capped off another good year for our company. We grew occupancy 40 basis points, to finish the year at 94.3%. That was 30 basis points ahead of our 94% year-end goal. For the year we gained 140 basis points.

These occupancy gains helped us deliver strong same store cash growth of 6.2% for the quarter and 4.2% for the year. So many thanks to all my FR team mates around the country once again for your outstanding efforts and execution in 2014. And I know that they are laser focused on delivering our 2014 goals that we will discuss in a moment.

Industry fundamentals are good; the economy is growing, driving net absorption which continuous to exceed new construction. And that has been the case for 18 quarters in a row and we don’t believe that the supply-demand picture will become in balance any time soon. Rental rates also continue their upward trend. We see that in our own results.

Cash rents were positive for the fourth consecutive quarter and GAAP rents have now been positive for 12 consecutive quarters. In addition to adding values through leasing we also continue to enhance our portfolio through active portfolio management, using our platform for targeted investments and dispositions.

On the acquisition side in the fourth quarter we were pleased to add five new distribution buildings totaling 554,000 square feet or $40.8 [ph] million. Two of the buildings, one in the Inland Empire and one in Minneapolis are 100% leased. We also acquired three assets in Phoenix within the Park where we already own the other two building.

Two of these are 100% leased and one is vacant. So there is a value-add component to this investment. We like the competitive positioning of these assets and the activity in the market. We also bought a development parcel in Atlanta for $2 million, that we are targeted to build soon. That is adjacent to our ADESA site near the airport there.

So in total, we invested $42.8 million in acquisitions in the quarter. For the year, we acquired 1.1 million square feet of property for $67.4 million plus $28.3 million of development sites for a total of $95.7 million.

As we’ve noted in the past, while we were pleased with our one-off acquisition given the highly competitive pricing environment we are putting our platform to use and focusing more on development. In doing so, we can build the type of building we want to own long-term to grow and enhance our portfolio and our cash flow.

So now let me walk you through our development activity. For the year, we placed in service five developments. These projects totaled 1.6 million square feet and our all fully leased with a total investments of $115 million at a 6.9% initial GAAP yield.

As a reminder when we talk about GAAP yield it’s the first year stabilized NOI over the GAAP investment basis. Let me quickly remind you of these developments placed in service. In Los Angeles, we successfully leased the remaining half of our 489,000 square foot First Bandini Logistics Center.

Earlier in the year, also in LA, we completed and fully leased our 43,000 square foot First Figueroa Logistics Center.

The other projects place in service were our First Logistics Center in I-83, which is our 708,000 square foot building in Central Pennsylvania leased to Federal-Mogul; our 250,000 square foot expansion or Rust-Oleum in the Chicago market; and a 97,000 square foot facility at our Interstate North project leased to Goodwill Industries in Minneapolis.

We also completed three additional developments in 2014 in the Inland Empire, Houston and Minneapolis respectively that are in the leased up space. These total more than 1 million square feet with an estimated investment of $62 million and a stabilized GAAP yield of 7.2%.

Lastly at year-end we had three developments in process, totaling 1.3 million square feet with a combined estimated investment of $79 million. Included in this category is our two buildings, 598,000 square foot First Pinnacle Industrial Center in Dallas which is 87% pre-leased.

Total estimated investment is $25.7 million and the estimated GAAP yield is 7.5%. The other two in process developments commenced in the fourth quarter. The first is our 153,000 square foot First Arlington Commerce Center at I-20 in the Dallas market which is already 41% pre-leased.

Estimated total investment is $9.5 million and the projected initial GAAP yield is 6.4%. We also started our First 33 Commerce Center in the Lehigh Valley in Pennsylvania. This is a two building complex totaling 585,000 square feet with a total projected investment of $43.8 million and a targeted initial GAAP yield of 6.4%.

Next month we plan to add to our development pipeline by starting our first park at Ocean Ranch in Southern California. Ocean Ranch will be a three building park totaling approximately 237,000 square feet. We anticipate completing this project by year-end. Total investment is estimated to be $27.5 million with a projected GAAP yield of 6.7%.

Moving on to fourth quarter sales we sold 967,000 square feet of buildings plus two land parcels for a total of $43.6 million. That brought our total sales for the year to $102.6 million, comprising nearly 2 million square feet.

