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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X]
    
    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the quarterly period ended March 31, 2004[  ]
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
    
 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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FIRST INDUSTRIAL, L.P.
Form 10-Q
For the Period Ended March 31, 2004 INDEX PAGEPart I: FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets as of March 31, 2004 and December 31, 2003
    
    
    2Consolidated Statements of Operations and Comprehensive Income for the Three
Months Ended March 31, 2004 and March 31, 2003
    
    
    3Consolidated Statements of Cash Flows for the Three Months Ended March 31,
2004 and March 31, 2003
    
    
    4Notes to Consolidated Financial Statements
    
    
    5-16Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    17-23Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    23Item 4. Controls and Procedures
    
    
    23Part II: OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    24Item 2. Changes in Securities
    
    
    24Item 3. Defaults Upon Senior Securities
    
    
    24Item 4. Submission of Matters to a Vote of Security Holders
    
    
    24Item 5. Other Information
    
    
    24Item 6. Exhibits and Reports on Form 8-K
    
    
    24SIGNATURE
    
    
    26EXHIBIT INDEX
    
    
    27Certification of Principal Executive OfficerCertification of Principal Financial OfficerSection 906 Certifications
 1




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FIRST INDUSTRIAL,
L.P.  
 CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
 March 31,
    
    December 31,2004
    
    2003ASSETSAssets:Investment in Real Estate:Land
    
    $
    396,194
    
    
    $
    392,916Buildings and Improvements
    
    
    1,833,598
    
    
    
    1,845,139Furniture, Fixtures and Equipment
    
    
    800
    
    
    
    801Construction in Progress
    
    
    110,809
    
    
    
    115,935Less: Accumulated Depreciation
    
    
    (302,625
    )
    
    
    (295,688
    )Net Investment in Real Estate
    
    
    2,038,776
    
    
    
    2,059,103Real Estate Held for Sale, Net of Accumulated Depreciation and
Amortization of $575 at March 31, 2004
    
    
    6,217
    
    
    
    Investments in and Advances to Other Real Estate Partnerships
    
    
    359,111
    
    
    
    374,906Cash and Cash Equivalents
    
    
    5,610
    
    
    
    Restricted Cash
    
    
    54,086
    
    
    
    60,875Tenant Accounts Receivable, Net
    
    
    7,252
    
    
    
    7,769Investments in Joint Ventures
    
    
    16,475
    
    
    
    14,606Deferred Rent Receivable
    
    
    13,343
    
    
    
    12,903Deferred Financing Costs, Net
    
    
    9,364
    
    
    
    9,809Prepaid Expenses and Other Assets, Net
    
    
    108,256
    
    
    
    93,291Total Assets
    
    $
    2,618,490
    
    
    $
    2,633,262LIABILITIES AND PARTNERS CAPITALLiabilities:Mortgage Loans Payable, Net
    
    $
    42,808
    
    
    $
    43,217Senior Unsecured Debt, Net
    
    
    1,212,225
    
    
    
    1,212,152Unsecured Line of Credit
    
    
    161,900
    
    
    
    195,900Accounts Payable and Accrued Expenses
    
    
    57,610
    
    
    
    62,382Rents Received in Advance and Security Deposits
    
    
    23,969
    
    
    
    24,655Distributions Payable
    
    
    32,718
    
    
    
    31,889Total Liabilities
    
    
    1,531,230
    
    
    
    1,570,195Commitments and Contingencies
    
    
    
    
    
    
    Partners Capital:General Partner Preferred Units (100,000 units issued and
outstanding at March 31, 2004 and December 31, 2003)
    
    
    240,697
    
    
    
    240,697General Partner Units (41,103,563 and 39,850,370 units issued and
outstanding at March 31, 2004 and December 31, 2003, respectively)
    
    
    719,908
    
    
    
    687,721Unamortized Value of General Partnership Restricted Units
    
    
    (25,652
    )
    
    
    (19,035
    )Limited Partners Units (6,660,921 and 6,704,012 units issued and
outstanding at March 31, 2004 and December 31, 2003, respectively)
    
    
    161,982
    
    
    
    163,794Accumulated Other Comprehensive Loss
    
    
    (9,675
    )
    
    
    (10,110
    )Total Partners Capital
    
    
    1,087,260
    
    
    
    1,063,067Total Liabilities and Partners Capital
    
    $
    2,618,490
    
    
    $
    2,633,262
 The accompanying notes are an integral part of the financial statements. 2




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FIRST INDUSTRIAL, L.P. 
 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Dollars in thousands, except per Unit data)
(Unaudited)
 Three Months
    
    Three MonthsEnded
    
    EndedMarch 31, 2004
    
    March 31, 2003Revenues:Rental Income
    
    $
    52,696
    
    
    $
    47,199Tenant Recoveries and Other Income
    
    
    20,096
    
    
    
    16,376Total Revenues
    
    
    72,792
    
    
    
    63,575Expenses:Real Estate Taxes
    
    
    11,246
    
    
    
    10,278Repairs and Maintenance
    
    
    6,131
    
    
    
    5,649Property Management
    
    
    2,443
    
    
    
    3,121Utilities
    
    
    2,714
    
    
    
    2,225Insurance
    
    
    731
    
    
    
    799Other
    
    
    1,694
    
    
    
    1,185General and Administrative
    
    
    7,068
    
    
    
    6,600Amortization of Deferred Financing Costs
    
    
    445
    
    
    
    437Depreciation and Other Amortization
    
    
    19,094
    
    
    
    14,434Total Expenses
    
    
    51,566
    
    
    
    44,728Other Income/Expense:Interest Income
    
    
    534
    
    
    
    376Interest Expense
    
    
    (23,653
    )
    
    
    (23,705
    )Total Other Income/Expense
    
    
    (23,119
    )
    
    
    (23,329
    )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
    
    
    (1,893
    )
    
    
    (4,482
    )Equity in Income of Other Real Estate Partnerships
    
    
    7,381
    
    
    
