Ladies and gentlemen, thank you for standing by and welcome to the First Industrial Second Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. It is my pleasure to turn the conference call over to Art Harmon, Senior Director of Investor Relations. Sir you may begin.

Thanks Rocelle. Hello and welcome to our call. Before we discuss our second quarter 2014 results, let me remind everyone that the speakers on today’s call will make various remarks regarding future expectations, plans and prospects for First Industrial. These remarks constitute forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. First Industrial assumes no obligation to update or supplement these forward-looking statements. Such forward-looking statements involve important factors that could cause actual results to differ materially from those in forward-looking statements, including those risks discussed in First Industrial’s 10-K for the year ending December 31, 2013 filed with the SEC and subsequent Exchange Act reports. Reconciliations from GAAP financial measures to non-GAAP financial measures are provided in our supplemental report available at firstindustrial.com under the Investor Relations tab. Since this call may be accessed via replay for a period of time, it is important to note that today’s call includes time-sensitive information, that maybe accurate only as of today’s date, July 24, 2014. Our call will begin with remarks by Bruce Duncan, our President and CEO, as well as Scott Musil, our CFO after which, we will open it up for your questions. Also on the call today are Jojo Yap, our Chief Investment Officer; Chris Schneider, Senior Vice President of Operations; Bob Walter, Senior Vice President of Capital Markets and Asset Management; and Peter Schultz, Executive Vice President for our East Region. Now, let me turn the call over to Bruce.

Thanks, Art and thank you all for joining us today. We had a great second quarter, which reflected both the underlying strength of the industrial market, as well as the many contributions from the First Industrial team around the country. So I’d say a hearty thank you to all my teammates for doing a great job in our mission of serving our customers and our shareholders. We have many reasons to feel good about the state of the industrial market. On a macro level, second quarter 2014 was the 16th consecutive quarter of positive net absorption for the industry. Incremental demand continues to significantly outpace the growth in new supply. It is important to having a historical context as you look at new supply. Where there had certainly been acceleration in new delivery compared to the virtually non-existing levels of the recent downturn, the amount of new products being built today is still well below historical and peak levels. Our second quarter portfolio results outpaced what is going on in the industry overall. We increased our occupancy to 93%, up 60 basis points from the end of the first quarter. We also saw positive rental rate change on a cash basis overall for the second quarter in a row, and for the fourth quarter in a row on renewals as market rents continue to trend higher. I would also point out that our GAAP rental rate change has been positive for 10 quarters in a row. Our occupancy gain was headlined by leasing at our Chicago asset at the intersection of I-55 and I-80. You may remember from our last earnings call, this acquisition was going to enter our in-service portfolio in the second quarter. At that time, our leasing prospects were not very clear. But as we announced last…

Thanks Bruce. I will start with the overall results for the quarter. Funds from operations were $0.28 per fully diluted share, compared to $0.20 per share in 2Q 2013. Second quarter results included losses from the retirement of debt, an $833,000 portion of a one-time restoration fee as we discussed last quarter, a loss related to our Series J preferred stock in 2Q of last year and acquisition costs. Before these one-time items, funds from operations were $0.28 per fully diluted share versus $0.27 in the year ago quarter. EPS for the quarter was $0.04 versus $0.05 in the year ago quarter. As we noted on our last call, our second quarter G&A of $7 million was higher than the one rate inspired by our guidance due to the accelerated vesting of approximately $1.5 million of incentive compensation related to Bruce’s contract. Moving on to our portfolio. Occupancy was 93%, up 60 basis points from the first quarter and up 180 basis points from a year ago. Regarding leasing volume, we commenced approximately 4.4 million square feet of leases in the quarter. Of these, 1.4 million square feet were new, 1.9 million were renewals and 1.1 million were short term. Tenant retention by square footage was 69.5%. Same store NOI on a cash basis, excluding termination fees was a positive 2.4%. Note that this figure excludes the portion of the one-time restoration fee that we excluded from our original same store guidance that we discussed on our fourth quarter call. Including the impact of this restoration fee, same store growth in the second quarter would have been 3.9%. Lease termination fees totaled $261,000 in the quarter and same store cash NOI growth, including termination fees but excluding the one-time restoration fee was 2.7%. Cash rental rates in the quarter were…