In the first quarter to-date we sold a six building flex in light industrial portfolio in the Atlanta market, comprised of 299,000 square feet for $12.9 million. Overall in 2015 we anticipate selling a total of $75 million to $100 million as we continue to refine our portfolio.

Sales are expected to be weighted towards the back half of the year as usual. As we look to deploy and recycle capital our focus is on the long-term cash flow growth of our portfolio. We have been happy with the results of our development leasing as evidenced by our track record of largely meeting or exceeding pro-forma.

We continue to prudently assume at least a year of downtime from completion. As we have stated previously we may suffer some near-term dilution from the timing of completions and lease up versus sales. If we do suffer short-term dilution we would do so because it’s in the right long-term decision for our shareholders.

In looking back on the year I want to revisit our last Investor Day in November of 2013. There we discussed our potential opportunity to deliver total AFFO growth of as much as 70% to 90% by the end of 2017 from year-end 2013.

We realized some of this opportunity as we delivered approximately 22% growth in AFFO per share 2014 through leasing, contractual rent bumps, interest savings, and lower leasing costs. We are excited about our ability to capture more of that opportunity in 2015 and beyond as strive toward our goal of 95% occupancy for year-end.

On our way to that goal we expect our typical first quarter dip of approximately 50 basis points but then we expect to grow occupancy from there for the balance of the year. On the strength of our performance and more importantly our 2015 outlook the Board of Directors declared a dividend of $0.1275 per share for the first quarter.

This is an increase of 24.4% from the prior rate of $0.1025 per share. It is expected to be within our target AFFO payout ratio of 50% to 60%. So before I turn it over to Scott, let me say we had a good quarter and as a team we are focused on delivering on our various cash flow opportunities and creating value through active portfolio management.

And given these opportunities and our valuation gap to our public peers and private comps we believe we continue to offer investors very good value. So with that let me turn it over to Scott.

Scott?.

Thanks Bruce. I will start with the overall results for the quarter. Funds from operations were $0.32 per fully diluted share, compared to $0.27 per share in 4Q, 2013. Fourth quarter results included the final $400,000 portion of a one-time restoration fee that we have discussed the last few quarters plus $849,000 of acquisition costs.

The four one-time items such as the restoration fee and acquisition costs mentioned above, as well NAREIT compliant gains and losses from and losses from retirement of debt, funds from operations were $0.32 per fully diluted share versus $0.28 in the year ago quarter. EPS for the quarter was $0.17 versus $0.18 in the year ago quarter.

For the year, FFO per share was $1.16 compared to $0.98 for 2013. Before one-time items such as the restoration fee recognized throughout the year, acquisition costs, losses from retirement of debt, loss from the redemption of preferred stock and NAREIT compliant gains and losses, FFO per share was $1.16 versus $1.08 a year ago.

EPS for 2014 was $0.42 versus $0.24 in 2013. We exceeded our 94% occupancy target finishing the year at 94.3% up 40 basis points from the third quarter and 140 basis points for the year. Regarding leasing volume we commenced approximately 3.9 million square feet of long term leases in the fourth quarter.

Of these 1.4 million square feet were new, 1.8 million were renewals and 700,000 were development leases. Tenant retention by square footage was 63.9% reflecting two sizable move outs in the Minneapolis and Baltimore Washington markets. For the year retention was 69.5%.

For the quarter same store NOI on a cash basis excluding termination fees and the one-time restoration fee we recognized in 4Q, 2014 was 6.2%. Same store was primarily driven by higher average occupancy as well as contractual rent escalations.

Lease termination fees totaled $245,000 in the quarter and same store cash NOI growth including termination fees, but excluding the one-time restoration fee, was 5.8%. For the year same store NOI was 4.2% excluding termination fees and the one-time restoration fee.

Including termination fees but excluding the restoration fee same store NOI was up 4.4%. Cash rental rates in the quarter were up 3.1% overall. Breaking it down renewals were a positive 5.6% and new leases were down 0.5%. On a GAAP basis the overall rental rate change was a positive 10.8%.

