##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A AMENDMENT NO.1 TO FORM 10-Q
 [X]
    
    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the quarterly period ended June 30, 2004[ ]
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 Commission File Number 333-21873
 FIRST INDUSTRIAL, L.P.  Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
    
    36-3924586
(I.R.S. Employer
Identification No.)
 311 S. Wacker Drive, Suite 4000, Chicago, Illinois 60606
(Address of Principal Executive Offices) (312) 344-4300
(Registrants Telephone Number, Including Area Code) Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [X]    No [ ] Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [X]    No [ ]




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Explanatory Note This amendment on Form 10-Q/A to Form 10-Q of First Industrial L.P., for the
quarter ended June 30, 2004 includes revisions to historical financial data and
related descriptions resulting from the Consolidated Operating Partnerships
determination that approximately $1.1 million of additional depreciation
expense relating to certain properties within the Consolidated Operating
Partnership and limited partnerships for which the Consolidated Operating
Partnership holds a 99% limited partnership interest in and accounts for under
the equity method of accounting should have been recorded in the second quarter
of 2004. This amendment includes changes to Part I items,
Item 1, Item 2 and Item 4,
but is not intended to update other information presented in other items in
this report as originally filed. We are not required to and we have not updated
any forward looking statements previously included in the Form 10-Q filed on
August 6, 2004. 1




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FIRST INDUSTRIAL, L.P.
Form 10-Q/A
For the Period Ended June 30, 2004  
 INDEX PAGEPart I: FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated
Balance Sheets as of June 30, 2004 (as restated) and December 31, 2003
    
    
    3Consolidated
Statements of Operations and Comprehensive Income for the Six Months
Ended June 30, 2004 (as restated) and June 30, 2003
    
    
    4Consolidated
Statements of Operations and Comprehensive Income for the Three
Months Ended June 30, 2004 (as restated) and June 30, 2003
    
    
    5Consolidated
Statements of Cash Flows for the Six Months Ended June 30, 2004
(as restated) and June 30, 2003
    
    
    6Notes to Consolidated Financial Statements
    
    
    7-21Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    22-35Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    35Item 4. Controls and Procedures
    
    
    35Part II: OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    36Item 2. Changes in Securities
    
    
    36Item 3. Defaults Upon Senior Securities
    
    
    36Item 4. Submission of Matters to a Vote of Security Holders
    
    
    36Item 5. Other Information
    
    
    36Item 6. Exhibits and Reports on Form 8-K
    
    
    36SIGNATURE
    
    
    38EXHIBIT INDEX
    
    
    39
  2




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##### 



PART I: FINANCIAL INFORMATION 
 Item 1. Financial Statements FIRST INDUSTRIAL, L.P.
 
 CONSOLIDATED BALANCE SHEETS
 (Dollars in thousands, except unit data)
 (Unaudited)
 (As Restated)June 30,
    
    December 31,2004
    
    2003ASSETSAssets:Investment in Real Estate:Land
    
    $
    394,052
    
    
    $
    392,916Buildings and Improvements
    
    
    1,884,841
    
    
    
    1,845,139Furniture, Fixtures and Equipment
    
    
    800
    
    
    
    801Construction in Progress
    
    
    88,713
    
    
    
    115,935Less: Accumulated Depreciation
    
    
    (311,963
    )
    
    
    (295,688
    )Net Investment in Real Estate
    
    
    2,056,443
    
    
    
    2,059,103Real Estate Held for Sale, Net of Accumulated Depreciation and
Amortization of $849 at June 30, 2004
    
    
    14,787
    
    
    
    Investments in and Advances to Other Real Estate Partnerships
    
    
    374,522
    
    
    
    374,906Restricted Cash
    
    
    68,868
    
    
    
    60,875Tenant Accounts Receivable, Net
    
    
    6,246
    
    
    
    7,769Investments in Joint Ventures
    
    
    17,895
    
    
    
    14,606Deferred Rent Receivable
    
    
    13,729
    
    
    
    12,903Deferred Financing Costs, Net
    
    
    12,603
    
    
    
    9,809Prepaid Expenses and Other Assets, Net
    
    
    94,259
    
    
    
    93,291Total Assets
    
    $
    2,659,352
    
    
    $
    2,633,262LIABILITIES AND PARTNERS CAPITALLiabilities:Mortgage Loans Payable, Net
    
    $
    42,393
    
    
    $
    43,217Senior Unsecured Debt, Net
    
    
    1,346,905
    
    
    
    1,212,152Unsecured Line of Credit
    
    
    84,000
    
    
    
    195,900Accounts Payable and Accrued Expenses
    
    
    46,419
    
    
    
    62,382Rents Received in Advance and Security Deposits
    
    
    25,059
    
    
    
    24,655Distributions Payable
    
    
    33,496
    
    
    
    31,889Total Liabilities
    
    
    1,578,272
    
    
    
    1,570,195Commitments and Contingencies
    
    
    
    
    
    
    Partners Capital:General Partner Preferred Units (21,250 and 100,000 units issued and
outstanding at June 30, 2004 and December 31, 2003, respectively)
    
    
    247,998
    
    
    
    240,697General Partner Units (41,244,415 and 39,850,370 units issued and
outstanding at June 30, 2004 and December 31, 2003, respectively)
    
    
    703,401
    
    
    
    687,721Unamortized Value of General Partnership Restricted Units
    
    
    (23,762
    )
    
    
    (19,035
    )Limited Partners Units (6,546,376 and 6,704,012 units issued and
outstanding at June 30, 2004 and December 31, 2003, respectively)
    
    
    156,850
    
    
    
    163,794Accumulated Other Comprehensive Loss
    
    
    (3,407
    )
    
    
    (10,110
    )Total Partners Capital
    
    
    1,081,080
    
    
    
    1,063,067Total Liabilities and Partners Capital
    
    $
    2,659,352
    
    
    $
    2,633,262
 The accompanying notes are an integral part of the financial statements. 3




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##### 



FIRST INDUSTRIAL, L.P. 
 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 (Dollars in thousands, except per Unit data)
 (Unaudited)
 (As Restated)Six Months
    
    Six MonthsEnded
    
    EndedJune 30, 2004
    
    June 30, 2003Revenues:Rental Income
    
    $
    103,960
    
    
    $
    93,926Tenant Recoveries and Other Income
    
    
    36,031
    
    
    
    31,341Total Revenues
    
    
    139,991
    
    
    
    125,267Expenses:Real Estate Taxes
    
    
    21,764
    
    
    
    20,109Repairs and Maintenance
    
    
    11,155
    
    
    
    10,545Property Management
    
    

    5,795
    
    
    
    5,238Utilities
    
    
    4,754
    
    
    
    4,000Insurance
    
    
    1,442
    
    
    
    1,530Other
    
    
    2,795
    
    
    
    2,681General and Administrative
    
    
    16,698
    
    
    
    13,758Amortization of Deferred Financing Costs
    
    
    908
    
    
    
    874Depreciation and Other Amortization
    
    
    40,084
    
    
    
    28,926Total Expenses
    
    
    105,395
    
    
    
    87,661Other Income/Expense:Interest Income
    
    
    1,089
    
    
    
    747Gain on Settlement of Interest Rate Protection Agreements
    
    
    1,450
    
    
    
    Interest Expense
    
    
    (47,594
    )
    
    
    (47,625
    )Total Other Income/Expense
    
    
    (45,055
    )
    
    
    (46,878
    )Loss from Continuing Operations Before Equity in Income of
Other Real Estate Partnerships, Equity in Income in Joint Ventures
and Gain on Sale of Real Estate
    
    
    (10,459
    )
    
    
    (9,272
    )Equity in Income of Other Real Estate Partnerships
    
    
    14,572
    
    
    
    25,272Equity in Income of Joint Ventures
    
    
    546
    
    
    
    444Income from Continuing Operations
    
    
    4,659
    
    
    
    16,444Income from Discontinued Operations (Including Gain on Sale of Real
Estate of $47,901 and $32,859 for the Six Months Ended
June 30, 2004 and 2003, respectively)
    
    
    50,749
    
    
    
    42,731(Loss) Income Before Gain on Sale of Real Estate
    
    
    55,408
    
    
    
    59,175Gain on Sale of Real Estate
    
    
    4,993
    
    
    
    2,614Net Income
    
    
    60,401
    
    
    
    61,789Less: Preferred Unit Distributions
    
    
    (9,834
    )
    
    
    (10,088
    )Less: Redemption of Preferred Units
    
    
    (7,359
    )
    
    
    Net Income Available to Unitholders
    
    $
    43,208
    
    
    $
    51,701(Loss) Income from Continuing Operations Available to Unitholders
Per Weighted Average Unit Outstanding:Basic
    
    $
    (0.16
    )
    
    $
    0.20Diluted
    
    $
    (0.16
    )
    
    $
    0.20Income from Discontinued Operations Available to Unitholders
Per Weighted Average Unit Outstanding:Basic
    
    $
    1.09
    
    
    $
    0.94Diluted
    
    $
    1.08
    
    
    $
    0.94Net Income Available to Unitholders Per Weighted Average
Unit Outstanding:Basic
    
    $
    0.93
    
    
    $
    1.14Diluted
    
    $
    0.92
    
    
    $
    1.14Net Income
    
    $
    60,401
    
    
    $
    61,789Other Comprehensive Income:Settlement of Interest Rate Protection Agreements
    
    
    6,657
    
    
    
    Mark-to-Market of Interest Rate Protection Agreements and
Interest Rate Swap Agreements
    
    
    (7
    )
    
    
    311Amortization of Interest Rate Protection Agreements
    
    
    53
    
    
    
    96Comprehensive Income
    
    $
    67,104
    
    
    $
    62,196
 The accompanying notes are an integral part of the financial statements. 4




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##### 



FIRST INDUSTRIAL, L.P. 
 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 (Dollars in thousands, except per Unit data)
 (Unaudited)
 (As Restated)Three Months
    
    Three MonthsEnded
    
    EndedJune 30, 2004
    
    June 30, 2003Revenues:Rental Income
    
    $
    52,297
    
    
    $
    48,197Tenant Recoveries and Other Income
    
    
    17,060
    
    
    
    15,396Total Revenues
    
    
    69,357
    
    
    
    63,593Expenses:Real Estate Taxes
    
    
    10,766
    
    
    
    10,030Repairs and Maintenance
    
    
    5,189
    
    
    
    5,043Property Management
    
    
    3,424
    
    
    
    2,178Utilities
    
    
    2,105
    
    
    
    1,809Insurance
    
    
    743
    
    
    
    752Other
    
    
    1,182
    
    
    
    1,546General and Administrative
    
    
    9,631
    
    
    
    7,158Amortization of Deferred Financing Costs
    
    
    463
    
    
    
    437Depreciation and Other Amortization
    
    
    21,443
    
    
    
    14,871Total Expenses
    
    
    54,946
    
    
    
    43,824Other Income/Expense:Interest Income
    
    
    556
    
    
    
    371Gain on Settlement of Interest Rate Protection Agreements
    
    
    1,450
    
    
    
    Interest Expense
    
    
    (23,942
    )
    
    
    (23,920
    )Total Other Income/Expense
    
    
    (21,936
    )
    
    
    (23,549
    )Loss from Continuing Operations Before Equity in Income of
Other Real Estate Partnerships, Equity in Income in Joint Ventures
and Gain on Sale of Real Estate
    
    
    (7,525
    )
    
    
    (3,780
    )Equity in Income of Other Real Estate Partnerships
    
    
    7,191
    
    
    
    8,044Equity in Income of Joint Ventures
    
    
    301
    
    
    
    269(Loss) Income from Continuing Operations
    
    
    (33
    )
    
    
    4,533Income from Discontinued Operations (Including Gain on Sale of Real
Estate of $25,722 and $16,308 for the Three Months Ended
June 30, 2004 and 2003, respectively)
    
    
    26,584
    
    
    
    20,721Income Before Gain on Sale of Real Estate
    
    
    26,551
    
    
    
    25,254Gain on Sale of Real Estate
    
    
    1,878
    
    
    
    1,378Net Income
    
    
    28,429
    
    
    
    26,632Less: Preferred Unit Distributions
    
    
    (4,790
    )
    
    
    (5,044
    )Less: Redemption of Preferred Units
    
    
    (7,359
    )
    
    
    Net Income Available to Unitholders
    
    $
    16,280
    
    
    $
    21,588(Loss) Income from Continuing Operations Available to Unitholders
Per Weighted Average Unit Outstanding:Basic
    
    $
    (0.22
    )
    
    $
    0.02Diluted
    
    $
    (0.22
    )
    
    $
    0.02Income from Discontinued Operations Available to Unitholders
Per Weighted Average Unit Outstanding:Basic
    
    $
    0.57
    
    
    $
    0.46Diluted
    
    $
    0.56
    
    
    $
    0.46Net Income Available to Unitholders Per Weighted Average
Unit Outstanding:Basic
    
    $
    0.35
    
    
    $
    0.48Diluted
    
    $
    0.35
    
    
    $
    0.48Net Income
    
    $
    28,429
    
    
    $
    26,632Other Comprehensive Income:Settlement of Interest Rate Protection Agreements
    
    
    6,657
    
    
    
    Mark-to-Market of Interest Rate Protection Agreements and
Interest Rate Swap Agreements
    
    
    (388
    )
    
    
    157Amortization of Interest Rate Protection Agreements
    
    
    (1
    )
    
    
    49Comprehensive Income
    
    $
    34,697
    
    
    $
    26,838
 The accompanying notes are an integral part of the financial statements. 5




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FIRST INDUSTRIAL, L.P. 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Dollars in thousands)
 (Unaudited)
 (As Restated)Six Months Ended
    
    Six Months EndedJune 30, 2004
    
    June 30, 2003CASH FLOWS FROM OPERATING ACTIVITIES:Net Income
    
    $
    60,401
    
    
    $
    61,789Adjustments to Reconcile Net Income to Net Cash Provided
by Operating Activities:Depreciation
    
    
    33,584
    
    
    
    28,502Amortization of Deferred Financing Costs
    
    
    908
    
    
    
    874Other Amortization
    
    
    10,571
    
    
    
    7,506Provision for Bad Debt
    
    
    (455
    )
    
    
    (230
    )Equity in Income of Joint Ventures
    
    
    (546
    )
    
    
    (443
    )Distributions from Joint Ventures
    
    
    546
    
    
    
    443Gain on Sale of Real Estate

    
    
    (52,894
    )
    
    
    (35,473
    )Equity in Income of Other Real Estate Partnerships
    
    
    (14,572
    )
    
    
    (25,273
    )Distributions from Investment in Other Real Estate
Partnerships
    
    
    14,572
    
    
    
    25,273Increase in Tenant Accounts Receivable and Prepaid
Expenses and Other Assets, Net
    
    
    (13,460
    )
    
    
    (17,170
    )Increase in Deferred Rent Receivable
    
    
    (2,120
    )
    
    
    (557
    )Decrease in Accounts Payable and Accrued
Expenses and Rents Received in Advance and
Security Deposits
    
    
    (18,158
    )
    
    
    (10,285
    )Net Cash Provided by Operating Activities
    
    
    18,377
    
    
    