Thanks, Scott. Before we open it up for questions, let me say that I am bullish about our prospects. The industrial real estate environment is healthy and is providing a good backdrop for us as we work to capitalize on our unique cash flow growth opportunity. We are using our platform to drive value from leasing, create value through new investments with an emphasis on development and realizing value through targeted sales. We look forward to updating you in future quarters on our progress. We will now open it up for your questions. As a courtesy to our other callers, we ask that you limit your questions to one plus a follow up in order to give other participants a chance to get their questions answered. You are of course welcome to get back in the queue. So operator, may we open it up for questions?

Certainly. (Operator Instructions). Your first question comes from the line of Craig Mailman with KeyBanc Capital Markets.

Scott just a question on the line balance. It’s I guess you said 217. Currently just thoughts that you keep driving that up a little bit higher and do a bond deal or is that just going to be paid down with proceeds from asset sales. Just curious with the development pipeline kind of ramping a bit here? KeyBanc Capital Markets : Scott just a question on the line balance. It’s I guess you said 217. Currently just thoughts that you keep driving that up a little bit higher and do a bond deal or is that just going to be paid down with proceeds from asset sales. Just curious with the development pipeline kind of ramping a bit here?

Well if you look at our line balance now, $217 million, you tack the developments that we have in process, plus the $20 some million of secured debt that we are paying off in September, we will get to high 200s in our line of credit. Now that doesn’t take into account any future sales. So our line will probably be low to mid $200 million. So we're in very good shape from a liquidity point of view, because our line capacity is $625 million. Now on your question on a bond offering. I think the catalyst for us there is to get upgraded by the agencies to investment grade and we have one of them so far investment grade and we need two. So when that happens, what we'll have to do is we'll look out to our debt coming due in 2016, which is about $215 million. $160 of it is due in January of 2016. So really it’s a cost benefit at that point of time. What’s the 10 year treasury at that point of time? What are spreads and what we think they are going to do in the next 12 months? So they key catalyst, Craig, is getting the rating and then evaluating what we think rates are going to do at that point.

And then just kind of switching gears to the rent spreads here, I remember you guys are doing some kind of teaser rates back in the recession. Are those all earned through here or maybe that’s what keeping a little bit of the lid on the rent spreads you guys could be seeing in the market rent growth? KeyBanc Capital Markets : And then just kind of switching gears to the rent spreads here, I remember you guys are doing some kind of teaser rates back in the recession. Are those all earned through here or maybe that’s what keeping a little bit of the lid on the rent spreads you guys could be seeing in the market rent growth?

Yes, Craig this is Chris. As far as the teaser rates, yes, they are minimizing a little bit and it’s reflected the bumps that we have in place. So right now if we look at our bumps, they are coming down a little bit from what they've been in the past couple of years but right now the in place bumps are still at 2.9% on an annual basis.

(Operator Instructions). Your next question comes from the line of Dave Rodgers with Robert. W. Baird.

Question for you on many of the high end of guidance. So taking an optimistic approach to it. What gets you up to that high end? The range is still fairly wide for getting later in the year. So, I guess I’ve got maybe a couple of questions around that. And any land sale gains related to the parcel you sold in the third quarter, acceleration of leasing spreads into the back half of the year, give us a little bit of color about what could be the optimistic scenario for the second half for First Industrial?

David this is Scott. I think the catalyst is going to be hitting -- to get to the high end of range is hitting the high end of our occupancy range doing lease up and our developments a little bit earlier. Lower bad debt expense, again we’ve modeled in $750,000 for plan. We were a little bit -- we were less than that by 0.5 million this quarter. So I would say those are probably the three main catalysts to get up to the higher range our FFO guidance.