For the year rents were up 2.2% on a cash basis and 9.1% on a GAAP basis. Regarding our balance sheet let me update you now on our leverage metrics. At the end of 4Q 2014 our net debt plus preferred stock to EBITDA is 6.2 times normalizing G&A and excluding the one-time restoration fee and acquisition costs.

This is well within our target range of six to seven times. At December 31st, the weighted average maturity of our unsecured notes, term loan and secured financings is 4.6 years with a weighted average interest rate of 5.6%. These figures exclude our credit facility.

Our credit line balance is $200 million and our cash position is approximately $24 million. Now onto our 2015 guidance for our press release released last evening. Our NAREIT FFO guidance range is $1.22 to $1.32 per share. The key assumptions are as follows, average in service occupancy of 93.5% to 94.5% based on quarter end results.

As Bruce mentioned similar to prior years we expect a dip in the first quarter given a few no move outs. This will also impact our first quarter tenant retention. We expect occupancy to ramp up over the balance of the year towards our yearend target of 95%; average quarterly same store NOI on a cash basis for termination fees of 3% to 5%.

Note that this excludes the one time restoration fees in 2014. Our G&A is expected to be in the range of $24 million to $25 million. Please note that first quarter G&A will be higher than the implied quarterly run rate by approximately $1.3 million or a $0.01 per share due to accelerated expenses of incentive compensation.

Guidance also assumes the anticipated issuance of approximately $250 million of unsecured debt in the second quarter with proceeds assumed to pay down the line of credit.

In light of the interest rate protection agreements we put in place in the third quarter related to such a debt issuance guidance assumes the effective interest rate of this unsecured debt is expected to be approximately 4.5%. The short-term dilution associated with this scenario will be approximately $0.03 to $0.05 per share.

The expected permanent home for this capital will to be to pay off $218 million in maturities in the first quarter of 2016 at an interest rate of 6.3%. Guidance reflects the fourth quarter 2015 no cost prepayment of approximately $23 million of secured debt at 5.58%. This loan was originally schedule to come due in the first quarter of 2016.

Guidance includes the costs related to our development in process in Dallas and Pennsylvania and our planned first quarter start in Southern California. We expect to capitalize about a penny per share of interest related to these developments in 2015.

Other than what I have noted our guidance does not reflect the impact of any future debt issuances, the impact of any future debt repurchases or repayments, any additional property sales acquisitions or further developments; any future NAREIT-compliant gains or losses; or the impact of impairments not a potential issuance of equity.

With that let me turn it back over to Bruce..

Thanks Scott. Before I open it up for questions let me say 2014 was a good year but it is onward and upward as we seek to capture more of our cash flow opportunity in 2015 and drive toward our goal of 95% occupancy by year end.

The impact of our new investments in sales is additive to long-term cash flow growth profile of our portfolio even if there is some modest dilation in the short-term. We also think it is additive to our efforts to further close the valuation gap to our public peers and private comps.

Our capital base is strong and we aim to solidify it further bring down our long-term cost of capital and as a team we are excited about what lies ahead. But there is work to be done. We will now open it up for your questions.

As the courtesy to our other callers we ask you limit your questions to one plus a follow-up in order to give the other participants a chance to their questions answered. You are welcome to get back into the queue. And so now Felicia may we open it up for questions. .

[Operator Instructions]. And your first question comes from the line of Craig Mailman with KeyBanc..

Hey good morning guys.

Just curious, the $75 million to $100 million, just want to get a sense of where cap rates and demand are for those assets kind of vis-à-vis the fact that you guys are focusing more on development less on stabilized acquisitions and just trying to get a sense as overall of whether the dilution we’ve seen from the capital recycling starts to narrow.

Or are you guys going to be buying that much more land and maybe this is a little bit wider initially..

Well let's talk about the definition. When you look at what we sold, we totaled over $100 million last year, the yield that we gave up was about 6%. That is the in place yield. Again that had some vacancy and so stabilized basis you are probably in the like 73, 74.

So that there is a little dilution as it relates to the stabilized yield but not on the going-in deal. And again the market has been pretty strong for asset sales. In terms of buying and again last year you saw what we brought, the stabilized properties are probably in the mid-sixes all in terms of Andy and then we brought some land for development.

So we're going to continue again as we said in the prepared remarks continue to focus on development. And we have a number of projects that we could start depending on the market. But right now the only start we're announcing is the Ocean Ranch project in Southern California. .