    17,228Equity in Income of Joint Ventures
    
    
    245
    
    
    
    174Income from Continuing Operations
    
    
    5,733
    
    
    
    12,920Income from Discontinued Operations (Including Gain on Sale of Real
Estate of $22,179 and $16,551 for the Three Months Ended
March 31, 2004 and 2003, respectively)
    
    
    23,124
    
    
    
    21,000Income Before Gain on Sale of Real Estate
    
    
    28,857
    
    
    
    33,920Gain on Sale of Real Estate
    
    
    3,115
    
    
    
    1,236Net Income
    
    
    31,972
    
    
    
    35,156Less: Preferred Unit Distributions
    
    
    (5,044
    )
    
    
    (5,044
    )Net Income Available to Unitholders
    
    $
    26,928
    
    
    $
    30,112Income from Continuing Operations Available to Unitholders
Per Weighted Average Unit Outstanding:Basic
    
    $
    0.08
    
    
    $
    0.20Diluted
    
    $
    0.08
    
    
    $
    0.20Income from
Discontinued Operations Available to Unitholders Per Weighted Average
Unit Outstanding:Basic
    
    $
    0.50
    
    
    $
    0.46Diluted
    
    $
    0.50
    
    
    $
    0.46Net Income Available to Unitholders Per Weighted Average
Unit Outstanding:Basic
    
    $
    0.58
    
    
    $
    0.67Diluted
    
    $
    0.58
    
    
    $
    0.67Net Income
    
    $
    31,972
    
    
    $
    35,156Other Comprehensive Income:Mark-to-Market of Interest Rate Protection Agreements and
Interest Rate Swap Agreements
    
    
    381
    
    
    
    154Amortization of Interest Rate Protection Agreements
    
    
    54
    
    
    
    47Comprehensive Income
    
    $
    32,407
    
    
    $
    35,357
 The accompanying notes are an integral part of the financial statements. 3




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FIRST INDUSTRIAL, L.P. 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
 Three Months Ended
    Three Months EndedMarch 31, 2004
    March 31, 2003CASH FLOWS FROM OPERATING ACTIVITIES:Net Income
    
    $
    31,972
    
    
    $
    35,156Adjustments to Reconcile Net Income to Net Cash Provided
by Operating Activities:Depreciation
    
    
    16,901
    
    
    
    13,925Amortization of Deferred Financing Costs
    
    
    445
    
    
    
    437Other Amortization
    
    
    3,940
    
    
    
    3,629Provision for Bad Debt
    
    
    305
    
    
    
    (600
    )Equity in Income of Joint Ventures
    
    
    (245
    )
    
    
    (174
    )Distributions from Joint Ventures
    
    
    245
    
    
    
    174Gain on Sale of Real Estate
    
    
    (25,294
    )
    
    
    (17,787
    )Equity in Income of Other Real Estate Partnerships
    
    
    (7,381
    )
    
    
    (17,228
    )Distributions from Investment in Other Real Estate
Partnerships
    
    
    7,381
    
    
    
    17,228Increase in Tenant Accounts Receivable and Prepaid
Expenses and Other Assets, Net
    
    
    (7,412
    )
    
    
    (12,844
    )Increase in Deferred Rent Receivable
    
    
    (1,306
    )
    
    
    (535
    )Decrease in Accounts Payable and Accrued Expenses
and Rents Received in Advance and
Security Deposits
    
    
    (74
    )
    
    
    (4,067
    )Net Cash Provided by Operating Activities
    
    
    19,477
    
    
    
    17,314CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of and Additions to Investment in Real Estate
    
    
    (81,638
    )
    
    
    (22,166
    )Net Proceeds from Sales of Investments in Real Estate
    
    
    88,947
    
    
    
    59,895Investments in and Advances to Other Real Estate
Partnerships
    
    
    (15,342
    )
    
    
    (34,272
    )Distributions from Other Real Estate Partnerships in Excess of
Equity in Income
    
    
    31,137
    
    
    
    49,082Contributions to and Investments in Joint Ventures
    
    
    (2,184
    )
    
    
    (459
    )Distributions from Joint Ventures
    
    
    291
    
    
    
    356Repayment of Mortgage Loans Receivable
    
    
    1,214
    
    
    
    1,689Decrease (Increase) in Restricted Cash
    
    
    6,789
    
    
    
    (35,494
    )Net Cash Provided by Investing Activities
    
    
    29,214
    
    
    
    18,631CASH FLOWS FROM FINANCING ACTIVITIES:Unit Contributions
    
    
    31,597
    
    
    
    727Unit Distributions
    
    
    (31,889
    )
    
    
    (31,106
    )Repurchase of Restricted Units
    
    
    (3,459
    )
    
    
    (1,591
    )Repurchase of General Partner Units
    
    
    
    
    
    
    (997
    )Preferred Unit Distributions
    
    
    (5,044
    )
    
    
    (5,044
    )Repayments on Mortgage Loans Payable
    
    
    (286
    )
    
    
    (224
    )Proceeds from Unsecured Line of Credit
    
    
    45,000
    
    
    
    61,900Repayments on Unsecured Line of Credit
    
    
    (79,000
    )
    
    
    (58,600
    )Net Cash Used in Financing Activities
    
    
    (43,081
    )
    
    
    (34,935
    )Net Increase in Cash and Cash Equivalents
    
    
    5,610
    
    
    
    1,010Cash and Cash Equivalents, Beginning of Period
    
    
    
    
    
    
    Cash and Cash Equivalents, End of Period
    
    $
    5,610
    
    
    $
    1,010
 The accompanying notes are an integral part of the financial statements. 4




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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 86.1% and 85.2% ownership interest at March 31, 2004
and 2003, respectively. The limited partners
of the Operating Partnership own approximately a 13.9% and 14.8% interest in the
Operating Partnership at March 31, 2004 and 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
March 31, 2004, the Consolidated Operating Partnership owned 722 in-service
industrial properties containing an aggregate of approximately 49.3 million
square feet of gross leasable area (GLA). On a combined basis, as of March
31, 2004, the Other Real Estate Partnerships owned 103 in-service industrial
properties containing an aggregate of approximately 9.2 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. 2. Summary of Significant Accounting Policies 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 5