    34,956CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of and Additions to Investment in Real Estate
    
    
    (183,479
    )
    
    
    (144,154
    )Net Proceeds from Sales of Investments in Real Estate
    
    
    180,879
    
    
    
    119,558Investments in and Advances to Other Real Estate
Partnerships
    
    
    (38,857
    )
    
    
    (36,625
    )Distributions from Other Real Estate Partnerships in Excess of
Equity in Income
    
    
    39,241
    
    
    
    50,773Contributions to and Investments in Joint Ventures
    
    
    (4,020
    )
    
    
    (1,742
    )Distributions from Joint Ventures
    
    
    620
    
    
    
    1,447Repayment of Mortgage Loans Receivable
    
    
    13,474
    
    
    
    2,060(Increase) Decrease in Restricted Cash
    
    
    (7,993
    )
    
    
    18,035Net Cash (Used in) Provided by Investing Activities
    
    
    (135
    )
    
    
    9,352CASH FLOWS FROM FINANCING ACTIVITIES:Unit Contributions
    
    
    31,967
    
    
    
    3,000Unit Distributions
    
    
    (64,613
    )
    
    
    (62,649
    )Proceeds from the Sale of Preferred Units
    
    
    200,000
    
    
    
    Preferred Unit Offering Costs
    
    
    (5,576
    )
    
    
    Redemption of Preferred Units
    
    
    (200,000
    )
    
    
    Repurchase of Restricted Units
    
    
    (3,468
    )
    
    
    (1,591
    )Repurchase of General Partner Units
    
    
    
    
    
    
    (997
    )Preferred Unit Distributions
    
    
    (9,075
    )
    
    
    (10,088
    )Proceeds from Senior Unsecured Debt
    
    
    134,496
    
    
    
    Other Proceeds from Senior Unsecured Debt
    
    
    6,657
    
    
    
    Repayments on Mortgage Loans Payable
    
    
    (577
    )
    
    
    (471
    )Proceeds from Unsecured Line of Credit
    
    
    312,000
    
    
    
    149,400Repayments on Unsecured Line of Credit
    
    
    (423,900
    )
    
    
    (117,100
    )Book Overdraft
    
    
    7,607
    
    
    
    Debt Issuance Costs
    
    
    (3,760
    )
    
    
    (53
    )Net Cash Used in Financing Activities
    
    
    (18,242
    )
    
    
    (40,549
    )Net Increase in Cash and Cash Equivalents
    
    
    
    
    
    
    3,759Cash and Cash Equivalents, Beginning of Period
    
    
    
    
    
    
    Cash and Cash Equivalents, End of Period
    
    $
    
    
    
    $
    3,759
 The accompanying notes are an integral part of the financial statements. 6




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FIRST INDUSTRIAL, L.P. 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
 (Unaudited)
 1. Organization and Formation of Partnership First Industrial, L.P. (the Operating Partnership) was organized as a
limited partnership in the state of Delaware on November 23, 1993. The sole
general partner is First Industrial Realty Trust, Inc. (the Company) with an
approximate 86.3% and 85.3% ownership interest at June 30, 2004 and June 30,
2003, respectively. The limited partners of the Operating Partnership own
approximately a 13.7% and 14.7% interest in the Operating Partnership at June
30, 2004 and June 30, 2003, respectively. The Company also owns a preferred
general partnership interest in the Operating Partnership with an aggregate
liquidation priority of $250,000. The Company is a real estate investment
trust (REIT) as defined in the Internal Revenue Code. The Companys
operations are conducted primarily through the Operating Partnership. The Operating Partnership is the sole member of several limited liability
companies (the L.L.C.s), the sole stockholder of First Industrial Development
Services, Inc., and holds at least a 99% limited partnership interest in each
of eight limited partnerships (together, the Other Real Estate Partnerships). The general partners of the Other Real Estate Partnerships are separate
corporations, each with at least a .01% general partnership interest in the
Other Real Estate Partnerships for which it acts as a general partner. Each
general partner of the Other Real Estate Partnerships is a wholly-owned
subsidiary of the Company. The financial statements of the Operating Partnership report the L.L.C.s
and First Industrial Development Services, Inc. (the Consolidated Operating
Partnership) on a consolidated basis. As of June 30, 2004, the Consolidated
Operating Partnership owned 713 in-service industrial properties containing an
aggregate of approximately 50.2 million square feet of gross leasable area
(GLA). On a combined basis, as of June 30, 2004, the Other Real Estate
Partnerships owned 101 in-service industrial properties containing an aggregate
of approximately 9.0 million square feet of GLA. The Operating Partnership,
through separate wholly-owned limited liability companies in which it is the
sole member, also owns minority equity interests in and provides asset and
property management services to three joint ventures which invest in industrial
properties (the September 1998 Joint Venture, the December 2001 Joint
Venture and the May 2003 Joint Venture). The Other Real Estate
Partnerships, the September 1998 Joint Venture, the December 2001 Joint Venture
and the May 2003 Joint Venture are accounted for under the equity method of
accounting. This amendment on Form 10-Q/A to Form 10-Q of First Industrial L.P., for
the quarter ended June 30, 2004 incorporates certain revisions to historical
financial data and related descriptions. As a result of its own internal
control procedures, the Consolidated Operating Partnership determined that
approximately $1,137 of additional depreciation expense relating to certain
properties within the Consolidated Operating Partnership and limited
partnerships for which the Consolidated Operating Partnership holds a 99%
limited partnership interest in and accounts for under the equity method of
accounting should have been recorded in the second quarter of 2004.
Accordingly, the Consolidated Operating Partnership has recognized this
additional depreciation expense and its 99% equity interest in depreciation in
its results of operations for the six months and three months ended June 30,
2004. Due to this restatement, net income available to unitholders for the
three months ended June 30, 2004 decreased to $16,280, as compared to $17,417,
as previously reported. On a per unit basis, basic and diluted net income
available to unitholders for the three months ended June 30, 2004 decreased to
$0.35 and $0.35, respectively, compared to $0.37 and $0.37, respectively, as
previously reported. Net income
available to unitholders for the six months ended June 30, 2004 decreased to
$43,208, compared to $44,345, as previously reported. On a per unit basis,
basic and diluted net income available to unitholders for the six months ended
June 30, 2004 decreased to $0.93 and $0.92, respectively, compared to $0.95 and
$0.94, respectively, as previously reported. Loss from continuing
operations for the three months ended June 30, 2004 decreased to
$(33) as compared to $1,104, as previously reported. On a per unit
basis, basic and diluted loss from continuing operations available to
unitholders for the three months ended June 30, 2004 decreased to
$(0.22) and $(0.22), respectively, compared to $(0.20) and $(0.19),
respectively, as previously reported. Income from continuing
operations for the six months ended June 30, 2004 decreased to $4,659
as compared to $5,796, as previously reported. On a per unit basis,
basic and diluted loss from continuing operations available to
unitholders for the six months ended June 30, 2004 decreased to
$(0.16) and $(0.16), respectively, compared to $(0.14) and $(0.14),
respectively, as previously reported. 7




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##### 



FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited) 2. Summary of Significant Accounting Policies, continued The accompanying unaudited interim financial statements have been prepared
in accordance with the accounting policies described in the financial
statements and related notes included in the Consolidated Operating
Partnerships 2003 Form 10-K and should be read in conjunction with such
financial statements and related notes. The following notes to these interim
financial statements highlight significant changes to the notes included in the
December 31, 2003 audited financial statements included in the Consolidated
Operating Partnerships 2003 Form 10-K and present interim disclosures as
required by the Securities and Exchange Commission. In order to conform with generally accepted accounting principles,
management, in preparation of the Consolidated Operating Partnerships
financial statements, is required to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities as of June 30, 2004, and the reported amounts of
revenues and expenses for each of the six and three months ended June 30, 2004
and 2003. Actual results could differ from those estimates. In the opinion of management, the accompanying unaudited interim financial
statements reflect all adjustments necessary for a fair statement of the
financial position of the Consolidated Operating Partnership as of June 30,
2004 and the results of its operations and comprehensive income for each of the
six and three months ended June 30, 2004 and 2003, and its cash flows for each
of the six months ended June 30, 2004 and 2003, respectively, and all
adjustments are of a normal recurring nature. Tenant Accounts Receivable, Net: The Consolidated Operating Partnership provides an allowance for doubtful
accounts against the portion of tenant accounts receivable which is estimated
to be uncollectible. Tenant accounts receivable in the consolidated balance
sheets are shown net of an allowance for doubtful accounts of approximately
$1,092 and $1,547 as of June 30, 2004 and December 31, 2003, respectively. Stock Incentive Plan: Prior to January 1, 2003, the Consolidated Operating Partnership accounted
for its stock incentive plans under the recognition and measurement principles
of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees (APB 25). Under APB 25, compensation expense is not recognized
for options issued in which the strike price is equal to the fair value of the
Companys stock on the date of grant. Certain options issued in 2000 were
issued with a strike price less than the fair value of the Companys stock on
the date of grant. Compensation expense was recognized for the intrinsic value
of these options determined at the date of grant over the vesting period. On
January 1, 2003, the Consolidated Operating Partnership adopted the fair value
recognition provisions of the Financial Accounting Standards Boards (FASB)
Statement of Financial Accounting Standards No. 123, Accounting for Stock
Based Compensation (FAS 123), as amended by Statement of Financial
Accounting Standards No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure. The Consolidated Operating
Partnership is applying the fair value recognition provisions of FAS 123

prospectively to all employee option awards granted after December 31, 2002.
The Consolidated Operating Partnership has not awarded options to employees or
directors of the Company during the six months ended June 30, 2004 and 2003,
therefore no stock-based employee compensation expense is included in net
income available to unitholders related to the fair value recognition
provisions of FAS 123. 8




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##### 



FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited) 2. Summary of Significant Accounting Policies, continued The following table illustrates the pro forma effect on net income and
earnings per unit as if the fair value recognition provisions of FAS 123 had
been applied to all outstanding and unvested option awards in each period
presented: Six Months Ended
    
    Three Months Ended(As Restated)
    
    
    
    
    
    (As Restated)June 30,
    
    June 30,
    
    June 30,
    
    June 30,2004
    
    2003
    
    2004
    
    2003Net Income Available to Unitholders  as reported
    
    $
    43,208
    
    
    $
    51,701
    
    
    $
    16,280
    
    
    $
    21,588Add: Stock-Based Employee Compensation Expense Included in
Net Income Available to Unitholders  as reported
    
    
    
    
    
    
    54
    
    
    
    
    
    
    
    Less: Total Stock-Based Employee Compensation Expense
Determined Under the Fair Value Method
    
    
    (241
    )
    
    
    (799
    )
    
    
    (120
    )
    
    
    (387
    )Net Income Available to Unitholders  pro forma
    
    $
    42,967
    
    
    $
    50,956
    
    
    $
    16,160
    
    
    $
    21,201Net Income Available to Unitholders
per Share  as reported  Basic
    
    $
    0.93
    
    
    $
    1.14
    
    
    $
    0.35
    
    
    $
    0.48Net Income Available to Unitholders
per Share  pro forma  Basic
    
    $
    0.92
    
    
    $
    1.13
    
    
    $
    0.34
    
    
    $
    0.47Net Income Available to Unitholders
per Share  as reported  Diluted
    
    $
    0.92
    
    
    $
    1.14
    
    
    $
    0.35
    
    
    $
    0.48Net Income Available to Unitholders
per Share  pro forma  Diluted
    
    $
    0.92
    
    
    $
    1.12
    
    
    $
    0.34
    
    
    $
    0.47
 Discontinued Operations: On January 1, 2002, the Consolidated Operating Partnership adopted the
FASBs Statement of Financial Accounting Standards No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets (FAS 144). FAS 144 addresses
financial accounting and reporting for the disposal of long-lived assets. FAS
144 requires that the results of operations and gains or losses on the sale of
properties sold as well as the results of operations from properties that are
classified as held for sale at June 30, 2004 be presented in discontinued
operations if both of the following criteria are met: (a) the operations and
cash flows of the property have been (or will be) eliminated from the ongoing
operations of the Consolidated Operating Partnership as a result of the
disposal transaction and (b) the Consolidated Operating Partnership will not
have any significant continuing involvement in the operations of the property
after the disposal transaction. FAS 144 also requires prior period results of
operations for these properties to be restated and presented in discontinued
operations in prior consolidated statements of operations. 9




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##### 



FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited) 3. Investments in and Advances to Other Real Estate Partnerships The investments in and advances to Other Real Estate Partnerships reflects
the Operating Partnerships limited partnership equity interests in the
entities referred to in Note 1 to these financial statements. Summarized combined condensed financial information as derived from the
financial statements of the Other Real Estate Partnerships is presented below: Condensed Combined Balance Sheets: (As Restated)June 30, 2004
    
    December 31, 2003ASSETSAssets:Investment in Real Estate, Net
    
    $
    314,978
    
    
    $
    332,371Other Assets, Net
    
    
    92,803
    
    
    
    70,524Total Assets
    
    $
    407,781
    
    
    $
    402,895LIABILITIES AND PARTNERS CAPITALLiabilities:Mortgage Loans Payable
    
    $
    2,493
    
    
    $
    2,529Other Liabilities
    
    
    27,486
    
    
    
    22,193Total Liabilities
    
    
    29,979
    
    
    
    24,722Partners Capital
    
    
    377,802
    
    
    
    378,173Total Liabilities and Partners Capital
    
    $
    407,781
    
    
    $
    402,895
 Condensed Combined Statements of Operations: Six Months Ended
    
    Three Months Ended(As Restated)
    
    
    
    
    
    (As Restated)June 30,
    
    June 30,
    
    June 30,
    
    June 30,2004
    
    2003
    
    2004
    
    2003Total Revenues
    
    $
    22,855
    
    
    $
    35,796
    
    
    $
    11,195
    
    
    $
    12,383Property Expenses
    
    
    (7,419
    )
    
    
    (7,947
    )
    
    
    (3,472
    )
    
    
    (3,896
    )Interest Expense
    
    
    (89
    )
    
    
    (166
    )
    
    
    (44
    )
    
    
    (45
    )Amortization of Deferred Financing Costs
    
    
    (2
    )
    
    
    (2
    )
    
    
    (1
    )
    
    
    (1
    )Depreciation and Other Amortization
    
    
    (6,358
    )
    
    
    (5,378
    )
    
    
    (3,188
    )
    
    
    (2,740
    )Loss From Early Retirement of Debt
    
    
    
    
    
    
    (1,466
    )
    
    
    
    
    
    
    Gain on Sale of Real Estate
    
    
    1,590
    
    
    
    2,022
    
    
    
    1,459
    
    
    
    1,958Income from Discontinued Operations (Including Gain on Sale
of Real Estate of $3,736 and $1,972 for the Six Months Ended
June 30, 2004 and 2003, respectively and $1,184 and $66 for
the Three Months Ended June 30, 2004 and 2003, respectively)
    
    
    4,120
    
    
    
    2,565
    
    
    
    1,297
    
    
    