And then just to follow up to that, you guys I think have about $8 million of or sorry 8 million square feet of building land in the bank.

Just curious your thoughts on whether you guys would be buyer of additional land kind of what the market looks like for that, and maybe of that 8 million square feet how much of that is sort of recycled versus next cycle. .

Craig, that's a great comment, I'll let Jojo comment on it. We've got again capacity to do about 7 million square feet and they are all good sites but Jojo why don't you talk about the sites. .

Sure. Bruce here mentioned 7 million square feet, Craig. I mean if you look at some are more immediate. We already mentioned to you First Park at Ocean Ranch in the Southern California that's about 237,000 square feet. We expect to build another Southern California, that's another of our 189,000 square feet.

Some of the potential larger developments, we mentioned to you before; First Bandini Logistics Center that's in the [indiscernible] for about a $1.450 million. We have just recently mentioned to you today that we've acquired a land site in the Atlanta that can accommodate a 924,000 square foot build to suit.

You've heard already in the past that we have land in the Energy Corridor at Grand Parkway Houston that accommodates 828,000 square feet. In Nashville we have a site that can accommodate about 1.5 million square feet. And in Northeast PA, our Covington land we can accommodate about 500,000 square feet.

But like you mentioned that we continue to look for sites that we can immediately develop on and once we do that we'll let you know. .

Great..

Craig, we like our portfolio in terms of land we have but we're always looking for land that we can -- allocate land at good price that we can place in service fairly quickly. .

That makes sense and can you guys just comment on what the pricing looks like for land in some of the kind of the tighter markets you guys are looking at?.

It keeps going up unfortunately. So again it's market-by-market but again there is good competition for that. The less competition for that in the existing leased buildings. But there is definitely more competition for land sites. .

Perfect, I yield the floor. Thanks. .

Thank you..

Your next question comes from the line of Ki Bin Kim with SunTrust Robinson Humphrey. .

Thank you and good morning everyone.

Just a quick question on your same-store NOI and same-store revenue, could you just help me break that down to see what the components of that growth was for the quarter, and how that translates into your guidance for 2015?.

Sure, Chris?.

Sure Ki Bin, this is Chris. In the quarter we were up about 6.2%. So if you kind of breakdown the components our average occupancy was up about 1.3% and that combined with rent concessions going down that contributed about 3.4%.

They contractual rent bumps and the cash increases -- rent increases provide another 2.5% and then finally we had landlord expenses that dropped a little bit more. I think you also talked about the revenues for the same store they were up about 7.2%. Part of that number, a big part of that number is that our expenses were up.

So of that 7.2% the recoverable income was up about 3%, so that kind of describes that.

And then looking forward to 2015 the midpoint was about 4% for the same store and again to kind of break that down, if you look at the impact in the average occupancy increases and the drop in the pre-rent that we are expecting for 2015 that was about 2% of the NOI increase.

The bumps again in the rent increases contribute about another 2.2% and then that’s offset slightly by a little bit higher assumption for bad debt similar to our historical runs..

Okay, thanks. That’s helpful and just a quick question, Scott, the 4.5% assumed cost of debt you are going to raise in 2015, how much of that is the cost of the interest rate hedge in that number and how much, I mean -- if I look at your spreads, what your debt is paying [ph] probably closer to 200, I believe.

Just curious what the differential was to make you say 4.5% for 2015?.

Sure Ki Bin, this is Scott. As we mentioned on the last call we entered into a hedge in the third quarter of last year that basically locked the 10 year treasury at 2.5%. So if you take that 2.5 plus 200 basis point of the spread and in that space pro forma we think we would trade at based upon other comps, that’s how we get to the 4.5%.

So I think saw in your note the beta between your rate and our rate is probably that hedge, that we haven’t placed because it sounds like the credit spread’s, very similar. .

Okay, thank you..

Your next question comes from the line of Eric Frankel with Green Street Advisors..

Thank you.

I have a couple of follow-ups as well, but first you have about roughly 1 million square feet rolling as of December 31, do you have a view of how much of that you could fill in the first quarter?.

I am sorry I didn’t hear your question, Eric. You said we have a….