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FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited) 2. Summary of Significant Accounting Policies, continued and liabilities as of March 31, 2004 and December 31, 2003, and the reported
amounts of revenues and expenses for each of the three months ended March 31,
2004 and 2003. Actual results could differ from those estimates. In the opinion of management, all adjustments consist of normal recurring
adjustments necessary for a fair statement of the financial position of the
Consolidated Operating Partnership as of March 31, 2004 and
December 31, 2003 and the results of its
operations and comprehensive income and its cash flows for each of the three months ended March
31, 2004 and 2003, respectively. 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
$1,852 and $1,547 as of March 31, 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 three months ended March 31, 2004,
and 2003, therefore no stock-based employee compensation expense is included in net
income available to common stockholders related to the fair value recognition
provisions of FAS 123. 6




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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: Three Months EndedMarch 31,
    
    March 31,2004
    
    2003Net Income
Available to Unitholders - as
reported
    
    $
    26,928
    
    
    $
    30,112Add: Stock-Based Employee Compensation Expense Included in
Net Income Available to
Unitholders - as
reported
    
    
    
    
    
    
    54Less: Total Stock-Based Employee Compensation Expense
Determined Under the Fair
Value
Method
    
    
    (121
    )
    
    
    (412
    )Net Income
Available to Unitholders - pro forma
    
    $
    26,807
    
    
    $
    29,754Net Income
Available to Unitholders per Share - as reported -
Basic
    
    $
    0.58
    
    
    $
    0.67Net Income Available to Unitholders
per Share - pro forma -
Basic
    
    $
    0.58
    
    
    $
    0.66Net Income Available to Unitholders
per Share - as reported -
Diluted
    
    $
    0.58
    
    
    $
    0.67Net Income Available to Unitholders
per Share - pro forma -
Diluted
    
    $
    0.57
    
    
    $
    0.66
 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 March 31,
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. Recent Accounting Pronouncements: On
December 24, 2003, FASB Interpretation No. 46 (revised
December 2003), Consolidation of Variable Interest
Entitiesan interpretation of ARB 51
(FIN 46R) was issued. FIN 46R includes
modifications that have been incorporated directly into the revised
FIN 46, rather than into a new interpretation that amends
FIN 46. FIN 46R incorporated much of the guidance
previously issued in the form of FASB Staff Positions
(FSPs). The Consolidated Operating Partnership was
required to apply FIN 46R no later than the quarter ended
March 31, 2004. The Consolidated Operating Partnerships
evaluation of FIN 46R did not result in the consolidation of any
of the Consolidated Operating Partnerships joint venture
entities and therefore did not impact the Consolidated Operating
Partnerships financial position, results of operations, or liquidity. 7




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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
condensed combined financial information as derived from the financial
statements of the Other Real Estate Partnerships is presented below: Condensed Combined Balance Sheets: March 31, 2004
    
    December 31, 2003ASSETSAssets:Investment in Real Estate,
Net
    
    $
    327,061
    
    
    $
    332,371Other Assets,
Net
    
    
    56,342
    
    
    
    70,524Total Assets
    
    $
    383,403
    
    
    $
    402,895LIABILITIES AND PARTNERS CAPITALLiabilities:Mortgage Loans
Payable
    
    $
    2,511
    
    
    $
    2,529Other
Liabilities
    
    
    18,649
    
    
    
    22,193Total
Liabilities
    
    
    21,160
    
    
    
    24,722Partners
Capital
    
    
    362,243
    
    
    
    378,173Total Liabilities
and Partners
Capital
    
    $
    383,403
    
    
    $
    402,895
 Condensed Combined Statements of Operations: Three Months EndedMarch 31,
    
    March 31,2004
    
    2003Total Revenues
    
    $
    11,876
    
    
    $
    23,550Property Expenses
    
    
    (3,999
    )
    
    
    (4,115
    )Interest Expense
    
    
    (45
    )
    
    
    (121
    )Amortization of Deferred Financing Costs
    
    
    (1
    )
    
    
    (1
    )Depreciation and Other Amortization
    
    
    (3,223
    )
    
    
    (2,675
    )Loss From Early Retirement of Debt
    
    
    
    
    
    
    (1,466
    )Gain on Sale of Real Estate
    
    
    131
    
    
    
    63Income from Discontinued Operations (Including Gain on Sale
of Real Estate of $2,552 and $1,907 for the Three Months Ended
March 31, 2004 and 2003,
respectively)
    
    
    2,711
    
    
    
    2,070Net Income
    
    $
    7,450
    
    
    $
    17,305
 8




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FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited) 4. Investments in Joint Ventures As of March 31, 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 one industrial property comprising approximately .2 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 three months ended March 31, 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: Three Months Ended
    
    Three Months EndedMarch 31,
    
    March 31,2004
    
    2003Contributions
    
    $
    788
    
    
    $
    428Distributions
    
    $
    536
    
    
    $
    530Fees
    
    $
    688
    
    
    $
    260
 9




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##### Table of Contents



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 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 atMarch 31,
    
    
    
    
    
    December 31,
    
    
    
    
    
    March 31,
    
    December 31,
    
    March 31,
    
    Maturity2004
    
    
    
    
    
    2003
    
    
    
    
    
    2004
    
    2003
    
    2004
    
    DateMortgage Loans Payable, NetAssumed
Loans
    
    $
    5,291
    
    
    
    
    
    
    $
    5,442
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    
    9.250
    %
    
    
    01/01/13Acquisition Mortgage Loan
IV
    
    
    2,108
    
    
    
    
    
    
    
    2,130
    
    
    
    
    
    
    
    16
    
    
    
    16
    
    
    
    8.950
    %
    
    
    10/01/06Acquisition Mortgage Loan
VIII
    
    
    5,568
    
    
    
    
    
    
    