    460Net Income
    
    $
    14,697
    
    
    $
    25,424
    
    
    $
    7,246
    
    
    $
    8,119
 10




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##### 



FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited) 4. Investments in Joint Ventures As of June 30, 2004, the September 1998 Joint Venture owned 43 industrial
properties comprising approximately 1.5 million square feet of GLA, the
December 2001 Joint Venture owned 36 industrial properties comprising
approximately 6.2 million square feet of GLA and the May 2003 Joint Venture
owned three industrial properties comprising approximately 1.7 million square
feet of GLA. Twenty-seven of the 36 industrial properties purchased by the
December 2001 Joint Venture were purchased from the Consolidated Operating
Partnership. The Consolidated Operating Partnership deferred 15% of the gain
resulting from these sales, which is equal to the Consolidated Operating
Partnerships economic interest in the December 2001 Joint Venture. The 15%
gain deferral reduced the Consolidated Operating Partnerships investment in
the joint venture and is amortized into income over the useful life of the
related building, which is typically 40 years. If the December 2001 Joint
Venture sells any of the 27 properties that were purchased from the
Consolidated Operating Partnership to a third party, the Consolidated Operating
Partnership will recognize the unamortized portion of the deferred gain as gain
on sale of real estate. If the Consolidated Operating Partnership repurchases
any of the 27 properties that it sold to the December 2001 Joint Venture, the
15% gain deferral will be netted against the basis of the property purchased
(which reduces the basis of the property). During the six months ended June 30, 2004 and 2003, the Consolidated
Operating Partnership invested the following amounts in its three joint
ventures as well as received distributions and recognized fees from
acquisition, disposition, property management and asset management services in
the following amounts: Six Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2004
    
    2003Contributions
    
    $
    2,525
    
    
    $
    1,742Distributions
    
    $
    1,166
    
    
    $
    1,890Fees
    
    $
    1,811
    
    
    $
    833
 11




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##### 



FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited) 5. Mortgage Loans Payable, Net, Senior Unsecured Debt, Net and Unsecured Line of Credit Senior Unsecured Debt: On May 17, 2004, the Consolidated Operating Partnership, through the
Operating Partnership, exchanged $125,000 of senior unsecured debt which
matures on June 1, 2014 and bears a coupon interest rate of 6.42% (the 2014
Notes) for $100,000 aggregate principal amount of its 7.375% Notes due 2011
(the 2011 PATS) and net cash in the amount of $8,877. The issue price of the
2014 Notes was 99.123%. Interest is paid semi-annually in arrears on June 1 and
December 1. The debt issue discount of the 2014 Notes is being amortized over
the life of the 2014 Notes as an adjustment to interest expense. This exchange
is being accounted for under EITF 96-19, Debtors Accounting for a Modification
or Exchange of Debt Instruments (EITF 96-19). Under EITF 96-19, if the 2011
PATS and the 2014 Notes are not substantially different, the difference between
the fair value of the 2011 PATS and the carrying value of the 2011 PATS as well
as the unamortized deferred financing costs of the 2011 PATS on the date of the
exchange is deferred and amortized over the life of the 2014 Notes. The
Consolidated Operating Partnership is amortizing this amount over the life of
the 2014 Notes. The 2014 Notes contain certain covenants, including
limitations on incurrence of debt and debt service coverage. On June 14, 2004, the Consolidated Operating Partnership, through the
Operating Partnership, issued $125,000 of senior unsecured debt which matures
on June 15, 2009 and bears a coupon interest rate of 5.25% (the 2009 Notes).
The issue price of the 2009 Notes was 99.826%. Interest is paid semi-annually
in arrears on June 15 and December 15. The Consolidated Operating Partnership
also entered into interest rate protection agreements which were used to fix
the interest rate on the 2009 Notes prior to issuance. The Consolidated
Operating Partnership settled the interest rate protection agreements for
approximately $6,657 of proceeds, which is included in other comprehensive
income. The debt issue discount and the settlement amount of the interest rate
protection agreements are being amortized over the life of the 2009 Notes as an
adjustment to interest expense. The 2009 Notes contain certain covenants,
including limitations on incurrence of debt and debt service coverage. Unsecured Line of Credit: On June 11, 2004, the Consolidated Operating Partnership, through the
Operating Partnership, amended and restated its $300,000 unsecured line of
credit (the Unsecured Line of Credit, formerly the 2002 Unsecured Line of
Credit). The Unsecured Line of Credit matures on September 28, 2007 and bears
interest at a floating rate of LIBOR plus .70%, or the Prime Rate, at the
Consolidated Operating Partnerships election. The net unamortized deferred
financing fees related to the 2002 Unsecured Acquisition Facility and any
additional deferred financing fees incurred with the Unsecured Line of Credit
are being amortized over the life of the Unsecured Line of Credit in accordance
with Emerging Issues Task Force Issue 98-14, Debtors Accounting for Changes
in Line-of-Credit or Revolving-Debt Arrangements. 12




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##### 



FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited) 5. Mortgage Loans Payable, Net, Senior Unsecured Debt, Net and Unsecured Line of Credit, continued. The following table discloses certain information regarding the Consolidated
Operating Partnerships mortgage loans payable, senior unsecured debt and
unsecured line of credit: Outstanding Balance at
    
    Accrued Interest Payable at
    
    Interest Rate atJune 30,
    
    December 31,
    
    June 30,
    
    December 31,
    
    June 30,
    
    Maturity2004
    
    2003
    
    2004
    
    2003
    
    2004
    
    DateMortgage Loans Payable, NetAssumed Loans
    
    $
    5,135
    
    
    $
    5,442
    
    
    $
    
    
    
    $
    
    
    
    
    9.250
    %
    
    
    01/01/13Acquisition Mortgage Loan IV
    
    
    2,085
    
    
    
    2,130
    
    
    
    16
    
    
    
    16
    
    
    
    8.950
    %
    
    
    10/01/06Acquisition Mortgage Loan VIII
    
    
    5,533
    
    
    
    5,603
    
    
    
    38
    
    
    
    39
    
    
    
    8.260
    %
    
    
    12/01/19Acquisition Mortgage Loan IX
    
    
    5,739
    
    
    
    5,811
    
    
    
    39
    
    
    
    40
    
    
    
    8.260
    %
    
    
    12/01/19Acquisition Mortgage Loan X
    
    
    16,504
    (1)
    
    
    16,754
    (1)
    
    
    96
    
    
    
    100
    
    
    
    8.250
    %
    
    
    12/01/10Acquisition Mortgage Loan XI
    
    
    4,802
    (1)
    
    
    4,854
    (1)
    
    
    27
    
    
    
    
    
    
    
    7.610
    %
    
    
    05/01/12Acquisition Mortgage Loan XII
    
    
    2,595
    (1)
    
    
    2,623
    (1)
    
    
    15
    
    
    
    
    
    
    
    7.540
    %
    
    
    01/01/12Total
    
    $
    42,393
    
    
    $
    43,217
    
    
    $
    231
    
    
    $
    195Senior Unsecured Debt, Net2005 Notes
    
    $
    50,000
    
    
    $
    50,000
    
    
    $
    383
    
    
    $
    383
    
    
    
    6.900
    %
    
    
    11/21/052006 Notes
    
    
    150,000
    
    
    
    150,000
    
    
    
    875
    
    
    
    875
    
    
    
    7.000
    %
    
    
    12/01/062007 Notes
    
    
    149,985
    (2)
    
    
    149,982
    (2)
    
    
    1,457
    
    
    
    1,457
    
    
    
    7.600
    %
    
    
    05/15/072011 PATS
    
    
    
    
    
    
    99,657
    (2)
    
    
    
    
    
    
    942
    
    
    
    7.375
    %
    
    
    05/15/11
    (3)2017 Notes
    
    
    99,871
    (2)
    
    
    99,866
    (2)
    
    
    625
    
    
    
    625
    
    
    
    7.500
    %
    
    
    12/01/172027 Notes
    
    
    15,053
    (2)
    
    
    15,053
    (2)
    
    
    138
    
    
    
    138
    
    
    
    7.150
    %
    
    
    05/15/272028 Notes
    
    
    199,811
    (2)
    
    
    199,807
    (2)
    
    
    7,009
    
    
    
    7,009
    
    
    
    7.600
    %
    
    
    07/15/282011 Notes
    
    
    199,593
    (2)
    
    
    199,563
    (2)
    
    
    4,343
    
    
    
    4,343
    
    
    
    7.375
    %
    
    
    03/15/112012 Notes
    
    
    198,925
    (2)
    
    
    198,856
    (2)
    
    
    2,903
    
    
    
    2,903
    
    
    
    6.875
    %
    
    
    04/15/122032 Notes
    
    
    49,379
    (2)
    
    
    49,368
    (2)
    
    
    818
    
    
    
    818
    
    
    
    7.750
    %
    
    
    04/15/322014 Notes
    
    
    109,504
    (2)
    
    
    
    
    
    
    981
    
    
    
    
    
    
    
    6.420
    %
    
    
    06/01/142009 Notes
    
    
    124,784
    (2)
    
    
    
    
    
    
    310
    
    
    
    
    
    
    
    5.250
    %
    
    
    06/15/09Total
    
    $
    1,346,905
    
    
    $
    1,212,152
    
    
    $
    19,842
    
    
    $
    19,493Unsecured Line of CreditUnsecured Line of Credit
    
    $
    84,000
    
    
    $
    195,900
    
    
    $
    126
    
    
    $
    336
    
    
    
    2.308
    %
    
    
    09/28/07
  (1)
    
    At June 30, 2004, the Acquisition Mortgage Loan X, Acquisition Mortgage Loan XI and the Acquisition Mortgage Loan XII include unamortized premiums
of $2,481, $561 and $287, respectively. At December 31, 2003 the Acquisition Mortgage Loan X, Acquisition Mortgage Loan XI and the Acquisition Mortgage Loan XII
include unamortized premiums of $2,673, $597 and $305, respectively.(2)
    
    At June 30, 2004, the 2007 Notes, 2017 Notes, 2027 Notes, 2028 Notes, 2011 Notes, 2012 Notes, 2032 Notes, 2014 Notes and the 2009 Notes are net of
unamortized discounts of $15, $129, $17, $189, $407, $1,075, $621, $15,496 and $216 respectively. At December 31, 2003, the 2007 Notes, 2011 PATS, 2017 Notes, 2027 Notes,
2028 Notes, 2011 Notes, 2012 Notes and the 2032 Notes are net of unamortized discounts of $18, $343, $134, $17, $193, $437, $1,144 and $632, respectively.(3)
    
    The 2011 PATS were exchanged for the 2014 Notes on May 17, 2004. 13




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##### 



FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited) 5. Mortgage Loans Payable, Net, Senior Unsecured Debt, Net and Unsecured Line of Credit, continued. The following is a schedule of the stated maturities and scheduled
principal payments of the mortgage loans, senior unsecured debt and unsecured
line of credit, exclusive of premiums and discounts, for the next five years
ending December 31, and thereafter: AmountRemainder of 2004
    
    $
    6082005
    
    
    51,3042006
    
    
    153,2492007
    
    
    235,4332008
    
    
    1,560Thereafter
    
    
    1,045,980Total
    
    $
    1,488,134
 Other Comprehensive Income: In conjunction with the prior issuances of senior unsecured debt, the
Consolidated Operating Partnership entered into interest rate protection
agreements to fix the interest rate on anticipated offerings of senior
unsecured debt (the Interest Rate Protection Agreements). In the next 12
months, the Consolidated Operating Partnership will amortize approximately
$1,099 into net income by reducing interest expense. In March 2004, the Consolidated Operating Partnership, through the
Operating Partnership, entered into an interest rate protection agreement which
fixed the interest rate on a forecasted offering of unsecured debt which it
designated as a cash flow hedge. This interest rate protection agreement had a
notional value of $73,500, was effective from July 1, 2004 through July 1, 2009
and fixed the LIBOR rate at 3.354%. In conjunction with the offering of the
2009 Notes, the Consolidated Operating Partnership settled this interest rate
protection agreement and received proceeds in the amount of $3,817, which is
recognized in other comprehensive income. The Consolidated Operating
Partnership is amortizing this settlement amount into net income over the life
of the 2009 Notes as an adjustment to interest expense. In March 2004, the Consolidated Operating Partnership, through the
Operating Partnership, entered into another interest rate protection agreement
which fixed the interest rate on a forecasted offering of unsecured debt which
it designated as a cash flow hedge. This interest rate protection agreement
had a notional value of $73,500, was effective from August 15, 2004 through
August 15, 2009 and fixed the LIBOR rate at 3.326%. In May 2004, the
Consolidated Operating Partnership reduced the projected amount of the future
debt offering and settled $24,500 of this interest rate protection agreement
for proceeds in the amount of $1,450 which is recognized in net income. In
conjunction with the offering of the 2009 Notes, the Consolidated Operating
Partnership settled the remaining $49,000 of this interest rate protection
agreement and received proceeds in the amount of $2,840, which is recognized in
other comprehensive income. The Consolidated Operating Partnership is
amortizing this settlement amount into net income over the life of the 2009
Notes as an adjustment to interest expense. 6. Partners Capital The Operating Partnership has issued general partnership units, limited
partnership units (together, the Units) and preferred general partnership
units. The general partnership units resulted from capital contributions from
the Company. The limited partnership units are issued in conjunction with the
acquisition of certain properties. Subject to lock-up periods and certain
adjustments, limited partnership units are convertible into common stock, $.01
par value, of the Company on a one-for-one basis or cash 14