You have 1 million square feet of space that’s rolling, where tenants are not renewing according to your leasing rollover schedule.

Do you have rough idea of how much of that space you can fill?.

Obviously, we are already talking to the tenants as far as the renewals. So it should be pretty evenly spread throughout the year but obviously we are in ongoing talk with our tenants there..

They are not automatically vacating?.

No, -- they all are not vacating obviously..

Okay and can you just comment on how much…?.

Don’t make us work, Eric..

And could you comment how much your dispositions in force occupancy [ph] this quarter?.

I think this quarter it was 40 basis points..

So all the occupancy increase was that a result of your dispositions?.

Yes..

Okay, I will jump back in queue, thanks..

[Operator Instructions]. And your next question comes from the line of Dave Rodgers with Roger W Baird..

Thanks, good morning. This is actually Stephen Dye here with Dave.

Could you just give some color on where you are saying traction between smaller and larger spaces in the portfolio and on a broader level kind of regional strength across your market, obviously industrial in general same low vacancies across the board but just talk more specifically about the recovery in certain markets, thanks?.

Peter, why don’t you…?.

Sure, Steve this is Peter. We continue to see good fundamentals, demand is broad based across the country, both in terms of geography and in terms of tenant size and continues to be diversified by industry.

On the larger spaces we continue to see demand from ecommerce, from consumer product companies, from retailers and of course transportation and logistics companies and on the smaller tenant side manufacturing, service technology healthcare medical and a series of others.

We continue to see progress across the entire portfolio from leasing and I would point to Denver as a good example where our occupancy is now in the mid-90s, largely a smaller tenant portfolio. So we continue to be pleased with that activity. In terms of markets overall, I would say we still have some work to do in Atlanta.

The Atlanta market is, as everybody knows has struggled, has certainly improved, strong absorption in 2014 and vacancy rates now just under 10%. Our occupancy is trailing that by a couple of percentage points, so more work to do there..

Great, thanks. And then I know you touched a little bit on the lease-up with the Dallas development, but any other commentary, specifically the Houston and Dallas markets, Dallas obviously on the supply there and then Houston with the energy impact, any color would be great? Thanks..

Okay. Well, let me just talk about Dallas and Jojo can talk about Houston. But in terms of Dallas we’re pretty encouraged with the development there, First Pinnacle we’re 87% pre-leased. And the new project we started last quarter, the 153,000 square foot building we’re 41% pre-leased.

So market is pretty good especially in the sites where we’re doing it, but we think that even the Big Box in Dallas we think we are going to have a decent first quarter in absorption, but so we’re encouraged by Dallas.

Houston again I think everyone is waiting to see what happens in terms of the impact, but Jojo why don’t you talk about that and our plans there?.

Sure, thank you. In terms of Houston, we entered the market and the Houston portfolio is 96.9% occupancy. We have very little rollover, about 7% of our portfolio rolled over this year. And we think we were going to have above average renewal rates on that as well. So first of all portfolio is doing well.

We have not seen any immediate significant drop in demand but of course like Bruce said we’re watching what oil price dynamic is doing. Vis-à-vis First Northwest. We just started 350,000 square foot building. That’s right in the beltway in the Northwest market which is the largest submarket in Houston.

We like that location, we’ve designed that building to be multi-tenant to a single-tenant. So it can accommodate varied sizes and we see activity from consumer companies in that, but we haven’t done a lease and we will let you know once we get a lease done.

As you know, we also own this really nice located site in Grand Parkway which is State Highway 99, which is the third beltway loop in Houston. So we are excited about that location site, we like that.

But we hit the pause button there for right now, because we want to see what would go on in terms of consumer demand in the Houston market due to the oil price dynamic. So we’ll let you know what we do with our project..

Right, we could start that this year, it all depends on the market and it all depends on [indiscernible] leasing goes in First Northwest….

Great. Thank you..

Your next question comes from the line of Michael Mueller with JPMorgan..

Hi.

Real quick, just given the comments on sequential occupancy, I was wondering before the questions, can you guys call out in the press release going forward how much of the sequential change is driven by the mix portfolio, mix changing versus more same-store nature? So that’s first and then I was just wondering on the two acquisitions that were a 100% leased, I mean what was appealing to you for those properties, was it the cap rate was attractive, rents below markets or something else?.

