Company: FR
Filing Date: 2025-02-14
Form Type: 10-K
Source: 0000921825-25-000019
Chunk: 444

Company: FIRST INDUSTRIAL REALTY TRUST INC
Filing Date: 2025-02-14
Form: 10-K
Item: Item 12
Chunk 444
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 of fair value for these financial instruments was primarily based on level 2 inputs. See Note 4 for the fair value of the construction loan.

Debt Issuance Costs

Debt issuance costs, which include fees and costs incurred to obtain long-term financing, are amortized over the term of the construction loan and are presented as a direct deduction from the carrying amount of the construction loan liability.

Revenue Recognition

The Joint Venture leases properties to tenants under agreements that are classified as leases. Rental revenue is recognized on a straight-line method under which contractual rent increases are recognized evenly over the lease term. Generally, under the terms of the leases, a majority of property operating expenses, including real estate taxes, insurance and other property operating expenses are recovered from tenants and recognized as tenant recovery revenue in the same period that the expenses are incurred. As the timing and straight-line pattern of transfer to the lessee for rental revenue and the associated rental recoveries are the same and as the leases qualify as operating leases, the Joint Venture accounts for the present rental revenue and tenant recovery revenue as a single component under Lease Revenue. 

The Joint 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