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##### 



FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited) 6. Partners Capital, continued at the option of the Company. The preferred general partnership units resulted
from preferred capital contributions from the Company. The Operating
Partnership will be required to make all required distributions on the
preferred general partnership units prior to any distribution of cash or assets
to the holders of the general and limited partnership units except for
distributions required to enable the Company to maintain its qualification as a
REIT. Preferred Redemptions/Contributions: On February 4, 1998, the Company issued 5,000,000 Depositary Shares, each
representing 1/100th of a share of the Companys 7.95%, $.01 par value, Series
D Cumulative Preferred Stock (the Series D Preferred Stock), at an initial
offering price of $25.00 per Depositary Share. The net proceeds of $120,562
received from the Series D Preferred Stock were contributed to the Operating
Partnership in exchange for 7.95% Series D Cumulative Preferred Units (the
Series D Preferred Units). On or after February 4, 2003, the Series D
Preferred Stock became redeemable for cash at the option of the Company, in
whole or in part, at a redemption price equivalent to $25.00 per Depositary
Share, or $125,000 in the aggregate, plus dividends accrued and unpaid to the
redemption date. The Company redeemed the Series D Preferred Stock on June
7, 2004 at a redemption price of $25.00 per Depositary Share and paid a
prorated second quarter dividend of $.36990 per Depositary Share, totaling
approximately $1,850. The Series D Preferred Units were redeemed on June 7,
2004 as well. In accordance with the Securities and Exchange Commissions July
31, 2003 clarification on Emerging Issues Task Force Abstract, Topic No. D-42,
The Effect on the Calculation of Earnings per Share for the Redemption or
Induced Conversion of Preferred Stock (EITF D-42), due to the redemption of
the Series D Preferred Units, the initial offering costs associated with the
issuance of the Series D Preferred Units of $4,467 were reflected as a
reduction of net income available to unitholders in determining earnings per
unit for the six and three months ended June 30, 2004. On March 18, 1998, the Company issued 3,000,000 Depositary Shares, each
representing 1/100th of a share of the Companys 7.90%, $.01 par value, Series
E Cumulative Preferred Stock (the Series E Preferred Stock), at an initial
offering price of $25.00 per Depositary Share. The net proceeds of $72,138
received from the Series E Preferred Stock were contributed to the Operating
Partnership in exchange for 7.90% Series E Cumulative Preferred Units (the
Series E Preferred Units). On or after March 18, 2003, the Series E
Preferred Stock became redeemable for cash at the option of the Company, in
whole or in part, at a redemption price equivalent to $25.00 per Depositary
Share, or $75,000 in the aggregate, plus dividends accrued and unpaid to the
redemption date. The Company redeemed the Series E Preferred Stock on June
7, 2004 at a redemption price of $25.00 per Depositary Share and paid a
prorated second quarter dividend of $.36757 per Depositary Share, totaling
approximately $1,103. The Series E Preferred Units were redeemed on June 7,
2004 as well. In accordance with EITF D-42, due to the redemption of the
Series E Preferred Units, the initial offering costs associated with the
issuance of the Series E Preferred Units of $2,892 were reflected as a
reduction of net income available to unitholders in determining earnings per
unit for the six and three months ended June 30, 2004. On May 27, 2004, the Company issued 50,000 Depositary Shares, each
representing 1/100th of a share of the Companys 6.236%, $.01 par value,
Series F Flexible Cumulative Redeemable Preferred Stock (the Series F
Preferred Stock), at an initial offering price of $1,000.00 per Depositary
Share for gross proceeds of $50,000. Net of offering costs, the Company
received net proceeds of $49,075 from the issuance of the Series F Preferred
Stock which were contributed to the Operating Partnership in exchange for
6.236% Series F Cumulative Preferred Units (the Series F Preferred Units) and
are reflected in the Consolidated Operating Partnerships financial statements
as general partner preferred unit contribution. Dividends on the Series F
Preferred Stock are cumulative from the date of 15




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##### 



FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited) 6. Partners Capital, continued initial issuance and are payable semi-annually in arrears for the period from
the date of original issuance through March 31, 2009 (the Series F Initial
Fixed Rate Period), commencing on September 30, 2004, at a rate of 6.236% per
annum of the liquidation preference (the Series F Initial Distribution Rate)
(equivalent to $62.36 per Depositary Share). On or after March 31, 2009, the
Series F Initial Distribution Rate is subject to reset, at the Companys
option, subject to certain conditions and parameters, at fixed or floating
rates and periods. Fixed rates and periods will be determined through a
remarketing procedure. Floating rates during floating rate periods will equal
2.375% (the initial credit spread), plus the greater of (i) the 3-month LIBOR
Rate, (ii) the 10-year Treasury CMT Rate (as defined in the Articles
Supplementary), and (iii) the 30-year Treasury CMT Rate (the adjustable
rate)(as defined in the Articles Supplementary), reset quarterly. Dividends on
the Series F Preferred Stock are payable semi-annually in arrears for fixed
rate periods subsequent to the Series F Initial Fixed Rate Period and quarterly
in arrears for floating rate periods. With respect to the payment of
dividends and amounts upon liquidation, dissolution or winding up, the
Series F Preferred Stock ranks senior to payments on the Companys Common
Stock and pari passu with the Companys 8.625%, $.01 par value, Series C
Cumulative Preferred Stock (the Series C Preferred Stock) and Series G
Preferred Stock (hereinafter defined). On or after March 31, 2009, subject to
any conditions on redemption applicable in any fixed rate period subsequent to
the Series F Initial Fixed Rate Period, the Series F Preferred Stock is
redeemable for cash at the option of the Company, in whole or in part, at a
redemption price equivalent to $1,000.00 per Depositary Share, or $50,000 in
the aggregate, plus dividends accrued and unpaid to the redemption date. The
Series F Preferred Stock has no stated maturity and is not convertible into any
other securities of the Company. On May 27, 2004, the Company issued 25,000 Depositary Shares, each
representing 1/100th of a share of the Companys 7.236%, $.01 par value,
Series G Flexible Cumulative Redeemable Preferred Stock (the Series G
Preferred Stock), at an initial offering price of $1,000.00 per Depositary
Share for gross proceeds of $25,000. Net of offering costs, the Company
received net proceeds of $24,512 from the issuance of the Series G Preferred
Stock which were contributed to the Operating Partnership in exchange for
7.236% Series G Cumulative Preferred Units (the Series G Preferred Units) and
are reflected in the Consolidated Operating Partnerships financial statements
as general partner preferred unit contribution. Dividends on the Series G
Preferred Stock are cumulative from the date of initial issuance and are
payable semi-annually in arrears for the period from the date of original
issuance of the Series G Preferred Stock through March 31, 2014 (the Series G
Initial Fixed Rate Period), commencing on September 30, 2004, at a rate of
7.236% per annum of the liquidation preference (the Series G Initial
Distribution Rate) (equivalent to $72.36 per Depositary Share). On or after
March 31, 2014, the Series G Initial Distribution Rate is subject to reset, at
the Companys option, subject to certain conditions and parameters, at fixed or
floating rates and periods. Fixed rates and periods will be determined through
a remarketing procedure. Floating rates during floating rate periods will equal
2.500% (the initial credit spread), plus the greater of (i) the 3-month LIBOR
Rate, (ii) the 10-year Treasury CMT Rate (as defined in the Articles
Supplementary), and (iii) the 30-year Treasury CMT Rate (the adjustable
rate)(as defined in the Articles Supplementary), reset quarterly. Dividends on
the Series G Preferred Stock are payable semi-annually in arrears for fixed
rate periods subsequent to the Series G Initial Fixed Rate Period and quarterly
in arrears for floating rate periods. With respect to the payment of
dividends and amounts upon liquidation, dissolution or winding up, the
Series G Preferred Stock ranks senior to payments on the Companys Common
Stock and pari passu with the Companys Series C Preferred Stock and Series F
Preferred Stock. On or after March 31, 2014, subject to any conditions on
redemption applicable in any fixed rate period subsequent to the Series G
Initial Fixed Rate Period, the Series G Preferred Stock is redeemable for cash
at the option of the Company, in whole or in part, at a redemption price
equivalent to $1,000.00 per Depositary Share, or $25,000 in the aggregate, plus
dividends accrued
and unpaid to the redemption date. The Series G Preferred Stock has no stated
maturity and is not convertible into any other securities of the Company. 16




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##### 



FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited) 6. Partners Capital, continued On June 2, 2004, the Company issued 500 shares of 2.965% the Companys
$.01 par value, Series H Flexible Cumulative Redeemable Preferred Stock (the
Series H Preferred Stock), at an initial offering price of $250,000 per share
for gross proceeds of $125,000. Net of offering costs, the Company received
net proceeds of $120,837 from the issuance of the Series H Preferred Stock
which were contributed to the Operating Partnership in exchange for Series H
Cumulative Preferred Units (the Series H Preferred Units) and are reflected
in the Consolidated Operating Partnerships financial statements as general
partner preferred unit contribution. On or after July 2, 2004, the Series H
Preferred Stock became redeemable for cash at the option of the Company, in
whole but not in part, at a redemption price equivalent, initially, to $242,875
per share plus accrued and unpaid dividends. The Company redeemed the Series H
Preferred Stock on July 2, 2004 and paid a prorated second and third quarter
dividend of $629.555 per share, totaling approximately $315. The Series H
Preferred Units were redeemed on July 2, 2004 as well. In accordance with EITF
D-42, due to the redemption of the Series H Preferred Units, the initial
offering costs associated with the issuance of the Series H Preferred Units of
$.6 million will be reflected as a reduction of net income available to
unitholders in determining earnings per Unit for the nine and three months
ended September 30, 2004. Unit Contributions: During the six months ended June 30, 2004, the Company awarded 206,117
shares of restricted common stock to certain employees and 2,266 shares of
restricted common stock to certain Directors. The Operating Partnership issued
Units to the Company in the same amount. These shares of restricted common
stock had a fair value of approximately $8,068 on the date of grant. The
restricted common stock vests over periods from one to ten years. Compensation
expense will be charged to earnings over the respective vesting period. During the six months ended June 30, 2004, certain employees exercised
1,393,969 non-qualified employee stock options. Net proceeds to the Company
were approximately $31,967. The Company contributed the net proceeds to the
Consolidated Operating Partnership and the Consolidated Operating Partnership,
through the Operating Partnership, issued Units to the Company in the same
amount. Distributions: On January 19, 2004, the Operating Partnership paid a fourth quarter 2003
distribution of $0.6850 per Unit, totaling approximately $31,889. On April 19,
2004, the Operating Partnership paid a first quarter 2004 distribution of
$0.6850 per Unit, totaling approximately $32,724. On March 31, 2004, the Operating Partnership paid first quarter 2004
distributions of $53.906 per Unit on its 8.625% Series C Cumulative Preferred
Units (the Series C Preferred Units), $49.688 per Unit on its Series D
Preferred Units and $49.375 per Unit on its Series E Preferred Units. The
preferred unit distributions paid on March 31, 2004, totaled approximately
$5,044. On June 30, 2004 the Operating Partnership paid a second quarter 2004
distribution of $53.906 per Unit on its Series C Preferred Units approximately
$1,078 and accrued prorated dividends of $294 on its Series F Preferred Units,
$171 on its Series G Preferred Units and $294 on its Series H Preferred Units. 17




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##### 



FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited) 7. Acquisition and Development of Real Estate During the six months ended June 30, 2004, the Consolidated Operating
Partnership acquired 23 industrial properties comprising approximately 3.5
million square feet of GLA and several land parcels. The purchase price of
these acquisitions totaled approximately $130,163, excluding costs incurred in
conjunction with the acquisition of the industrial properties and land parcels.
The Consolidated Operating Partnership also completed the development of eight
industrial properties comprising approximately 1.2 million square feet of GLA
at an estimated cost of approximately $63.0 million. 8. Sale of Real Estate, Real Estate Held for Sale and Discontinued Operations During the six months ended June 30, 2004, the Consolidated Operating
Partnership sold 49 industrial properties comprising approximately 3.9 million
square feet of GLA and several land parcels. Gross proceeds from the sales of
the 49 industrial properties and several land parcels were approximately
$202,350. The gain on sale of real estate was approximately $52,894.
Forty-seven of the 49 sold industrial properties meet the criteria established
by FAS 144 to be included in discontinued operations. Therefore, in accordance
with FAS 144, the results of operations and gain on sale of real estate for the
47 sold industrial properties that meet the criteria established by FAS 144 are
included in discontinued operations. The results of operations and gain on
sale of real estate for the two industrial properties and several land parcels
that do not meet the criteria established by FAS 144 are included in continuing
operations. At June 30, 2004, the Consolidated Operating Partnership had two
industrial properties comprising approximately .2 million square feet of GLA
held for sale. In accordance with FAS 144, the results of operations of the
two industrial properties held for sale at June 30, 2004 are included in
discontinued operations. There can be no assurance that such industrial
properties held for sale will be sold. Income from discontinued operations for the six months ended June 30, 2004
reflects the results of operations and gain on sale of real estate of 47
industrial properties that were sold during the six months ended June 30, 2004
as well as the results of operations of two industrial properties held for sale
at June 30, 2004. Income from discontinued operations for the six months ended June 30, 2003
reflects the results of operations of 47 industrial properties that were sold
during the six months ended June 30, 2004, two industrial properties identified
as held for sale at June 30, 2004, 113 industrial properties that were sold
during the twelve months ended December 31, 2003, as well as the gain on sale
of real estate from 40 industrial properties which were sold during the six
months ended June 30, 2003. The following table discloses certain information regarding the industrial
properties included in discontinued operations by the Consolidated Operating
Partnership, for the six and three months ended June 30, 2004 and 2003. Six Months Ended June 30,
    
    Three Months Ended June 30,2004
    
    2003
    
    2004
    
    2003Total Revenues
    
    $
    6,934
    
    
    $
    21,776
    
    
    $
    2,252
    
    
    $
    9,848Operating Expenses
    
    
    (2,601
    )
    
    
    (7,181
    )
    
    
    (829
    )
    
    
    (3,132
    )Depreciation and Amortization
    
    
    (1,485
    )
    
    
    (4,723
    )
    
    
    (561
    )
    
    
    (2,303
    )Gain on Sale of Real Estate
    
    
    47,901
    
    
    
    32,859
    
    
    
    25,722
    
    
    
    16,308Income from Discontinued Operations
    
    $
    50,749
    
    
    $
    42,731
    
    
    $
    26,584
    
    
    $
    20,721
 18




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##### 



FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited) 9. Supplemental Information to Statement of Cash Flows Supplemental disclosure of cash flow information: Six Months EndedJune 30,
    
    June 30,2004
    
    2003Interest paid, net of capitalized interest
    
    $
    47,419
    
    
    $
    47,568Interest capitalized
    
    $
    649
    
    
    $
    366Supplemental schedule of non-cash investing and financing activities:Distribution payable on units
    
    $
    32,737
    
    
    $
    31,607Distribution payable on preferred units
    
    $
    759
    
    
    $
    Exchange of limited partnership units for general partnership units:Limited partnership units
    
    $
    (3,948
    )
    
    $
    (1,011
    )General partnership units
    
    
    3,948
    
    
    
    1,011$
    
    
    
    $
    In conjunction with the property and land acquisitions, the following
liabilities were assumed:Purchase of real estate
    
    $
    130,163
    
    
    $
    132,654Deferred purchase price
    
    
    
    
    
    
    (10,425
    )Accounts payable and accrued expenses
    
    
    (599
    )
    
    
    (712
    )Mortgage Debt
    
    
    
    
    
    
    (14,157
    )Acquisition of real estate
    
    $
    129,564
    
    
    $
    107,360In conjunction with certain property sales, the Operating Partnership
provided seller financing:Notes Receivable
    
    $
    8,573
    
    
    $
    7,139
 19




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##### 



FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per Unit data)
(Unaudited) 10. Earnings Per Unit (EPU) The computation of basic and diluted EPU is presented below: Six Months Ended
    
    Three Months Ended(As Restated)
    
    
    
    
    
    (As Restated)June 30,
    
    June 30,
    
    June 30,
    
    June 30,2004
    
    2003
    
    2004
    
    2003Numerator:Income (Loss) from Continuing Operations
    
    $
    4,659
    
    
    $
    16,444
    
    
    $
    (33
    )
    
    $
    4,533Gain On Sale of Real Estate
    
    
    4,993
    
    
    
    2,614
    
    
    
    1,878
    
    
    
    1,378Less: Preferred Distributions
    
    
    (9,834
    )
    
    
    (10,088
    )
    
    
    (4,790
    )
    
    
    (5,044
    )Less: Redemption of Preferred Units
    
    
    (7,359
    )
    