Take the first question. .

The first question you wanted was what so….

Yes, just….

We will definitely consider that going forward in terms of the changes related to our portfolio change in the portfolio. And just correct it for you guys, Eric Frankel had a question about the impact of occupancy. In the quarter that change was 15 basis points of the 40 basis points increase..

Of disposition, 15, I misstated saying 40 basis points. Go ahead Jojo..

This is Jojo. Yeah and so the acquisitions, the two 100% leased acquisitions, basically, we believe that both of those acquisitions will give us good long-term cash flow growth. We like our cost base and those were all below replacement cost and we like their returns as well.

Specifically in Minneapolis the asset is located in the Eagan submarket the largest submarket that’s Southeast of the airport. It’s is a very, very infill market and we like that because in infill markets like that we would expect future rent growth.

In terms of the acquisition Inland Empire, it’s in Ontario at the Southwest corner of the 10 and 15 Main and Main, for all those who knows the Inland Empire market. In this asset it’s also in an infill corner that we think we can grow rents in the future. So we are excited and we like these assets we bought..

Okay, that was it, thank you..

Thank you..

Your next question comes from the line of Bill Crow with Raymond James & Associates..

Sorry I thought I pulled myself out of the queue. I am all set I was going to into Houston, you already took care of that. Thanks guys..

Thanks Bill..

[Operator Instructions]. And your next is a follow-up from the line of Ki Bin Kim with SunTrust Robinson Humphrey..

Thanks. If I heard you correctly Bruce you said your AFFO payout ratio in 2015 would be 55% to 60% of the new dividend run rate which would basically imply like a $0.86 FFO -- FAD per share in 2015, which is similar to the number you are going to end up with in 2014 right.

So just curious if that is correct that math and I guess a more basic question is what do you think your CapEx will be in 2015?.

Right, well let me hand it over to Scott, because the math is….

Right, Ki Bin so if want to -- in Bruce’s comments we said 50% to 60%. I think you said 55% to 60%. So if you just look at our annualized first quarter ‘15 dividend that’s $0.51. You do the math on the 55% payout ratio, that’s the midpoint you get about $0.92 a share of potential AFFO for 2015 which compares to about $0.82 per a share of AFFO in 2014.

So we’re growing at about $0.10 a share..

And is the delta basically the CapEx?.

The delta -- it’s a lot of pieces to in that growth rate. A lot of these apply to our FFO change as well, I’ll run through the items here.

Development is about $0.08 share of that growth and about $0.05 of that $0.08 has to do with our I-83 Logistics Center in our Bandini development just because we are getting full 12 months in 2015, bumps are about $0.04 a share, increase of occupancy is about $0.02.

We are starting to see a little bit increase in cash flow because of rental rates, old rates to new, that’s about a $0.01 a share and that’s offset by an increase in bad debt of about a $0.01. We are factoring in about $3 million in our guidance compared to $1.5 million actual in 2014.

Interest expense is up about a $0.01 and then there is a couple of pieces of miscellaneous in there, CapEx though 2015 compared to 2014 we think that will add about a $0.01 a share to AFFO as well. So there is a lot of different pieces to that increase Ki Bin and if you want to talk offline we can as well..

No, that was a lot of detail, thank you..

Your next question comes from the line of Jon Petersen with MLV & Company..

Great, thank you. I was just curious on the timing of expected debt offering in 2015, the $250 million.

What’s the thought behind doing that in the second quarter rather waiting towards the end of the year when you can -- you don’t have to have the overlap, so when it more closely matches your maturities?.

Jon, this is Scott Musil. You are right we do have some maturities, $218 million first quarter of ‘16 at a 6.3% rate. One of the things that we learned from the downturn is you don’t want to space too closely together maturities with capital raises, that’s one thought of it.

The second thought of it is when we entered into the edge last year in the third quarter we liked where we looked from an all-in rate with the hedge and the -- in the spread point of view. So those were a couple of factors that we considered to do the debt offering in the second quarter..

Okay, thank you. And then did you say how much you expect occupancy to decline in the first quarter? I mean always it declines in the first quarter anywhere from 30 to 60 basis points over the last few years.

So should we expect something worse than that than what we have seen in recent years?.

