Company: FR
Filing Date: 2025-02-14
Form Type: 10-K
Source: 0000921825-25-000019
Chunk: 685

Company: FIRST INDUSTRIAL REALTY TRUST INC
Filing Date: 2025-02-14
Form: 10-K
Item: Item 16
Chunk 685
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 Venture assesses the collectability of lease receivables (including future minimum rental payments) at commencement and throughout the lease term. If the Joint Venture concludes that collection of lease payments is not probable at lease commencement, lease payments will be recognized as they are received or on a straight-line basis, whichever is lower. If collection of lease payments is concluded to be probable at commencement and the assessment of collectability changes during the lease term, any difference between the revenue that would have been received under the straight-line method and the lease payments that have been collected will be recognized as a current period adjustment to Lease Revenue and revenue will subsequently be accounted for on a cash basis until such time that collection of future rent is deemed probable.

If a lease provides for tenant improvements, the Joint Venture determines whether the Joint Venture or the tenant is the owner of the tenant improvements. When the Joint Venture is the owner of the tenant improvements, any tenant improvements funded by the tenant are treated as lease payments which are deferred and amortized as revenue over the lease term. When the tenant is the owner of the tenant improvements, the Joint Venture will record any tenant improvement allowance funded as a lease inducement and amortize it as a reduction of revenue over the lease term.

100

Property Expenses

Property expenses include real estate taxes, utilities, repairs and maintenance, property insurance as well as other costs of managing properties in the Joint Venture. The Joint Venture excludes from property expenses certain lessor costs, such as real estate taxes, that the Joint Venture contractually requires the tenant to pay directly to a third party on the Joint Venture’s behalf. The amounts paid directly to third parties by tenants for lessor costs are also excluded from lease revenues.

Gain on Sale of Real Estate

Asset sales are generally recognized when control of the asset being sold is transferred to the buyer. As the assets are sold, their costs and related accumulated depreciation, if any, are derecognized with resulting gains or losses reflected in net income. Estimated future costs to be incurred by the Joint Venture after completion of each sale are accrued and included in the determination of the gain on sales.

When leases contain purchase options, the Joint Venture will assess the probability that the tenant will execute the purchase option both at lease commencement or at the time the tenant communicates their intent to execute the purchase option. If the Joint Venture determines that the execution of the purchase option is reasonably certain, the Joint Venture will account for the lease as a sales-type lease and derecognize the associated real estate assets on the Joint Venture’s balance