    5,603
    
    
    
    
    
    
    
    38
    
    
    
    39
    
    
    
    8.260
    %
    
    
    12/01/19Acquisition Mortgage Loan
IX
    
    
    5,775
    
    
    
    
    
    
    
    5,811
    
    
    
    
    
    
    
    40
    
    
    
    40
    
    
    
    8.260
    %
    
    
    12/01/19Acquisition Mortgage Loan
X
    
    
    16,628
    
    
    
    (1
    )
    
    
    16,754
    
    
    
    (1
    )
    
    
    100
    
    
    
    100
    
    
    
    8.250
    %
    
    
    12/01/10Acquisition Mortgage Loan
XI
    
    
    4,829
    
    
    
    (1
    )
    
    
    4,854
    
    
    
    (1
    )
    
    
    28
    
    
    
    
    
    
    
    7.610
    %
    
    
    05/01/12Acquisition Mortgage Loan
XII
    
    
    2,609
    
    
    
    (1
    )
    
    
    2,623
    
    
    
    (1
    )
    
    
    15
    
    
    
    
    
    
    
    7.540
    %
    
    
    01/01/12Total
    
    $
    42,808
    
    
    
    
    
    
    $
    43,217
    
    
    
    
    
    
    $
    237
    
    
    $
    195Senior Unsecured Debt, Net2005
Notes
    
    $
    50,000
    
    
    
    
    
    
    $
    50,000
    
    
    
    
    
    
    $
    1,245
    
    
    $
    383
    
    
    
    6.900
    %
    
    
    11/21/052006
Notes
    
    
    150,000
    
    
    
    
    
    
    
    150,000
    
    
    
    
    
    
    
    3,500
    
    
    
    875
    
    
    
    7.000
    %
    
    
    12/01/062007
Notes
    
    
    149,984
    
    
    
    (2
    )
    
    
    149,982
    
    
    
    (2
    )
    
    
    4,307
    
    
    
    1,457
    
    
    
    7.600
    %
    
    
    05/15/072011
PATS
    
    
    99,668
    
    
    
    (2
    )
    
    
    99,657
    
    
    
    (2
    )
    
    
    2,786
    
    
    
    942
    
    
    
    7.375
    %
    
    
    05/15/11
    
    
    
    (3
    )2017
Notes
    
    
    99,869
    
    
    
    (2
    )
    
    
    99,866
    
    
    
    (2
    )
    
    
    2,500
    
    
    
    625
    
    
    
    7.500
    %
    
    
    12/01/172027 Notes
    
    
    15,053
    
    
    
    (2
    )
    
    
    15,053
    
    
    
    (2
    )
    
    
    407
    
    
    
    138
    
    
    
    7.150
    %
    
    
    05/15/272028 Notes
    
    
    199,809
    
    
    
    (2
    )
    
    
    199,807
    
    
    
    (2
    )
    
    
    3,209
    
    
    
    7,009
    
    
    
    7.600
    %
    
    
    07/15/282011
Notes
    
    
    199,578
    
    
    
    (2
    )
    
    
    199,563
    
    
    
    (2
    )
    
    
    656
    
    
    
    4,343
    
    
    
    7.375
    %
    
    
    03/15/112012
Notes
    
    
    198,890
    
    
    
    (2
    )
    
    
    198,856
    
    
    
    (2
    )
    
    
    6,340
    
    
    
    2,903
    
    
    
    6.875
    %
    
    
    04/15/122032
Notes
    
    
    49,374
    
    
    
    (2
    )
    
    
    49,368
    
    
    
    (2
    )
    
    
    1,787
    
    
    
    818
    
    
    
    7.750
    %
    
    
    04/15/32Total
    
    $
    1,212,225
    
    
    
    
    
    
    $
    1,212,152
    
    
    
    
    
    
    $
    26,737
    
    
    $
    19,493Unsecured Line of CreditUnsecured Line of
Credit
    
    $
    161,900
    
    
    
    
    
    
    $
    195,900
    
    
    
    
    
    
    $
    336
    
    
    $
    336
    
    
    
    1.903
    %
    
    
    09/30/05
  (1)
    
    At March 31, 2004, the Acquisition Mortgage Loan X, Acquisition Mortgage Loan XI and the Acquisition Mortgage Loan XII include unamortized premiums
of $2,577, $579 and $295, 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 March 31, 2004, 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
$16, $332, $131, $17, $191, $422, $1,110 and $626, respectively. At December 31, 2002, 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 are redeemable at the option of the holder thereof, on May 15, 2004. 10




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##### Table of Contents



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
    
    $
    9002005
    
    
    213,2042006
    
    
    153,2492007
    
    
    151,4332008
    
    
    1,560Thereafter
    
    
    895,981Total
    
    $
    1,416,327
 Other Comprehensive Income: In conjunction with the prior issuances of senior unsecured debt, the
Consolidated Operating Partnership, through the 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 $226 into net income as an increase to interest
expense. 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 has a notional value of $73,500, is effective from
July 1, 2004 through July 1, 2009 and fixed the LIBOR rate at 3.3535%. In March 2004, the Consolidated 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 has a notional value of $73,500, is effective from
August 15, 2004 through August 15, 2009 and fixed the LIBOR rate at 3.326%. 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, par
value $.01, of the Company on a one-for-one basis or cash 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 11




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##### Table of Contents



FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited) 6. Partners Capital, continued holders of the general and limited partnership units except for distributions
required to enable the Company to maintain its qualification as a REIT. Unit Contributions: During the three months ended March 31, 2004, the Company awarded 206,117
shares of restricted common stock to certain employees and 1,221 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 $8,027 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 three months ended March 31, 2004, certain employees exercised
1,378,469 non-qualified employee stock options. Net proceeds to the Company
were approximately $31,597. 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 $.6850 per Unit, totaling approximately $31,889. On March 31, 2004, the Operating Partnership paid first quarter 2004
distributions of $53.906 per Unit on its 8 5/8% 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, totaled
approximately $5,044. 7. Acquisition and Development of Real Estate During the three months ended March 31, 2004, the Consolidated Operating
Partnership acquired nine industrial properties comprising approximately 1.9
million square feet of GLA and several land parcels. The purchase price of
these acquisitions totaled approximately $56,975, excluding costs incurred in
conjunction with the acquisition of the industrial properties and land parcels.
The Consolidated Operating Partnership also completed the development of three
industrial properties comprising approximately .3 million square feet of GLA at
an estimated cost of approximately $15.4 million. 12