    
    
    
    
    
    (7,359
    )
    
    
    (Loss) Income from Continuing Operations Available
to Unitholders  For Basic and Diluted EPU
    
    
    (7,541
    )
    
    
    8,970
    
    
    
    (10,304
    )
    
    
    867Discontinued Operations
    
    
    50,749
    
    
    
    42,731
    
    
    
    26,584
    
    
    
    20,721Net Income Available to Unitholders
    
    $
    43,208
    
    
    $
    51,701
    
    
    $
    16,280
    
    
    $
    21,588Denominator:Weighted Average Units  Basic
    
    
    46,568,519
    
    
    
    45,218,886
    
    
    
    46,908,514
    
    
    
    45,239,870Effect of Dilutive Securities that Result in the
Issuance of General Partner Units:Employee and Director Common Stock Options
    
    
    241,045
    
    
    
    83,990
    
    
    
    150,944
    
    
    
    105,759Employee and Director Shares of Restricted Stock
    
    
    130,356
    
    
    
    1,505
    
    
    
    96,241
    
    
    
    21,423Weighted Average Units Outstanding  Diluted
    
    
    46,939,920
    
    
    
    45,304,381
    
    
    
    47,155,699
    
    
    
    45,367,052Basic EPU:(Loss) Income from Continuing Operations Available
to Unitholders
    
    $
    (0.16
    )
    
    $
    0.20
    
    
    $
    (0.22
    )
    
    $
    0.02Discontinued Operations
    
    $
    1.09
    
    
    $
    0.94
    
    
    $
    0.57
    
    
    $
    0.46Net Income Available to Unitholders
    
    $
    0.93
    
    
    $
    1.14
    
    
    $
    0.35
    
    
    $
    0.48Diluted EPU:(Loss) Income from Continuing Operations Available to
Unitholders
    
    $
    (0.16
    )
    
    $
    0.20
    
    
    $
    (0.22
    )
    
    $
    0.02Discontinued Operations
    
    $
    1.08
    
    
    $
    0.94
    
    
    $
    0.56
    
    
    $
    0.46Net Income Available to Unitholders
    
    $
    0.92
    
    
    $
    1.14
    
    
    $
    0.35
    
    
    $
    0.48
 20




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##### 



FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited) 11. Commitments and Contingencies In the normal course of business, the Consolidated Operating Partnership
is involved in legal actions arising from the ownership of its properties. In
managements opinion, the liabilities, if any, that may ultimately result from
such legal actions are not expected to have a materially adverse effect on the
consolidated financial position, operations or liquidity of the Consolidated
Operating Partnership. The Consolidated Operating Partnership has committed to the construction
of 24 development projects totaling approximately 2.8 million square feet of
GLA for an estimated investment of approximately $149.0 million. Of this
amount, approximately $47.7 million remains to be funded. These developments
are expected to be funded with proceeds from the sale of select properties,
cash flows from operations and borrowings under the Unsecured Line of Credit.
The Consolidated Operating Partnership expects to place in service 21 of the 24
development projects during the next twelve months. There can be no assurance
that the Consolidated Operating Partnership will place these projects in
service during the next twelve months or that the actual completion cost will
not exceed the estimated completion cost stated above. 12. Subsequent Events From July 1, 2004 to July 30, 2004, the Consolidated Operating Partnership
acquired four industrial properties for an aggregate purchase price of
approximately $6,713, excluding costs incurred in conjunction with the
acquisition of these industrial properties. The Consolidated Operating
Partnership also sold one industrial property for approximately $6,750 of gross
proceeds. On July 2, 2004, the Company redeemed the Series H Preferred Stock. The
Series H Preferred Units were redeemed on July 2, 2004 as well (see Note 6). On July 19, 2004, the Operating Partnership paid a second quarter 2004
distribution of $.6850 per Unit, totaling approximately $32,737. On July 28, 2004, the Operating Partnership declared a third quarter 2004
distribution on its Series C Preferred Units of $53.906, payable on September
30, 2004, to its unitholders of record on September 15, 2004. 21




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##### 



FIRST INDUSTRIAL, L.P. 
 Item 2. Managements Discussion and Analysis of Financial Condition
 and Results of Operations
 The Managements Discussion and Analysis of Financial Condition and
Results of Operations presented below reflects certain restatements to the
previously reported results of operations for the six and three months ended
June, 30, 2004 as described in Note 1 in the Notes to Consolidated Financial
Statements. As a result of its own internal control procedures, the
Consolidated Operating Partnership determined that approximately $1.1 million
of additional depreciation expense relating to certain properties within the
Consolidated Operating Partnership and limited partnerships for which the
Consolidated Operating Partnership holds a 99% limited partnership interest in
and accounts for under the equity method of accounting should have been
recorded in the second quarter of 2004. Accordingly, the Consolidated
Operating Partnership has recognized this additional depreciation expense and
its 99% equity interest in depreciation in its results of operations for the
six months and three months ended June 30, 2004. The following discussion and
analysis of First Industrial, L.P.s (the Operating Partnership) financial
condition and results of operations should be read in conjunction with the
financial statements and notes thereto appearing elsewhere in this Form 10-Q/A. This report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended (the Exchange Act). The
Operating Partnership intends such forward-looking statements to be covered by
the safe harbor provisions for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995, and is including this
statement for purposes of complying with these safe harbor provisions.
Forward-looking statements, which are based on certain assumptions and describe
future plans, strategies and expectations of the Operating Partnership, are
generally identifiable by use of the words believe, expect, intend,
anticipate, estimate, project or similar expressions. The Operating
Partnerships ability to predict results or the actual effect of future plans
or strategies is inherently uncertain. Factors which could have a material
adverse affect on the operations and future prospects of the Operating
Partnership on a consolidated basis include, but are not limited to, changes
in: economic conditions generally and the real estate market specifically,
legislative/regulatory changes (including changes to laws governing the
taxation of real estate investment trusts), availability of financing, interest
rate levels, competition, supply and demand for industrial properties in the
Operating Partnerships current and proposed market areas, potential
environmental liabilities, slippage in development or lease-up schedules,
tenant credit risks, higher-than-expected costs and changes in general
accounting principles, policies and guidelines applicable to real estate
investment trusts. These risks and uncertainties should be considered in
evaluating forward-looking statements and undue reliance should not be placed
on such statements. Further information concerning the Operating Partnership
and its business, including additional factors that could materially affect the
Operating Partnerships financial results, is included herein and in the
Operating Partnerships other filings with the Securities and Exchange
Commission. The Operating Partnership was organized as a limited partnership in the
state of Delaware on November 23, 1993. The sole general partner of the
Operating Partnership is First Industrial Realty Trust, Inc. (the Company)
with an approximate 86.3% ownership interest at June 30, 2004. The limited
partners of the Operating Partnership own, in the aggregate, approximately a
13.7% interest in the Operating Partnership at June 30, 2004. The Company also
owns a preferred general partnership interest in the Operating Partnership with
an aggregate liquidation priority of $250 million. The Company is a real
estate investment trust (REIT) as defined in the Internal Revenue Code. The
Companys operations are conducted primarily through the Operating Partnership. The Operating Partnership is the sole member of several limited liability
companies (the L.L.C.s) and the sole shareholder of First Industrial
Development Services, Inc. and holds at least a 99% limited partnership
interest in each of eight limited partnerships (together, the Other Real
Estate Partnerships). The general partners of the Other Real Estate Partnerships are separate
corporations, each with at least a .01% general partnership interest in the
Other Real Estate Partnership for which it acts as a
general partner. Each general partner of the Other Real Estate Partnerships is
a wholly-owned subsidiary of the Company. 22




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##### 



The financial statements of the Operating Partnership report the L.L.C.s
and First Industrial Development Services, Inc. (the Consolidated Operating
Partnership) on a consolidated basis. As of June 30, 2004, the Consolidated
Operating Partnership owned 713 in-service industrial properties containing an
aggregate of approximately 50.2 million square feet of gross leasable area
(GLA). On a combined basis, as of June 30, 2004, the Other Real Estate
Partnerships owned 101 in-service industrial properties containing an aggregate
of approximately 9.0 million square feet of GLA. The Operating Partnership, through separate wholly-owned limited liability
companies in which it is the sole member, also owns minority equity interests
in and provides asset and property management services to three joint ventures
which invest in industrial properties (the September 1998 Joint Venture, the
December 2001 Joint Venture and the May 2003 Joint Venture; collectively,
the Joint Ventures). The Other Real Estate Partnerships, the September 1998
Joint Venture, the December 2001 Joint Venture and the May 2003 Joint Venture
are accounted for under the equity method of accounting. The operating data of
the Joint Ventures is not consolidated with that of the Consolidated Operating
Partnership as presented herein. Management believes the Consolidated Operating Partnerships financial
condition and results of operations are, primarily, a function of the
Consolidated Operating Partnerships performance in four key areas: leasing of
industrial properties, acquisition and development of additional industrial
properties, redeployment of internal capital and access to external capital. The Consolidated Operating Partnership generates revenue primarily from
rental income and tenant recoveries from the lease of industrial properties
under long-term (generally three to six years) operating leases. Such revenue
is offset by certain property specific operating expenses, such as real estate
taxes, repairs and maintenance, property management, utilities and insurance
expenses, along with certain other costs and expenses, such as depreciation and
amortization costs and general and administrative and interest expenses. The
Consolidated Operating Partnerships revenue growth is dependent, in part, on
its ability to (i) increase rental income, through increasing, either or both,
occupancy rates and rental rates at the Consolidated Operating Partnerships
properties, (ii) maximize tenant recoveries and (iii) minimize operating and
certain other expenses. Revenues generated from rental income and tenant
recoveries are a significant source of funds, in addition to income generated
from gains/losses on the sale of the Consolidated Operating Partnerships
properties (as discussed below), for the Consolidated Operating Partnerships
distributions. The leasing of property, in general, and occupancy rates, rental
rates, operating expenses and certain non-operating expenses, in particular,
are impacted, variously, by property specific, market specific, general
economic and other conditions, many of which are beyond the control of the
Consolidated Operating Partnership. The leasing of property also entails
various risks, including the risk of tenant default. If the Consolidated
Operating Partnership were unable to maintain or increase occupancy rates and
rental rates at the Consolidated Operating Partnerships properties or to
maintain tenant recoveries and operating and certain expenses consistent with
historical levels and proportions, the Consolidated Operating Partnerships
revenue growth would be limited. Further, if a significant number of the
Consolidated Operating Partnerships tenants were unable to pay rent (including
tenant recoveries) or if the Consolidated Operating Partnership were unable to
rent its properties on favorable terms, the Consolidated Operating
Partnerships financial condition, results of operations, cash flow and ability
to pay dividends on, and the market price of, the Companys common stock would
be adversely affected. The Consolidated Operating Partnerships revenue growth is also dependent,
in part, on its ability to acquire existing, and acquire and develop new,
additional industrial properties on favorable terms. The Consolidated Operating
Partnership continually seeks to acquire existing industrial properties on
favorable terms, and, when conditions permit, also seeks to acquire and develop
new industrial properties on favorable terms. Existing properties, as they are
acquired, and acquired and developed properties, as they lease-up, generate
revenue from rental income and tenant recoveries, income from which, as
discussed above, is a source of funds for the Consolidated Operating
Partnerships distributions. The acquisition and development of properties is
impacted, variously, by property specific, market specific, general economic
and other conditions, many of which are beyond the control of the Consolidated
Operating Partnership. The acquisition and development of properties also
entails various risks, including the risk that the Consolidated Operating
Partnerships investments may not perform as expected. For example, acquired
existing and acquired and developed new properties may not sustain and/or
achieve anticipated 23




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##### 



occupancy and rental rate levels. With respect to acquired
and developed new properties, the Consolidated Operating Partnership may not be
able to complete construction on schedule or within budget, resulting in
increased debt service expense and construction costs and delays in leasing the
properties. Also, the Consolidated Operating Partnership faces significant
competition for attractive acquisition and development opportunities from other
well-capitalized real estate investors, including both publicly-traded real
estate investment trusts and private investors. Further, as discussed below,
the Consolidated Operating Partnership may not be able to finance the
acquisition and development opportunities it identifies. If the Consolidated
Operating Partnership were unable to acquire and develop sufficient additional
properties on favorable terms or if such investments did not perform as
expected, the Consolidated Operating Partnerships revenue growth would be
limited and its financial condition, results of operations, cash flow and
ability to pay dividends on, and the market price of, the Companys common
stock would be adversely affected. The Consolidated Operating Partnership also generates income from the sale
of properties (including existing buildings, buildings which the Consolidated
Operating Partnership has developed or re-developed on a merchant basis and
land). The Consolidated Operating Partnership is continually engaged in, and
its income growth is dependent, in part, on systematically redeploying its
capital from properties and other assets with lower yield potential into
properties and other assets with higher yield potential. As part of that
process, the Consolidated Operating Partnership sells, on an ongoing basis,
select stabilized properties or properties offering lower potential returns
relative to their market value. The gain/loss on the sale of such properties is
included in the Consolidated Operating Partnerships income and is a
significant source of funds, in addition to revenues generated from rental
income and tenant recoveries, for the Consolidated Operating Partnerships
distributions. Also, a significant portion of the proceeds from such sales is
used to fund the acquisition of existing, and the acquisition and development
of new, industrial properties. The sale of properties is impacted, variously,
by property specific, market specific, general economic and other conditions,
many of which are beyond the control of the Consolidated Operating Partnership.
The sale of properties also entails various risks, including competition from
other sellers and the availability of attractive financing for potential buyers
of the Consolidated Operating Partnerships properties. Further, the
Consolidated Operating Partnerships ability to sell properties is limited by
safe harbor rules applying to REITs under the Code which relate to the number
of properties that may be disposed of in a year, their tax bases and the cost
of improvements made to the properties, along with other tests which enable a
REIT to avoid punitive taxation on the sale of assets. If the Consolidated
Operating Partnership were unable to sell properties on favorable terms, the
Consolidated Operating Partnerships income growth would be limited and its
financial condition, results of operations, cash flow and ability to pay
dividends on, and the market price of, the Companys common stock would be
adversely affected. Currently, the Consolidated Operating Partnership utilizes a portion of
the net sales proceeds from property sales, as well as borrowings under its
$300 million unsecured line of credit (the Unsecured Line of Credit), to
finance future acquisitions and developments. Nonetheless, access to external
capital on favorable terms plays a key role in the Consolidated Operating
Partnerships financial condition and results of operations, as it impacts the
Consolidated Operating Partnerships cost of capital and its ability, and cost,
to refinance existing indebtedness as it matures and to fund future
acquisitions and developments, if the Consolidated Operating Partnership
chooses to do so, through the issuance of additional equity securities. The
Companys ability to access external capital on favorable terms is dependent on
various factors, including general market conditions, interest rates, credit
ratings on the Companys capital stock and debt, the markets perception of the
Companys growth potential, the Companys current and potential future earnings
and cash distributions and the market price of the Companys capital stock. If
the Company were unable to access external capital on favorable terms, the
Companys financial condition, results of operations, cash flow and ability to
pay dividends on, and the market price of, the Companys common stock would be
adversely affected. RESULTS OF OPERATIONS At June 30, 2004, the Consolidated Operating Partnership owned 713
in-service industrial properties with approximately 50.2 million square feet of
GLA, compared to 777 in-service industrial properties with approximately 50.4
million square feet of GLA at June 30, 2003. During the period between July 1,
2003 and June 30, 2004, the Consolidated Operating Partnership acquired 58
industrial properties containing approximately 6.0 million square feet of GLA,
completed development of 16 industrial properties totaling 24