Now what we're seeing it -- again we typically have planned about 50 basis points. If you look at where things are, if we do better than or worst depending on how we finish out the quarter but we are anticipating 50 to 80..

Okay. And then Bruce you mentioned in your comments about the discount that First Industrial trades at relative to peers.

I guess very high level I mean how do you feel as the CEO of the company, you closed that gap between you and peers and given the large industrial portfolios we've seen out there for sale, the obvious question is its First Industrial with the sale of the company be a quick way to close that gap..

I think what we've embarked on a strategy of upgrading the portfolio and growing cash flow. I mean we outlined it last time at our investor day in 2013. We think there’s a great opportunity to grow our cash flow.

We think there is a great opportunity to continue to upgrade our portfolio and if we do that at some point the light bulb goes off and people say hey, you know what this portfolio is pretty good and shouldn't trade at the discount to some of our other. And we're closing that gap but we've got work to do and we're going to continue to do it.

Again our focus has been more on development than buying existing assets because we think again that's two things for us. We think we got a better risk adjusted return and we think that it improves the quality of the portfolio.

So we're going to continue to do that and we're going to continue to focus on execution and if we're right that gap will continue to narrow. But if the gap is big then someone else [ph] they come in and close that gap for us but our view is industrial we've got a great platform.

Our view is that markets are very good and if we can continue to execute on what we put in place, we're very confident we can -- the stock will continue to do well relative to our brethren, but there is work to be done on our part and we know we have to do it. .

Got it. All right. Thank you. Appreciate it. .

Your next question is a follow-up from the line of Eric Frankel with Green Street Advisors. .

Thank you. Can you go to a little bit more detail on the Atlanta transaction and it appears that you're going to be that at the land sites at [indiscernible] and different location and so I'd like to understand if there is any reasons how much of a rent reduction a debt is going to achieve for giving up some land as part of that deal. .

Great. Eric, good question. We'll go through it, make sure you got the correction on the occupancy from the sales right. .

I did, thank you. .

Perfect okay. Jojo you want to talk about this..

Yes, Eric. So basically we acquired an adjacent site and we will do if that there is unused, there is an unused portion of the current deficit. We will configure [ph] that we'll take that back and basically move some of their operations to a further portion of site that's not affecting this 923,000 square foot built to suit.

So at the end of the day when we're all done it's going to be an efficiently used site. .

But we reduced the deficit..

Yeah that's right. .

Okay I mean it's hard there are a good way to understand the economics behind the rent reduction and how that translates to the land basis..

Sure. So how we -- if you look at our supplemental we can build 923,000 square feet but we've bought 24 acres of usable site, so what you do is that the way we value the remaining out of the site which we would correspond in with the reduction in rents is almost exactly the same as how much we bought the adjacent side.

We acquired the adjacent side at roughly about $1.87 a square foot. We kind of applied the same valuation factor for the rest of the adjacent side to a rent reduction. .

We'll give you more color when we see you in there. .

That sounds good and you're just marking the site for bill to suit not spec development. .

Yes. .

Okay.

A follow up question for you Bruce obviously at Star where there has been some big news has happened last couple weeks just like to understand as the Chairman of that company how you're managing your time effectively between your role here and your role there?.

Eric I promise you I am all over First Industrial. This is the First Industrial call I am all over you can talk to the team here. So we got management in place at Star, they're doing just fine. .

Well okay. I mean obviously the CEO -- obviously more work to do probably last quarter or so just like to understand that a little bit more clearly..

I don't know what to say. .

Well I am just wondering how much time that role than what you are doing at First Industrial..

Well it did take time but 24X7 we do whatever it takes to make sure we don’t miss a beat here at First Industrial. So I promise you this is my number one job, this is my focus and we're working on it. So there is more. There is a lot of time in the day. .

Okay, that’s great. Appreciate the color. Thanks. .

And there are no further questions at this time. I would like to hand the conference back to Mr. Bruce Duncan for closing remarks. .

Well, we appreciate your interest. If you have any questions, please call and talk to IR, Scott and myself. And we look forward to seeing lots of you at the Fun and the Sun at the Citi Conference next week or so [indiscernible]. Bye, thank you. .

Thank you and this concludes today’s conference call. You may now disconnect..