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##### Table of Contents



FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited) 8. Sale of Real Estate, Real Estate Held for Sale and Discontinued
Operations During the three months ended March 31, 2004, the Consolidated Operating
Partnership sold 20 industrial properties comprising approximately 2.1 million
square feet of GLA and several land parcels. Gross proceeds from the sales of
the 20 industrial properties and several land parcels were approximately
$104,833. The gain on sale of real estate was approximately $25,294. Eighteen
of the 20 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 18 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 March 31, 2004, the Consolidated Operating Partnership had two
industrial properties comprising approximately .1 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 March 31, 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 three months ended March 31,
2004 reflects the results of operations and gain on sale of real estate of 18
industrial properties that were sold during the three months ended March 31,
2004 as well as the results of operations of two industrial properties held for
sale at March 31, 2004. Income from discontinued operations for the three months ended March 31,
2003 reflects the results of operations of 18 industrial properties that were
sold during the three months ended March 31, 2004, 113 industrial properties
that were sold during the twelve months ended December 31, 2003, two industrial
properties identified as held for sale at March 31, 2004, as well as the gain
on sale of real estate from 20 industrial properties which were sold during the
three months ended March 31, 2003. The following table discloses certain information regarding the industrial
properties included in discontinued operations by the Consolidated Operating
Partnership, for the three months ended March 31, 2004 and 2003. Three Months Ended March 31,2004
    
    2003Total Revenues
    
    $
    2,524
    
    
    $
    10,027Operating Expenses
    
    
    (1,108
    )
    
    
    (3,537
    )Depreciation and Amortization
    
    
    (471
    )
    
    
    (2,041
    )Gain on Sale of Real Estate
    
    
    22,179
    
    
    
    16,551Income from Discontinued Operations
    
    $
    23,124
    
    
    $
    21,000
 13




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##### Table of Contents



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: Three Months EndedMarch 31,
    
    March 31,2004
    
    2003Interest paid, net of capitalized
interest
    
    $
    16,367
    
    
    $
    16,533Interest
capitalized.
    
    $
    391
    
    
    $
    204Supplemental schedule of non-cash investing and financing activities:Distribution payable on
units
    
    $
    32,718
    
    
    $
    31,543Exchange of limited partnership units for general partnership units:Limited partnership
units
    
    $
    (1,096
    )
    
    $
    (72
    )General partnership
units
    
    
    1,096
    
    
    
    72$
    
    
    
    $
    In conjunction with the property and land acquisitions, the following
liabilities were assumed:Purchase of real
estate
    
    $
    56,975
    
    
    $
    22,050Deferred purchase
price
    
    
    
    
    
    
    (10,425
    )Accounts payable and accrued
expenses
    
    
    (38
    )
    
    
    Acquisition of real
estate
    
    $
    56,937
    
    
    $
    11,625In conjunction with certain property sales, the Operating Partnership
provided seller financing:Notes
Receivable
    
    $
    8,573
    
    
    $
    
 14




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##### Table of Contents



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: Three Months EndedMarch 31,
    
    March 31,2004
    
    2003Numerator:Income from Continuing Operations
    
    $
    5,733
    
    
    $
    12,920Gain On Sale of Real Estate
    
    
    3,115
    
    
    
    1,236Less: Preferred Distributions
    
    
    (5,044
    )
    
    
    (5,044
    )Income from Continuing Operations Available to
Unitholders - For Basic and Diluted
EPU
    
    
    3,804
    
    
    
    9,112Discontinued
Operations
    
    
    23,124
    
    
    
    21,000Net Income Available to
Unitholders
    
    $
    26,928
    
    
    $
    30,112Denominator:Weighted
Average Units - Basic
    
    
    46,228,525
    
    
    
    45,197,669Effect of Dilutive Securities that Result in the
Issuance of General Partner Units:Employee and Director Common Stock Options
    
    
    344,116
    
    
    
    57,078Employee and Director Shares of Restricted Stock
    
    
    121,002
    
    
    
    2,784Weighted
Average Units Outstanding - Diluted
    
    
    46,693,643
    
    
    
    45,257,531Basic EPU:Income from Continuing Operations Available to
Unitholders
    
    $
    0.08
    
    
    $
    0.20Discontinued Operations
    
    $
    0.50
    
    
    $
    0.46Net Income Available to Unitholders
    
    $
    0.58
    
    
    $
    0.67Diluted EPU:Income from Continuing Operations Available to
Unitholders
    
    $
    0.08
    
    
    $
    0.20Discontinued Operations
    
    $
    0.50
    
    
    $
    0.46Net Income Available to Unitholders
    
    $
    0.58
    
    
    $
    0.67
 15




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##### Table of Contents



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 2.4 million square feet of
GLA for an estimated investment of approximately $155.2 million. Of this
amount, approximately $34.9 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 Consolidated Operating
Partnerships $300,000 unsecured line of credit (the
Unsecured Line of Credit). The Consolidated Operating
Partnership expects to place in service 23 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
April 1, 2004 to April 30, 2004, the Consolidated Operating Partnership
acquired or completed development of seven industrial properties and
several land parcels for an aggregate purchase price of
approximately $27,590, excluding costs incurred in conjunction with the
acquisition of these industrial properties. The Consolidated Operating
Partnership also sold one industrial property and one land parcel for
approximately $3,218 of gross
proceeds. On April 19, 2004, the Operating Partnership paid a first quarter 2004
distribution of $.6850 per Unit, totaling approximately $32,718. On
May 10, 2004, the Company called for the redemption of all of its
outstanding Series D Preferred Stock and Series E Preferred
Stock, each at the price of $25.00 per share, plus accrued and unpaid
dividends. The redemption date for each will be June 7, 2004
(the Redemption Date). The Series D Preferred Units
associated with the Series D Preferred Stock and the
Series E Preferred Units associated with the Series E
Preferred Stock will be redeemed on June 7, 2004 as well. The
redemption of the Series D Preferred Stock and/or the
Series E Preferred Stock are subject to the closing of one or
more offerings by the Company, which are contemplated to close on or
before the Redemption Date. 16