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##### 



approximately 2.0
million square feet of GLA and sold 124 in-service industrial properties
totaling approximately 7.3 million square feet of GLA, three out of service
industrial properties and several land parcels. The Consolidated Operating
Partnership also took 30 industrial properties out of service comprising
approximately 2.9 million square feet of GLA and placed in-service 16
industrial properties comprising approximately 2.0 million square feet of GLA. Comparison of Six Months Ended June 30, 2004 to Six Months Ended June 30, 2003 The tables below summarize the Consolidated Operating Partnerships
revenues, property expenses and depreciation and other amortization by various
categories. Same store properties are in-service properties owned prior to
January 1, 2003. Acquired properties are in-service properties that were
acquired subsequent to December 31, 2002. During the six months ended June 30,
2004 and the year ended December 31, 2003, the Consolidated Operating
Partnership acquired 85 industrial properties totaling approximately 9.8
million square feet of GLA at a total purchase price of $345.8 million. Sold
properties are properties that were sold subsequent to December 31, 2002.
During the six months ended June 30, 2004 and the year ended December 31, 2003,
the Consolidated Operating Partnership sold 170 industrial properties totaling
approximately 10.2 million square feet of GLA and several land parcels for
gross sales proceeds of $540.8 million. Properties that are not placed
in-service are properties that have not been placed in-service as of December
31, 2002. These properties will be placed in-service when they reach
stabilized occupancy. Other revenues are derived from the operations of the
Consolidated Operating Partnerships maintenance company, fees earned from the
Consolidated Operating Partnerships joint ventures, fees earned for developing
properties for third parties and other miscellaneous revenues. Other expenses
are derived from the operations of the Consolidated Operating Partnerships
maintenance company and other miscellaneous expenses. The Consolidated Operating Partnerships future financial condition and
results of operations, including rental revenues, may be impacted by the future
acquisition and sale of properties. The Consolidated Operating Partnerships
future revenues and expenses may vary materially from historical rates. For the first six months of 2004, the Consolidated Operating Partnerships
revenues continued to be impacted by a soft leasing market attributable to a
weak economy. At June 30, 2004 and 2003, the occupancy rates of the
Consolidated Operating Partnerships in-service properties were 89.6% and
89.0%, respectively Revenues from same store properties decreased $2.9 million, or 2.6%, due
primarily to a decrease in rental rates on new leases. Revenues from acquired
properties increased $11.3 million due to properties acquired subsequent to
December 31, 2002. Revenues from sold properties decreased $16.2 million, or
67.7%, due to properties sold subsequent to December 31, 2002. Six Months Ended June 30,2004
    
    2003
    
    $ Change
    
    % ChangeREVENUES ($ in 000s)Same Store Properties
    
    $
    110,550
    
    
    $
    113,495
    
    
    $
    (2,945
    )
    
    
    -2.6
    %Acquired Properties
    
    
    12,524
    
    
    
    1,258
    
    
    
    11,266
    
    
    
    895.5
    %Sold Properties
    
    
    7,738
    
    
    
    23,931
    
    
    
    (16,193
    )
    
    
    -67.7
    %Properties Not Placed in-service
    
    
    11,108
    
    
    
    5,367
    
    
    
    5,741
    
    
    
    107.0
    %Other
    
    
    5,005
    
    
    
    2,992
    
    
    
    2,013
    
    
    
    67.3
    %146,925
    
    
    
    147,043
    
    
    
    (118
    )
    
    
    -0.1
    %Discontinued Operations
    
    
    (6,934
    )
    
    
    (21,776
    )
    
    
    14,842
    
    
    
    -68.2
    %Total Revenues
    
    $
    139,991
    
    
    $
    125,267
    
    
    $
    14,724
    
    
    
    11.8
    %
 Property expenses include real estate taxes, repairs and maintenance,
property management, utilities, insurance and other property related expenses.
Property expenses from same store properties remained relatively unchanged.
Property expenses from acquired properties increased by $3.1 million due to 25




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##### 



properties acquired subsequent to December 31, 2002. Property expenses from
sold properties decreased by $5.3 million, or 64.1%, due to properties sold
subsequent to December 31, 2002. Six Months Ended June 30,2004
    
    2003
    
    $ Change
    
    %ChangePROPERTY EXPENSES ($ in 000s)Same Store Properties
    
    $
    36,924
    
    
    $
    38,070
    
    
    $
    (1,146
    )
    
    
    -3.0
    %Acquired Properties
    
    
    3,330
    
    
    
    265
    
    
    
    3,065
    
    
    
    1156.6
    %Sold Properties
    
    
    2,961
    
    
    
    8,255
    
    
    
    (5,294
    )
    
    
    -64.1
    %Properties Not Placed in-service
    
    
    4,409
    
    
    
    2,039
    
    
    
    2,370
    
    
    
    116.2
    %Other
    
    
    2,682
    
    
    
    2,655
    
    
    
    27
    
    
    
    1.0
    %50,306
    
    
    
    51,284
    
    
    
    (978
    )
    
    
    -1.9
    %Discontinued Operations
    
    
    (2,601
    )
    
    
    (7,181
    )
    
    
    4,580
    
    
    
    -63.8
    %Total Property Expenses
    
    $
    47,705
    
    
    $
    44,103
    
    
    $
    3,602
    
    
    
    8.2
    %
 General and administrative expense increased by approximately $2.9
million, or 21.4%, due primarily to an increase in employees and employee
compensation. Amortization of deferred financing costs remained relatively unchanged. The increase in depreciation and other amortization for the same store
properties is primarily due to a net increase in leasing commissions and tenant
improvements paid in 2004 and 2003. Depreciation and other amortization from
acquired properties increased by $3.4 million due to properties acquired
subsequent to December 31, 2002. Depreciation and other amortization from sold
properties decreased by $3.2 million, or 66.2%, due to properties sold
subsequent to December 31, 2002. Six Months Ended June 30,(As Restated)2004
    
    2003
    
    $ Change
    
    % ChangeDEPRECIATION and
OTHER AMORTIZATION ($ in 000s)Same Store Properties
    
    $
    30,681
    
    
    $
    27,550
    
    
    $
    3,131
    
    
    
    11.4
    %Acquired Properties
    
    
    3,655
    
    
    
    269
    
    
    
    3,386
    
    
    
    1258.7
    %Sold Properties
    
    
    1,623
    
    
    
    4,800
    
    
    
    (3,177
    )
    
    
    -66.2
    %Properties Not Placed in-service and Other
    
    
    4,970
    
    
    
    415
    
    
    
    4,555
    
    
    
    1097.6
    %Corporate Furniture, Fixtures and Equipment
    
    
    640
    
    
    
    615
    
    
    
    25
    
    
    
    4.1
    %41,569
    
    
    
    33,649
    
    
    
    7,920
    
    
    
    23.5
    %Discontinued Operations
    
    
    (1,485
    )
    
    
    (4,723
    )
    
    
    3,238
    
    
    
    -68.6
    %Total Depreciation and
Other Amortization
    
    $
    40,084
    
    
    $
    28,926
    
    
    $
    11,158
    
    
    
    38.6
    %
 Interest income remained relatively unchanged. In March 2004, the Consolidated Operating Partnership, through the
Operating Partnership, entered into an interest rate protection agreement which
fixed the interest rate on a forecasted offering of unsecured debt which it
designated as a cash flow hedge. This interest rate protection agreement had a
notional value of $73.5 million, was effective from August 15, 2004 through
August 15, 2009 and fixed the LIBOR rate at 3.326%. In May 2004, the
Consolidated Operating Partnership reduced the projected amount of the future
debt offering and settled $24.5 million of this interest rate protection
agreement for proceeds in the amount of $1.5 million which is recognized in net
income for the six months ended June 30, 2004. Interest expense remained relatively unchanged. The weighted average
interest rate on the Consolidated Operating Partnerships outstanding debt for
the six months ended June 30, 2004 was 6.69% as compared to the six months
ended June 30, 2003 6.71%. The average debt balance outstanding for the six
months ended June 30, 2004 and 2003 was approximately $1,449.3 million and
$1,442.1 million, respectively. 26




---



##### 



Equity in income of Other Real Estate Partnerships decreased by
approximately $10.7 million due primarily to an approximate $10.7 million lease
termination fee received from a tenant during the six months ended June 30,
2003. Equity in income of joint ventures remained relatively unchanged. The $5.0 million gain on sale of real estate for the six months ended June
30, 2004 resulted from the sale of two industrial properties and several land
parcels that do not meet the criteria established by FAS 144 for inclusion in
discontinued operations. The $2.6 million gain on sale of real estate for the
six months ended June 30, 2003 resulted from the sale of three industrial
properties and several land parcels that do not meet the criteria established
by FAS 144 for inclusion in discontinued operations. Income from discontinued operations for the six months ended June 30, 2004
reflects the results of operations and gain on sale of real estate of $47.9
million relating to 47 industrial properties that were sold during the six
months ended June 30, 2004 and the results of operations from two properties
identified as held for sale at June 30, 2004. Income from discontinued operations for the six months ended June 30, 2003
reflects the results of operations of 47 industrial properties that were sold
during the six months ended June 30, 2004, the results of operations from two
properties identified as held for sale at June 30, 2004, 113 industrial
properties that were sold during the twelve months ended December 31, 2003 as
well as the gain on sale of real estate of $32.9 million from the 40 industrial
properties which were sold during the six months ended June 30, 2003. The following table discloses certain information regarding the industrial
properties included in discontinued operations by the Consolidated Operating
Partnership, for the six months ended June 30, 2004 and 2003. Six Months Ended June 30,($ in 000s)
    
    2004
    
    2003Total Revenues
    
    $
    6,934
    
    
    $
    21,776Operating Expenses
    
    
    (2,601
    )
    
    
    (7,181
    )Depreciation and Amortization
    
    
    (1,485
    )
    
    
    (4,723
    )Gain on Sale of Real Estate
    
    
    47,901
    
    
    
    32,859Income from Discontinued Operations
    
    $
    50,749
    
    
    $
    42,731
 Comparison of Three Months Ended June 30, 2004 to Three Months Ended June 30, 2003 The tables below summarize the Consolidated Operating Partnerships
revenues, property expenses and depreciation and other amortization by various
categories. Same store properties are in-service properties owned prior to
April 1, 2003. Acquired properties are in-service properties that were
acquired subsequent to March 31, 2003. During the six months ended June 30,
2004 and from April 1, 2003 through December 31, 2003, the Consolidated
Operating Partnership acquired 84 industrial properties totaling approximately
9.2 million square feet of GLA at a total purchase price of $325.4 million.
Sold properties are properties that were sold subsequent to March 31, 2003.
During the six months ended June 30, 2004 and from April 1, 2004 through
December 31, 2003, the Consolidated Operating Partnership sold 149 industrial
properties totaling approximately 9.1 million square feet of GLA and several
land parcels for gross sales proceeds of $479.8 million. Properties that are
not placed in-service are properties that have not been placed in-service as of
March 31, 2003. These properties will be placed in-service when they reach
stabilized occupancy. Other revenues are derived from the operations of the
Consolidated Operating Partnerships maintenance company, fees earned from the
Consolidated Operating Partnerships joint ventures, fees earned for developing
properties for third parties and other miscellaneous revenues. Other expenses
are derived from the operations of the Consolidated Operating Partnerships
maintenance company and other miscellaneous expenses. 27




---



##### 



The Consolidated Operating Partnerships future financial condition and
results of operations, including rental revenues, may be impacted by the future
acquisition and sale of properties. The Consolidated Operating Partnerships
future revenues and expenses may vary materially from historical rates. In the second quarter of 2004, the Consolidated Operating Partnerships
revenues continued to be impacted by a soft leasing market attributable to a
weak economy. At June 30, 2004 and 2003, the occupancy rates of the
Consolidated Operating Partnerships in-service properties were 89.6% and
89.0%, respectively. Revenues from same store properties decreased $1.5 million, or 2.6%, due
primarily to a decrease in rental rates on new leases. Revenues from acquired
properties increased $5.9 million due to properties acquired subsequent to
March 31, 2003. Revenues from sold properties decreased $8.5 million, or
76.5%, due to properties sold subsequent to March 31, 2003. Three Months Ended June 30,2004
    
    2003
    
    $ Change
    
    % ChangeREVENUES ($ in 000s)Same Store Properties
    
    $
    55,253
    
    
    $
    56,750
    
    
    $
    (1,497
    )
    
    
    -2.6
    %Acquired Properties
    
    
    6,970
    
    
    
    1,070
    
    
    
    5,900
    
    
    
    551.4
    %Sold Properties
    
    
    2,599
    
    
    
    11,058
    
    
    
    (8,459
    )
    
    
    -76.5
    %Properties Not Placed in-service
    
    
    4,895
    
    
    
    2,635
    
    
    
    2,260
    
    
    
    85.8
    %Other
    
    
    1,892
    
    
    
    1,928
    
    
    
    (36
    )
    
    
    -1.9
    %71,609
    
    
    
    73,441
    
    
    
    (1,832
    )
    
    
    -2.5
    %Discontinued Operations
    
    
    (2,252
    )
    
    
    (9,848
    )
    
    
    7,596
    
    
    
    -77.1
    %Total Revenues
    
    $
    69,357
    
    
    $
    63,593
    
    
    $
    5,764
    
    
    
    9.1
    %
 Property expenses include real estate taxes, repairs and maintenance,
property management, utilities, insurance and other property related expenses.
Property expenses from same store properties remained relatively unchanged.
Property expenses from acquired properties increased by $1.6 million due to
properties acquired subsequent to March 31, 2003. Property expenses from sold
properties decreased by $2.7 million, or 73.5%, due to properties sold
subsequent to March 31, 2003. Three Months Ended June 30,2004
    
    2003
    
    $ Change
    
    % ChangePROPERTY EXPENSES ($ in 000s)Same Store Properties
    
    $
    17,852
    
    
    $
    18,747
    
    
    $
    (895
    )
    
    
    -4.8
    %Acquired Properties
    
    
    1,755
    
    
    
    178
    
    
    
    1,577
    
    
    
    886.0
    %Sold Properties
    
    
    977
    
    
    
    3,692
    
    
    
    (2,715
    )
    
    
    -73.5
    %Properties Not Placed in-service
    
    
    2,107
    
    
    
    953
    
    
    
    1,154
    
    
    
    121.1
    %Other
    
    
    1,547
    
    
    
    920
    
    
    
    627
    
    
    
    68.2
    %24,238
    
    
    
    24,490
    
    
    
    (252
    )
    
    
    -1.0
    %Discontinued Operations
    
    
    (829
    )
    