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##### Table of Contents



FIRST INDUSTRIAL, L.P. 
 Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
 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. 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 86.1% ownership interest at March 31, 2004. The limited
partners of the Operating Partnership own, in the aggregate, approximately a
13.9% interest in the Operating Partnership at March 31, 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). 17




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##### Table of Contents



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. 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
March 31, 2004, the Consolidated Operating Partnership owned 722 in-service
industrial properties containing an aggregate of approximately 49.3 million
square feet of gross leasable area (GLA). On a combined basis, as of March
31, 2004, the Other Real Estate Partnerships owned 103 in-service industrial
properties containing an aggregate of approximately 9.2 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. 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 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 March 31, 2004, the Consolidated Operating Partnership owned 722
in-service industrial properties with approximately 49.3 million square feet of
gross leasable area (GLA), compared to 778 in-service industrial properties
with approximately 48.8 million square feet of GLA at March 31, 2003. During
the period between April 1, 2003 and March 31, 2004, the Consolidated Operating
Partnership acquired 70 industrial properties containing approximately 7.8
million square feet of GLA, completed development of 12 industrial properties
totaling approximately 1.4 million square feet of GLA and sold 116 in-service
industrial properties totaling approximately 6.7 million square feet of GLA,
four out of service industrial properties and several land parcels. The
Consolidated Operating Partnership also took 33 industrial properties out of
service comprising approximately 3.6 million square feet of GLA and placed
in-service 11 industrial properties comprising approximately 1.6 million square
feet of GLA. The
tables below summarize the Consolidated Operating Partnerships
revenues, property expenses and depreciation and other amortization
by source. 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 three months ended March 31, 2004 and the year ended
December 31, 2003, the Consolidated Operating Partnership
acquired 71 industrial properties totaling approximately 8.2 million
square feet of GLA at a total purchase price of $272.6 million.
Sold properties are properties that were sold subsequent to
December 31, 2002. During the three months ended March 31,
2004 and the year ended December 31, 2003, the Consolidated
Operating Partnership sold 141 industrial properties totaling
approximately 8.4 million square feet of GLA and several land
parcels for gross sales proceeds of $450.0 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 have reached 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. Comparison of Three Months Ended March 31, 2004 to Three Months Ended March 31,
2003 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 first quarter of 2004, the Consolidated Operating Partnerships revenues continued to be
impacted by a soft leasing market attributable to a weak economy. At March 31,
2004 and 2003, the occupancy rates of the Consolidated Operating Partnerships
in-service properties were 89.6% and 88.3%, respectively. Revenues
from same store properties decreased $1.5 million, or 2.5%, due
primarily to a decrease in rental rates on new leases. Revenues from acquired
properties increased $4.8 million due to properties acquired subsequent to
December 31, 2002. Revenues from sold properties decreased $8.0 million, or
75.6%, due to properties sold subsequent to December 31, 2002. Three Months Ended March 31,2004
    
    2003
    
    $ Change
    
    % ChangeREVENUES ($ in 000s)Same Store Properties
    
    $
    57,834
    
    
    $
    59,335
    
    
    $
    (1,501
    )
    
    
    -2.5
    %Acquired Properties
    
    
    4,847
    
    
    
    
    
    
    
    4,847
    
    
    
    100.0
    %Sold Properties
    
    
    2,587
    
    
    
    10,613
    
    
    
    (8,026
    )
    
    
    -75.6
    %Properties Not Placed in-service
    
    
    6,923
    
    
    
    2,581
    
    
    
    4,342
    
    
    
    168.2
    %Other
    
    
    3,125
    
    
    
    1,073
    
    
    
    2,052
    
    
    
    191.2
    %75,316
    
    
    
    73,602
    
    
    
    1,714
    
    
    
    2.3
    %Discontinued
Operations
    
    
    (2,524
    )
    
    
    (10,027
    )
    
    
    7,503
    
    
    
    -74.8
    %Total Revenues
    
    $
    72,792
    
    
    $
    63,575
    
    
    $
    9,217
    
    
    
    14.5
    %
 Property expenses include real estate taxes, repairs and maintenance,
property management, utilities, insurance and other property related
expenses. Property expenses from same store properties remain relatively unchanged. Property expenses from acquired
properties increased by $1.3 million due to properties
acquired subsequent to December 31, 2002. Property expenses from sold
properties decreased by $2.7 million, or 72.2%, due to properties sold
subsequent to December 31, 2002. 18




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##### Table of Contents



Three Months Ended March 31,2004
    
    2003
    
    $ Change
    
    % ChangePROPERTY EXPENSES ($ in 000s)Same Store
Properties
    
    $
    19,949
    
    
    $
    20,213
    
    
    $
    (264
    )
    
    
    -1.3
    %Acquired Properties
    
    
    1,275
    
    
    
    
    
    
    
    1,275
    
    
    
    100.0
    %Sold Properties
    
    
    1,053
    
    
    
    3,792
    
    
    
    (2,739
    )
    
    
    -72.2
    %Properties Not Placed
in-service
    
    
    2,645
    
    
    
    1,045
    
    
    
    1,600
    
    
    
    153.1
    %Other
    
    
    1,145
    
    
    
    1,744
    
    
    
    (599
    )
    
    
    -34.3
    %26,067
    
    
    
    26,794
    
    
    
    (727
    )
    
    
    -2.7
    %Discontinued
Operations
    
    
    (1,108
    )
    