    
    (3,132
    )
    
    
    2,303
    
    
    
    -73.5
    %Total Property Expenses
    
    $
    23,409
    
    
    $
    21,358
    
    
    $
    2,051
    
    
    
    9.6
    %
 General and administrative expense increased by approximately $2.5
million, or 34.5%, due primarily to an increase in employees and employee
compensation. Amortization of deferred financing costs remained relatively unchanged. The increase in depreciation and other amortization for the same store
properties is primarily due to a net increase in leasing commissions and tenant
improvements paid in 2004 and 2003. Depreciation and other amortization from
acquired properties increased by $1.3 million due to properties acquired
subsequent to March 31, 2003. Depreciation and other amortization from sold
properties decreased by $1.7 million, or 73.5%, due to properties sold
subsequent to March 31, 2003. 28




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##### 



Three Months Ended June 30,(As Restated)2004
    
    2003
    
    $ Change
    
    % ChangeDEPRECIATION and
OTHER AMORTIZATION ($ in 000s)Same Store Properties
    
    $
    15,955
    
    
    $
    14,087
    
    
    $
    1,868
    
    
    
    13.3
    %Acquired Properties
    
    
    1,578
    
    
    
    269
    
    
    
    1,309
    
    
    
    486.6
    %Sold Properties
    
    
    615
    
    
    
    2,321
    
    
    
    (1,706
    )
    
    
    -73.5
    %Properties Not Placed in-service and Other
    
    
    3,534
    
    
    
    186
    
    
    
    3,348
    
    
    
    1800.0
    %Corporate Furniture, Fixtures and Equipment
    
    
    322
    
    
    
    311
    
    
    
    11
    
    
    
    3.5
    %22,004
    
    
    
    17,174
    
    
    
    4,830
    
    
    
    28.1
    %Discontinued Operations
    
    
    (561
    )
    
    
    (2,303
    )
    
    
    1,742
    
    
    
    -75.6
    %Total Depreciation and
Other Amortization
    
    $
    21,443
    
    
    $
    14,871
    
    
    $
    6,572
    
    
    
    44.2
    %
 Interest income remained relatively unchanged. In March 2004, the Consolidated Operating Partnership entered into an
interest rate protection agreement which fixed the interest rate on a
forecasted offering of unsecured debt which it designated as
a cash flow hedge. This interest rate protection agreement had a notional
value of $73.5 million, was effective from August 15, 2004 through August 15,
2009 and fixed the LIBOR rate at 3.326%. In May 2004, the Consolidated
Operating Partnership reduced the projected amount of the future debt offering
and settled $24.5 million of this interest rate protection agreement for
proceeds in the amount of $1.5 million which is recognized in net income for
the three months ended June 30, 2004. Interest expense remained relatively unchanged. The weighted average
interest rate on the Consolidated Operating Partnerships outstanding debt for
the three months ended June 30, 2004 was 6.84% as compared to the three months
ended June 30, 2003 6.65%. The average debt balance outstanding for the three
months ended June 30, 2004 and 2003 was approximately $1,422.6 million and
$1,453.6 million, respectively. Equity in income of Other Real Estate Partnerships decreased by
approximately $.9 million due primarily to the decrease in net operating income
as a result of property sales subsequent to June 30, 2003. Equity in income of joint ventures remained relatively unchanged. The $1.9 million gain on sale of real estate for the three months ended
June 30, 2004 resulted from the sale of several land parcels that do not meet
the criteria established by FAS 144 for inclusion in discontinued operations.
The $1.4 million gain on sale of real estate for the three months ended June
30, 2003 resulted from the sale of two industrial properties and several land
parcels that do not meet the criteria established by FAS 144 for inclusion in
discontinued operations. Income from discontinued operations for the three months ended June 30,
2004 reflects the results of operations and gain on sale of real estate of
$25.7 million relating to 29 industrial properties that were sold during the
three months ended June 30, 2004 and the results of operations from two
properties identified as held for sale at June 30, 2004. Income from discontinued operations for the three months ended June 30,
2003 reflects the results of operations of 29 industrial properties that were
sold during the three months ended June 30, 2004, the results of operations
from two properties identified as held for sale at June 30, 2004, 113
industrial properties that were sold during the twelve months ended December
31, 2003 as well as the gain on sale of real estate of $16.3 million from the
20 industrial properties which were sold during the three months ended June 30,
2003. 29




---



##### 



The following table discloses certain information regarding the industrial
properties included in discontinued operations by the Consolidated Operating
Partnership, for the three months ended June 30, 2004 and 2003. Three Months Ended June 30,($ in 000s)
    
    2004
    
    2003Total Revenues
    
    $
    2,252
    
    
    $
    9,848Operating Expenses
    
    
    (829
    )
    
    
    (3,132
    )Depreciation and Amortization
    
    
    (561
    )
    
    
    (2,303
    )Gain on Sale of Real Estate
    
    
    25,722
    
    
    
    16,308Income from Discontinued Operations
    
    $
    26,584
    
    
    $
    20,721
 LIQUIDITY AND CAPITAL RESOURCES At June 30, 2004, the Consolidated Operating Partnerships restricted cash
was approximately $68.9 million. Restricted cash is comprised of gross
proceeds from the sales of certain industrial properties. These sales proceeds
will be disbursed as the Consolidated Operating Partnership exchanges
industrial properties under Section 1031 of the Internal Revenue Code. The Consolidated Operating Partnership has considered its short-term (one
year or less) liquidity needs and the adequacy of its estimated cash flow from
operations and other expected liquidity sources to meet these needs. The
Consolidated Operating Partnership believes that its principal short-term
liquidity needs are to fund normal recurring expenses, debt service
requirements and the minimum distribution required by the Company to maintain
the Companys REIT qualification under the Internal Revenue Code. The
Consolidated Operating Partnership anticipates that these needs will be met
with cash flows provided by operating activities. The Consolidated Operating Partnership expects to meet long-term (greater
than one year) liquidity requirements such as property acquisitions,
developments, scheduled debt maturities, major renovations, expansions and
other nonrecurring capital improvements through the disposition of select
assets, long-term unsecured indebtedness and the issuance of additional Units
and preferred units. As of June 30, 2004 and July 30, 2004, $125 million of
debt securities was registered and unissued under the Securities Act of 1933,
as amended. On July 30, 2004, the Consolidated Operating Partnership filed a
new shelf registration statement with the Securities and Exchange Commission.
Once effective, the new shelf registration statement will add $375 million of
registered and unissued debt securities to the Consolidated Operating
Partnerships current capacity. The Consolidated Operating Partnership also may
finance the development or acquisition of additional properties through
borrowings under the Unsecured Line of Credit. At June 30, 2004, borrowings
under the Unsecured Line of Credit bore interest at a weighted average interest
rate of 2.308%. The Unsecured Line of Credit bears interest at a floating rate
of LIBOR plus .70%, or the Prime Rate, at the Companys election. As of July
30, 2004 the Consolidated Operating Partnership, through the Operating
Partnership, had approximately $46.4 million available for additional
borrowings under the Unsecured Line of Credit. Six months Ended June 30, 2004 Net cash provided by operating activities of approximately $18.4 million
for the six months ended June 30, 2004 was comprised primarily of net income of
approximately $60.4 million, partially offset by the net change in operating
assets and liabilities of approximately $31.6 million and adjustments for
non-cash items of approximately $10.4 million. The adjustments for the
non-cash items of approximately $10.4 million are primarily comprised of the
gain on sale of real estate of approximately $52.9 million, the effect of the
straight-lining of rental income of approximately $2.1 million and a decrease
of the bad debt provision of approximately $.5 million offset by depreciation
and amortization of approximately $45.1 million. 30




---



##### 



Net cash used in investing activities of approximately $.2 million for
the six months ended June 30, 2004 was comprised primarily of the acquisition
of real estate, development of real estate, capital expenditures related to the
expansion and improvement of existing real estate, investments in and advances
to the Other Real Estate Partnerships, an increase in restricted cash that was
held by an intermediary for Section 1031 exchange purposes and contributions to
and investments in one of the Consolidated Operating Partnerships industrial
real estate joint ventures partially offset by the net proceeds from sales of
investment in real estate, distributions from the Other Real Estate
Partnerships, distributions from two of the Consolidated Operating
Partnerships industrial real estate joint ventures and the repayment of
mortgage loans receivable. . During the six months ended June 30, 2004, the Consolidated Operating
Partnership sold 49 industrial properties comprising approximately 3.9 million
square feet of GLA and several land parcels. Gross proceeds from the sales of
the 49 industrial properties and several land parcels were approximately $202.4
million. During the six months ended June 30, 2004, the Consolidated Operating
Partnership acquired 23 industrial properties comprising approximately 3.5
million square feet of GLA and several land parcels. The purchase price for
these acquisitions totaled approximately $130.2 million, excluding costs
incurred in conjunction with the acquisition of the industrial properties and
land parcels. The Consolidated Operating Partnership also completed the
development of eight industrial properties comprising approximately 1.2 million
square feet of GLA at an estimated cost of approximately $63.0 million. The Consolidated Operating Partnership, through a wholly-owned limited
liability company in which the Operating Partnership is the sole member,
invested approximately $4.0 million and received distributions of approximately
$1.2 million from the Operating Partnerships industrial real estate joint
ventures. As of June 30, 2004, the Operating Partnerships industrial real
estate joint ventures owned 82 industrial properties comprising approximately
9.4 million square feet of GLA. Net cash used in financing activities of approximately $18.2 million for
the six months ended June 30, 2004 was comprised primarily of general
partnership and limited partnership units (Unit) and
preferred general partnership unit distributions, the repurchase of restricted
units and repayments on mortgage loans payable, partially offset by net
borrowings under the Consolidated Operating Partnerships Unsecured Line of
Credit and the net proceeds from the exercise of stock options. On January 19, 2004, the Operating Partnership paid a fourth quarter 2003
distribution of $0.6850 per Unit, totaling approximately $31.9 million. On
April 19, 2004, the Operating Partnership paid a first quarter 2004
distribution of $0.6850 per Unit, totaling approximately $32.7 million. On March 31, 2004, the Operating Partnership paid first quarter 2004
distributions of $53.906 per Unit on its 8.625% Series C Cumulative Preferred
Units (the Series C Preferred Units), $49.688 per Unit on its 7.95% Series D
Cumulative Preferred Units (the Series D Preferred Units) and $49.375 per
Unit on its 7.90% Series E Cumulative Preferred Units (the Series E Preferred
Units). The preferred unit distributions paid on March 31, 2004, were
approximately $5.0 million. On June 30, 2004 the Operating Partnership paid a
second quarter 2004 distribution of $53.906 per Unit on its Series C Preferred
Units of approximately $1.1 million. On May 17, 2004, the Consolidated Operating Partnership, through the
Operating Partnership, exchanged $125.0 million of senior unsecured debt which
matures on June 1, 2014 and bears a coupon interest rate of 6.42% (the 2014
Notes) for $100.0 million aggregate principal amount of its 7.375% Notes due
2011 (the 2011 PATS) and net cash in the amount of approximately $8.9
million. The issue price of the 2014 Notes was 99.123%. On June 14, 2004, the Consolidated Operating Partnership, through the
Operating Partnership, issued $125.0 million of senior unsecured debt which
matures on June 15, 2009 and bears a coupon interest rate of 5.25% (the 2009
Notes). The issue price of the 2009 Notes was 99.826%. The Consolidated
Operating Partnership also entered into interest rate protection agreements
which were used to fix the interest rate on the 2009 Notes prior to issuance.
The Consolidated Operating Partnership settled the 31




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interest rate protection
agreements for approximately $6.7 million of proceeds, which is included in
other comprehensive income. On June 11, 2004, the Consolidated Operating Partnership, through the
Operating Partnership, amended and restated its $300.0 million Unsecured Line
of Credit. The Unsecured Line of Credit matures on September 28, 2007 and bears
interest at a floating rate of LIBOR plus .70%, or the Prime Rate, at the
Consolidated Operating Partnerships election. On February 4, 1998, the Company issued 5,000,000 Depositary Shares, each
representing 1/100th of a share of the Companys 7.95%, $.01 par value, Series
D Cumulative Preferred Stock (the Series D Preferred Stock), at an initial
offering price of $25.00 per Depositary Share. The net proceeds of $120.6
million received from the Series D Preferred Stock were contributed to the
Operating Partnership in exchange for the Series D Preferred Units. The
Company redeemed the Series D Preferred Stock on June 7, 2004 at a redemption
price of $25.00 per Depositary Share and paid a prorated second quarter
dividend of $.36990 per Depositary Share, totaling approximately $1.9 million.
The Series D Preferred Units were redeemed on June 7, 2004 as well. In
accordance with the Securities and Exchange Commissions July 31, 2003
clarification on Emerging Issues Task Force Abstract, Topic No. D-42, The
Effect on the Calculation of Earnings per Share for the Redemption or Induced
Conversion of Preferred Stock (EITF D-42), due to the redemption of Series D
Preferred Units, the initial offering costs associated with the issuance of the
Series D Preferred Units of $4.5 million were reflected as a reduction of net
income available to unitholders in determining earnings per unit for the six
and three months ended June 30, 2004. On March 18, 1998, the Company issued 3,000,000 Depositary Shares, each
representing 1/100th of a share of the Companys 7.90%, $.01 par value, Series
E Cumulative Preferred Stock (the Series E Preferred Stock), at an initial
offering price of $25.00 per Depositary Share. The net proceeds of $72.1
million received from the Series E Preferred Stock were contributed to the
Operating Partnership in exchange for the Series E Preferred Units. The
Company redeemed the Series E Preferred Stock on June 7, 2004 at a redemption
price of $25.00 per Depositary Share and paid a prorated second quarter
dividend of $.36757 per Depositary Share, totaling approximately $1.1 million.
The Series E Preferred Units were redeemed on June 7, 2004 as well. In
accordance with EITF D-42, due to the redemption of
Series E Preferred Units, the initial offering costs associated with the
issuance of the Series E Preferred Units of $2.9 million were reflected as a
reduction of net income available to unitholders in determining earnings per
unit for the six and three months ended June 30, 2004. On May 27, 2004, the Company issued 50,000 Depositary Shares, each
representing 1/100th of a share of the Companys 6.236%, $.01 par value,
Series F Flexible Cumulative Redeemable Preferred Stock (the Series F
Preferred Stock), at an initial offering price of $1,000.00 per Depositary
Share for gross proceeds of $50.0 million. Net of offering costs, the Company
received proceeds of $49.1 million from the issuance of the Series F Preferred
Stock which were contributed to the Operating Partnership in exchange for
6.236% Series F Cumulative Preferred Units (the Series F Preferred Units)
and are reflected in the Consolidated Operating Partnerships financial
statements as general partner preferred unit contributions. Dividends on the
Series F Preferred Stock are cumulative from the date of initial issuance and
are payable semi-annually in arrears for the period from the date of original
issuance through March 31, 2009 (the Series F Initial Fixed Rate Period),
commencing on September 30, 2004, at a rate of 6.236% per annum of the
liquidation preference (the Series F Initial Distribution Rate) (equivalent
to $62.36 per Depositary Share). On or after March 31, 2009, the Series F
Initial Distribution Rate is subject to reset, at the Companys option, subject
to certain conditions and parameters, at fixed or floating rates and periods.
Fixed rates and periods will be determined through a remarketing procedure.
Floating rates during floating rate periods will equal 2.375% (the initial
credit spread), plus the greater of (i) the 3-month LIBOR Rate, (ii) the
10-year Treasury CMT Rate (as defined in the Articles Supplementary), and (iii)
the 30-year Treasury CMT Rate (the adjustable rate) (as defined in the Articles
Supplementary), reset quarterly. Dividends on the Series F Preferred Stock are
payable semi-annually in arrears for fixed rate periods subsequent to the
Series F Initial Fixed Rate Period and quarterly in arrears for floating rate
periods. With respect to the payment of dividends and amounts upon
liquidation, dissolution or winding up, the Series F Preferred Stock
ranks senior to payments on the Companys Common Stock and pari passu with the
Companys 8.625%, $.01 par value, Series C Cumulative Preferred Stock (the
Series C Preferred Stock) and Series G Preferred Stock (hereinafter
defined). On 32




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or after March 31, 2009, subject to any conditions on redemption
applicable in any fixed rate period subsequent to the Series F Initial Fixed
Rate Period, the Series F Preferred Stock is redeemable for cash at the option
of the Company, in whole or in part, at a redemption price equivalent to
$1,000.00 per Depositary Share, or $50.0 million in the aggregate, plus
dividends accrued and unpaid to the redemption date. The Series F Preferred
Stock has no stated maturity and is not convertible into any other securities
of the Company. On May 27, 2004, the Company issued 25,000 Depositary Shares, each
representing 1/100th of a share of the Companys 7.236%, $.01 par value,
Series G Flexible Cumulative Redeemable Preferred Stock (the Series G
Preferred Stock), at an initial offering price of $1,000.00 per Depositary
Share for gross proceeds of $25.0 million. Net of offering costs, the Company
received proceeds of $24.5 million from the issuance of the Series G Preferred
Stock which were contributed to the Operating Partnership in exchange for
7.236% Series G Cumulative Preferred Units (the Series G Preferred Units) and
are reflected in the Consolidated Operating Partnerships financial statements
as general partner preferred unit contribution. Dividends on the Series G
Preferred Stock are cumulative from the date of initial issuance and are
payable semi-annually in arrears for the period from the date of original
issuance of the Series G Preferred Stock through March 31, 2014 (the Series G
Initial Fixed Rate Period), commencing on September 30, 2004, at a rate of
7.236% per annum of the liquidation preference (the Series G Initial
Distribution Rate) (equivalent to $72.36 per Depositary Share). On or after
March 31, 2014, the Series G Initial Distribution Rate is subject to reset, at
the Companys option, subject to certain conditions and parameters, at fixed or
floating rates and periods. Fixed rates and periods will be determined through
a remarketing procedure. Floating rates during floating rate periods will equal
2.500% (the initial credit spread), plus the greater of (i) the 3-month LIBOR
Rate, (ii) the 10-year Treasury CMT Rate (as defined in the Articles
Supplementary), and (iii) the 30-year Treasury CMT Rate (the adjustable
rate)(as defined in the Articles Supplementary), reset quarterly. Dividends on
the Series G Preferred Stock are payable semi-annually in arrears for fixed
rate periods subsequent to the Series G Initial Fixed Rate Period and quarterly
in arrears for floating rate periods. With respect to the payment of
dividends and amounts upon liquidation, dissolution or winding up, the
Series G Preferred Stock ranks senior to payments on the Companys Common
Stock and pari passu with the Companys Series C Preferred Stock and Series F
Preferred Stock. On or after March 31, 2014, subject to any conditions on
redemption applicable in any fixed rate period subsequent to the Series G
Initial Fixed Rate Period, the Series G
Preferred Stock is redeemable for cash at the option of the Company, in whole
or in part, at a redemption price equivalent to $1,000.00 per Depositary Share,
or $25.0 million in the aggregate, plus dividends accrued and unpaid to the
redemption date. The Series G Preferred Stock has no stated maturity and is
not convertible into any other securities of the Company. On June 2, 2004, the Company issued 500 shares of 2.965% of a share of the
Companys $.01 par value, Series H Flexible Cumulative Redeemable Preferred
Stock (the Series H Preferred Stock), at an initial offering price of
$250,000 per share for gross proceeds of $125.0 million. Net of offering
costs, the Company received proceeds of $120.8 million from the issuance of the
Series H Preferred Stock which were contributed to the Operating Partnership in
exchange for Series H Cumulative Preferred Units (the Series H Preferred
Units) and are reflected in the Consolidated Operating Partnerships financial
statements as general partner preferred unit contribution. On or after July 2,
2004, the Series H Preferred Stock became redeemable for cash at the option of
the Company, in whole but not in part, at a redemption price equivalent,
initially, to $242,875 per share plus accrued and unpaid dividends. The
Company redeemed the Series H Preferred Stock on July 2, 2004 and paid a
prorated second and third quarter dividend of $629.555 per share, totaling
approximately $.3 million. On July 2, 2004, the Series H Preferred Units were
redeemed as well. In accordance with EITF D-42, due to the redemption of Series
H Preferred Units, the initial offering costs associated with the issuance of
the Series H Preferred Units of $.6 million will be reflected as a reduction of
net income available to unitholders in determining earnings per unit for the
nine and three months ended September 30, 2004. During the six months ended June 30, 2004, the Company awarded 206,117
shares of restricted common stock to certain employees and 2,266 shares of
restricted common stock to certain Directors. The Operating Partnership issued
Units to the Company in the same amount. These shares of restricted common
stock had a fair value of approximately $8.1 million on the date of grant. The
restricted common stock vests over periods from one to ten years. Compensation
expense will be charged to earnings over the respective vesting periods. 33




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During the six months ended June 30, 2004, certain employees exercised
1,393,969 non-qualified employee stock options. Net proceeds to the Company
were approximately $32.0 million. The Consolidated Operating Partnership,
through the Operating Partnership, issued Units to the Company in the same
amount. Market Risk The following discussion about the Consolidated Operating Partnerships
risk-management activities includes forward-looking statements that involve
risk and uncertainties. Actual results could differ materially from those
projected in the forward-looking statements. This analysis presents the hypothetical gain or loss in earnings, cash
flows or fair value of the financial instruments and derivative instruments
which are held by the Consolidated Operating Partnership at June 30, 2004 that
are sensitive to changes in the interest rates. While this analysis may have
some use as a benchmark, it should not be viewed as a forecast. In the normal course of business, the Consolidated Operating Partnership
also faces risks that are either non-financial or non-quantifiable. Such risks
principally include credit risk and legal risk and are not represented in the
following analysis. At June 30, 2004, approximately $1,389.3 million (approximately 94.3% of
total debt at June 30, 2004) of the Consolidated Operating Partnerships debt
was fixed rate debt and approximately $84.0 million (approximately 5.7% of
total debt at June 30, 2004) was variable rate debt. Currently, the
Consolidated Operating Partnership does not enter into financial instruments
for trading or other speculative purposes. For fixed rate debt, changes in interest rates generally affect the fair
value of the debt, but not earnings or cash flows of the Consolidated Operating
Partnership. Conversely, for variable rate debt, changes in the interest rate
generally do not impact the fair value of the debt, but would affect the
Consolidated Operating Partnerships future earnings and cash flows. The
interest rate risk and changes in fair market value of fixed rate debt
generally do not have a significant impact on the Consolidated Operating
Partnership until the Consolidated Operating Partnership is required to
refinance such debt. See Note 5 to the consolidated financial statements for a
discussion of the maturity dates of the Consolidated Operating Partnerships
various fixed rate debt. Based upon the amount of variable rate debt outstanding at June 30, 2004,
a 10% increase or decrease in the interest rate on the Consolidated Operating
Partnerships variable rate debt would decrease or increase, respectively,
future net income and cash flows by approximately $.2 million per year. A 10%
increase in interest rates would decrease the fair value of the fixed rate debt
at June 30, 2004 by approximately $53.3 million to $1,459.3 million. A 10%
decrease in interest rates would increase the fair value of the fixed rate debt
at June 30, 2004 by approximately $57.6 million to $1,570.2 million. Subsequent Events From July 1, 2004 through July 30, 2004 the Consolidated Operating
Partnership acquired four industrial properties for an aggregate purchase
price of approximately $6.7 million, excluding costs incurred in conjunction
with the acquisition of these industrial properties. The Consolidated
Operating Partnership also sold one industrial property for approximately $6.8
million of gross proceeds. On July 2, 2004, the Company redeemed the Series H Preferred Stock. On
July 2, 2004, the Series H Preferred Units were redeemed as well. See Note 6 to
the consolidated financial statements. On July 19, 2004, the Operating Partnership paid a second quarter 2004
distribution of $.6850 per Unit, totaling approximately $32.7 million. 34




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On July 28, 2004, the Operating Partnership declared a third quarter 2004
distribution on its Series C Preferred Units of $53.906, payable on September
30, 2004, to its unitholders of record on September 15, 2004. 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk Response to this item is included in Item 2. Managements Discussion and
Analysis of Financial Condition and Results of Operations above. 
 Item 4. Controls and Procedures The Companys principal executive officer and principal financial officer,
after evaluating the effectiveness of the Operating Partnerships disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) as of the end of the period covered by this report, based on the
evaluation of these controls and procedures required by Exchange Act Rules
13a-15(b) or 15d-15(b), have concluded that as of the end of such period the
Operating Partnerships disclosure controls and procedures were effective. There has been no change in the Consolidated Operating Partnerships
internal control over financial reporting that occurred during the fiscal
quarter covered by this report that has materially affected, or is reasonably
likely to materially affect, the Consolidated Operating Partnerships internal
control over financial reporting. In the third quarter of 2004, the
Consolidated Operating Partnership added a new internal control in
which the Consolidated Operating Partnership recalculates the data in
the spreadsheet used to prepare the year to date and quarterly
financial statements. As a result of the implementation of this
internal control, the Consolidated Operating Partnership determined
that it should have recognized additional depreciation expense of
$1.1 million in the second quarter of 2004 relating to certain
properties within the Consolidated Operating Partnership and limited
partnerships for which the Consolidated Operating Partnership holds a
99% limited partnership interest in (see Note 1 to the financial
statements). 35




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PART II. OTHER INFORMATION 
 Item 1. Legal Proceedings None. 
 Item 2. Changes in Securities None. 
 Item 3. Defaults Upon Senior Securities None. 
 Item 4. Submission of Matters to a Vote of Security Holders None. 
 Item 5. Other Information Not applicable. 
 Item 6. Exhibits and Report on Form 8-K (a) Exhibits: Exhibit Number
    
    Description4.1
    
    Third Amended and Restated Unsecured Revolving Credit Agreement,
dated as of June 11, 2004, among the Operating Partnership, the
Company, Bank One, NA, and certain other banks (incorporated by
reference to Exhibit 10.2 of the Companys Form 10-Q for the
quarter ended June 30, 2004, File No. 1-13102).10.1
    
    Eighth Amended and Restated Limited Partnership Agreement of the
Operating Partnership (incorporated by reference to Exhibit 10.1 of
the Companys Form 10-Q for the quarter ended June 30, 2004, File
No. 1-13102).31.1*
    
    Certification of Principal Executive Officer of First Industrial
Realty Trust, Inc., registrants sole general partner, pursuant to
Rule 13a-14(a) under the Securities Exchange Act of 1934, as
amended.31.2*
    
    Certification of Principal Financial Officer of First Industrial
Realty Trust, Inc., registrants sole general partner, pursuant to
Rule 13a-14(a) under the Securities Exchange Act of 1934, as
amended.32.1**
    
    Certification of the Principal Executive Officer and the Principal
Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes  Oxley Act of 2002.
 (b) Reports filed on Form 8-K: Report on Form 8-K dated June 17, 2004 filing the underwriting agreement and
certain other agreements with respect to the Operating Partnerships 5.25%
Senior Notes due 2009. Report on Form 8-K dated June 8, 2004 reporting the Operating Partnerships
ratio of earnings to fixed charges for the three months ended March 31, 2004. Report on Form 8-K dated May 27, 2004 filing a supplemental indenture relating
to the Operating Partnerships 6.42% Senior Notes due 2014. Report on Form 8-K dated July 30, 2004 updating Items 6, 7 and 8 of the
Consolidated Operating Partnerships 2003 Form 10-K to reflect the
reclassification of operations from properties sold from January 1, 2004 to
March 31, 2004 and industrial properties held for sale at March 31, 2004 as
discontinued operations for all periods presented. *Filed herewith **Furnished herewith 36




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The Company maintains a website at www.firstindustrial.com. Copies of the
Companys annual report on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and amendments to such reports are available without
charge on the Companys website as soon as reasonably practicable after such
reports are filed with or furnished to the SEC. In addition, the Companys
Corporate Governance Guidelines, Code of Business Conduct and Ethics, Audit
Committee Charter, Compensation Committee Charter, Nominating/Corporate
Governance Committee Charter, along with supplemental financial and operating
information prepared by the Company, are all available without charge on the
Companys website or upon request to the Company. Amendments to, or waivers
from, the Companys Code of Business Conduct and Ethics that apply to the
Companys executive officers or directors shall be posted to the Companys
website at www.firstindustrial.com. Please direct requests as follows: First Industrial Realty Trust, Inc.
311 S. Wacker, Suite 4000
Chicago, IL 60606
Attention: Investor Relations 37




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SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized. FIRST INDUSTRIAL, L.P.By: FIRST INDUSTRIAL REALTY TRUST, INC.Its Sole General PartnerDate November 5, 2004
    
    By:
    
    /s/ Scott A. MusilScott A. MusilSenior Vice President- Controller(Principal Accounting Officer)
 38




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EXHIBIT INDEX ExhibitNumber
    
    Description4.1
    
    Third Amended and Restated Unsecured Revolving Credit Agreement,
dated as of June 11, 2004, among the Operating Partnership, the
Company, Bank One, NA, and certain other banks (incorporated by
reference to Exhibit 10.2 of the Companys Form 10-Q for the
quarter ended June 30, 2004, File No. 1-13102).10.1
    
    Eighth Amended and Restated Limited Partnership Agreement of the
Operating Partnership (incorporated by reference to Exhibit 10.1 of
the Companys Form
10-Q for the quarter ended June 30, 2004, File
No. 1-13102).31.1*
    
    Certification of Principal Executive Officer of First Industrial
Realty Trust, Inc., registrants sole general partner, pursuant to
Rule 13a-14(a) under the Securities Exchange Act of 1934, as
amended.31.2*
    
    Certification of Principal Financial Officer of First Industrial
Realty Trust, Inc., registrants sole general partner, pursuant to
Rule 13a-14(a) under the Securities Exchange Act of 1934, as
amended.32.1**
    
    Certification of the Principal Executive Officer and the Principal
Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes  Oxley Act of 2002.*Filed herewith**Furnished herewith
 39