    
    (3,537
    )
    
    
    2,429
    
    
    
    -68.7
    %Total Property Expenses
    
    $
    24,959
    
    
    $
    23,257
    
    
    $
    1,702
    
    
    
    7.3
    %
 General and administrative expense increased by approximately $.5 million
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 $1.4 million due to properties acquired
subsequent to December 31, 2002. Depreciation and other amortization from sold
properties decreased by $1.6 million, or 78.3%, due to properties sold
subsequent to December 31, 2002. Three Months Ended March 31,2004
    
    2003
    
    $ Change
    
    % ChangeDEPRECIATION and
OTHER AMORTIZATION ($ in 000s)Same Store
Properties
    
    $
    15,273
    
    
    $
    13,934
    
    
    $
    1,339
    
    
    
    9.6
    %Acquired Properties
    
    
    1,397
    
    
    
    
    
    
    
    1,397
    
    
    
    100.0
    %Sold Properties
    
    
    444
    
    
    
    2,047
    
    
    
    (1,603
    )
    
    
    -78.3
    %Properties Not Placed in-service and
Other
    
    
    2,133
    
    
    
    190
    
    
    
    1,943
    
    
    
    1022.6
    %Corporate Furniture, Fixtures and
Equipment
    
    
    318
    
    
    
    304
    
    
    
    14
    
    
    
    4.6
    %$
    19,565
    
    
    $
    16,475
    
    
    $
    3,090
    
    
    
    18.8
    %Discontinued Operations
    
    
    (471
    )
    
    
    (2,041
    )
    
    
    1,570
    
    
    
    -76.9
    %Total Depreciation and
Other Amortization
    
    $
    19,094
    
    
    $
    14,434
    
    
    $
    4,660
    
    
    
    32.3
    %
 Interest income remained relatively unchanged. Interest expense decreased by approximately $.1 million for the three
months ended March 31, 2004 as compared to the three months ended March 31,
2003 due primarily to a decrease in the weighted average interest rate on
the Consolidated Operating Partnerships outstanding debt for the three months
ended March 31, 2004 (6.55%) as compared to the three months ended March 31,
2003 (6.78%) as well as a increase in capitalized interest due to an increase
in development activities. This was slightly offset due to a higher average
debt balance outstanding for the three months ended March 31, 2004 as compared
to the three months ended March 31, 2003. The average debt balance outstanding
for the three months ended March 31, 2004 and 2003 was approximately $1,476.0
million and $1,430.4 million, respectively. Equity in income of Other Real Estate Partnerships decreased by
approximately $9.8 million due primarily to an approximate
$10.7 million lease termination fee received from a tenant
during the three months ended March 31, 2003, partially offset
by an increase in gain on sale of real
estate for the three months ended March 31, 2004 as compared to the three
months ended March 31, 2003. Equity in
income of joint ventures remained relatively unchanged. 19




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##### Table of Contents



The $3.1 million gain on sale of real estate for the three months ended
March 31, 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 $1.2 million gain on sale of real estate for
the three months ended March 31, 2003 resulted from the sale of one industrial
property 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 March 31,
2004 reflects the results of operations and gain on sale of real estate of
$22.2 million relating to 18 industrial properties that were sold during the
three months ended March 31, 2004 and the results of operations from two
properties identified as held for sale at March 31, 2004. Income from discontinued operations for the three months ended March 31,
2003 reflects the results of operations of 18 industrial properties that were
sold during the three months ended March 31, 2004, the results of operations
from two properties identified as held for sale at March 31, 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 $16.6 million from the
20 industrial properties which were sold during the three months ended March
31, 2003. The
following table discloses certain information regarding the
industrial properties included in discontinued operations by the
Consolidated Operating Partnership, for the three months ended
March 31, 2004 and 2003: Three Months Ended March 31,($ in 000s)
    
    2004
    
    2003Total
Revenues
    
    $
    2,524
    
    
    $
    10,027Operating
Expenses
    
    
    (1,108
    )
    
    
    (3,537
    )Depreciation and
Amortization
    
    
    (471
    )
    
    
    (2,041
    )Gain on Sale of Real
Estate
    
    
    22,179
    
    
    
    16,551Income from Discontinued
Operations
    
    $
    23,124
    
    
    $
    21,000
 LIQUIDITY AND CAPITAL RESOURCES At March 31, 2004, the Consolidated Operating Partnerships cash and cash
equivalents was approximately $5.6 million and restricted cash was
approximately $54.1 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 March 31, 2004 and April 30, 2004, $250.0 million
of debt securities was registered and unissued under the Securities Act of
1933, as amended. The Consolidated Operating Partnership also may finance the
development or acquisition of additional properties through borrowings under
the Unsecured Line of Credit. At March 31, 2004, borrowings under
the Unsecured Line of Credit bore interest at a 20




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##### Table of Contents



weighted average interest rate of 1.903%.
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
April 30, 2004, the Consolidated Operating Partnership, through the Operating
Partnership, had approximately $99.8 million available for additional
borrowings under the Unsecured Line of Credit. Three Months Ended March 31, 2004 Net
cash provided by operating activities of approximately $19.5 million
for the three months ended March 31, 2004 was comprised primarily of net income
of approximately $32.0 million, partially offset by the net change in operating
assets and liabilities of approximately $7.4 million and adjustments for
non-cash items of approximately $5.1 million. The adjustments for the non-cash
items of approximately $5.1 million are primarily comprised of the gain on sale
of real estate of approximately $25.3 million and the effect of the
straight-lining of rental income of approximately $1.3 million, partially
offset by depreciation and amortization of approximately $21.2 million and a
decrease of the bad debt provision of approximately $.3 million. Net
cash provided by investing activities of approximately $29.2 million
for the three months ended March 31, 2004 was comprised primarily of the net
proceeds from sales of investment in real estate, distributions from the Other
Real Estate Partnerships, distributions from one of the Consolidated Operating
Partnerships industrial real estate joint ventures, a decrease in restricted
cash that was held by an intermediary for Section 1031 exchange purposes and
the repayment of mortgage loans receivable, partially offset by 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 and contributions to and investments in
one of the Consolidated Operating Partnerships industrial real estate joint
ventures. During the three months ended March 31, 2004, the Consolidated Operating
Partnership sold 20 industrial properties comprising approximately 2.1 million
square feet of GLA and several land parcels. Gross proceeds from the sales of
the 20 industrial properties and several land parcels were approximately $104.8
million. During the three months ended March 31, 2004, the Consolidated Operating
Partnership acquired nine industrial properties comprising approximately 1.9
million square feet of GLA and several land parcels. The purchase price for
these acquisitions totaled approximately $57.0 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 three industrial properties comprising approximately .3 million
square feet of GLA at a cost of approximately $15.4 million. The Consolidated Operating Partnership, through a wholly-owned limited
liability company in which the Operating Partnership is the sole member,
invested approximately $2.2 million and received distributions of approximately
$.5 million from Operating Partnerships industrial real estate joint ventures.
As of March 31, 2004, the Operating Partnerships industrial real estate joint
ventures owned 80 industrial properties comprising approximately 7.9 million
square feet of GLA. Net cash used in financing activities of approximately $43.1 million for
the three months ended March 31, 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 $.6850 per Unit, totaling approximately $31.9 million. On March 31, 2004,
the Operating Partnership paid first quarter 2004 distributions
of $53.906 per Unit on its 8 5/8% 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 21




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##### Table of Contents



7.90% Series E Cumulative Preferred Units (the Series E Preferred Units).
The preferred unit distributions paid on March 31, 2004, was approximately $5.0
million. During the three months ended March 31, 2004, the Company awarded 206,117
shares of restricted common stock to certain employees and 1,221 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 $8.0 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. During the three months ended March 31, 2004, certain employees exercised
1,378,469 non-qualified employee stock options. Net proceeds to the Company
were approximately $31.6 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 March 31, 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 March 31, 2004, approximately $1,255.0 million (approximately 88.6% of
total debt at March 31, 2004) of the Consolidated Operating Partnerships debt
was fixed rate debt and approximately $161.9 million (approximately 11.4% of
total debt at March 31, 2004) was variable rate debt. The Consolidated
Operating Partnership also had outstanding a written put option (the Written
Option) which was issued in conjunction with the initial offering of one
tranche of senior unsecured debt as well as interest rate protection
agreements (the "IRPAs") with a notional value of $147 million which
fixed the interest rate on a forecasted issuance of unsecured 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 March 31, 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 $.3 million per year. A 10%
increase in interest rates would decrease the fair value of the fixed rate debt
at March 31, 2004 by approximately $44.9 million to $1,373.6 million. A 10%
decrease in interest rates would increase the fair value of the fixed rate debt
at March 31, 2004 by approximately $48.5 million to $1,467.0 million. A 10%
increase in interest rates would decrease the fair value of the Written Option
at March 31, 2004 by approximately $2.6 million to $17.9 million. A 10%
decrease in interest rates would increase the fair value of the Written Option
at March 31, 2004 by approximately $2.6 million to
$23.1 million. A 10% increase in interest rates would increase
the fair value of the IRPAs by approximately $2.3 million to $2.7
million. A 10% decrease in interest rates would decrease the fair
value of the IRPAs by approximately $2.3 million to $(1.9) million. 22




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##### Table of Contents



Subsequent Events From
April 1, 2004 through April 30, 2004 the Consolidated
Operating Partnership acquired or completed development of seven industrial
properties and several land parcels for an aggregate purchase price
of approximately $27.6 million,
excluding costs incurred in conjunction with the acquisition of these
industrial properties. The Consolidated Operating Partnership also
sold one
industrial property and one land parcel for approximately $3.2 million of gross proceeds. On
April 19, 2004, the Operating Partnership paid a first quarter 2004
distribution of $.6850 per Unit, totaling approximately $32.7 million. On
May 10, 2004, the Company called for the redemption of all of
its outstanding Series D Preferred Stock and Series E
Preferred Stock, each at the price of $25.00 per share, plus accrued
and unpaid dividends. The redemption date for each will be
June 7, 2004 (the Redemption Date). The
Series D Preferred Units associated with the Series D
Preferred Stock and the Series E Preferred Units associated with
the Series E Preferred Stock will be redeemed on June 7,
2004 as well. The redemption of the Series D Preferred Stock
and/or the Series E Preferred Stock are subject to the closing
of one or more offerings by the Company, which are contemplated to
close on or before the Redemption Date. Other On
December 24, 2003, FASB Interpretation No. 46 (revised
December 2003), Consolidation of Variable Interest
Entities  an interpretation of ARB 51 (FIN
46R) was issued. FIN 46R includes modifications that have
been incorporated directly into the revised FIN 46, rather than
into a new interpretation that amends FIN 46. FIN 46R
incorporated much of the guidance previously issued in the form of
FASB Staff Positions (FSPs). The Consolidated Operating
Partnership was required to apply FIN 46R no later than the
quarter ended March 31, 2004. The Consolidated Operating
Partnerships evaluation of FIN 46R did not result in the
consolidation of any of the Consolidated Operating Partnerships
joint venture entities and therefore did not impact the Consolidated
Operating Partnerships financial position, results of
operations, or liquidity. 
 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. 23




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##### Table of Contents



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: ExhibitNumber
    
    Description31.1*
    
    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**
    
    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: None. *Filed herewith **Furnished herewith 24




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##### Table of Contents



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 4000Chicago, IL 60606Attention: Investor Relations
 25




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##### Table of Contents



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
May 6, 2004
    
    By:
    
    /s/ Scott A. Musil .Scott A. Musil
Senior Vice President- Controller
(Principal Accounting Officer)
 26




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##### Table of Contents



EXHIBIT INDEX Exhibit No.
    
    Description31.1*
    
    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**
    
    Certification of the Principal Executive Officer and 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 27