And then maybe around development, a couple of questions for Bruce. Bruce as you look at development, you continue to talk a lot about it in your opening comments. You continue to buy some land and put money to work. So give us a sense over the next 12 to 24 months, given your preference, if you could put the money to work, what does the development pipeline look like in terms of sizing? And I guess also with respect to that, you gave some quoted yields for the projects that you’re working on. Can you talk about kind of where those spreads are to market and how comfortable you are with those today?

Let me step back here. I would say again we love what we’re doing in the development area. We had said building these projects and again we're dealing very-very functional product in great locations so we like it. We’ve been -- we’re executing on it in terms of getting them built on-time, on-budget and leasing them up. So we’re happy about that. We are excited about what we have going in terms of the new buildings in Houston and Dallas, the new land site we just brought in the great southwest market in Dallas, the Minneapolis project and we have a number of other projects that we can start. I.e. if you look at our land bank we’ve got about $60 million and we could probably build a little over 6 million square feet. And on top of that we could also buy some additional land like we’ve done over the last few years. But when we look at it, again we also look at what the yields are what we can build versus what we could buy. And we can still build the product at yields of 150 basis points at a minimum versus what we could sell the asset for if it would stabilize. So when I look at the pipeline going forward, we have a self-imposed cap of about $250 million. With the recent leasing we’re down to about $150 million. So we have about a $100 million capacity there. I could easily see next year that we could start -- we would have $200 million in development there. So again new development. So we’re very excited about our opportunities and as we put them in the ground, we will let you know where they are and what the economic yields are. So we think it’s pretty exciting.

That 250 million, that’s kind of a capital at risk. So once it’s leased up, it kind of moves out of that bucket so to speak?

Yes, once it’s leased up, it moves out of that bucket.

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

I was wondering if you can walk me through your same store guidance. So it looks like for the first three quarters, same store results were below the low end of the range and to get to your mid-point you need to have above 5% same store NOI growth for the latter half of the year. I'm just wondering, from a re-leasing spread and occupancy standpoint how do you get there?

Yes, overall we expected at the beginning of the year that the same store would be accelerating in the last half of the year and that’s primarily due to the leasing spreads, positive rental rates to continue in the third and fourth quarter. So that’s if you look back right now, if look at same store, if you look back a year ago, you've got some negative rental rate spreads in last four quarters. So we expect that to accelerate and that’s how we kind of get that to that mid-point of 4%.

And then just kind of going to the broader goals, that drive to 95% occupancy. So it looks like you are pretty full in your bulk and a regional warehouse portfolios. How does it work? I understand some of that will be additional to the traction by selling some not as well leased assets. How did you get there in the light Industrial and R&D portfolio? Can you really push occupancy that much higher to get to that broader goal?

Eric, this is Bob Walter. I think we can, as we laid out at Investor Day. We think we’ve got some traction there. There is no more of that product really being built. We’re seeing good pickups in occupancy in a number of markets like Tampa and Denver. So we’re still optimistic that we can reset that goal.

Eric, could you hear our sick Bob here? Bob is not doing well. But again we feel in terms of this product that it’s keep on building and we’re -- the market seems to be firm enough but now we’ve got to get that up over the next few years.

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

Just going back to the questions regarding leasing, if you guys look at what you’ve done or what’s close to being executed on your leases with your tenants, could you maybe give a little insight into what we can expect in the second half that you see -- based on what you see on the ground or based on what you’ve signed or close signing? Is it, should we expect a 8% GAAP spread to get better incrementally, or is it going to be more -- little more volatile?

Yes, Ki Bin I think that as Bruce mentioned on the GAAP rental rates, we’ve seen 10 straight quarters of positive. And also as you go back to the peak year rents prior to that time, that’s going to be a smaller and smaller portion of our rollover. So we would expect those positive rental rates to continue to increase.

But again the 8% it can go up and down depending on quarter by quarter.

You could have fluctuations quarter-by-quarter, but we expect that to continue.

And have you guys done this analysis just looking at where your rents are versus the market before NOI [ph]?

No.

Okay. And just last question from me, if you had a section called shallow development pipeline in your supplemental and based on your land bank you say you want to do about $200 million of development roughly. How much of that would be from land on balance sheet today versus things that you have to acquire?

Well, let’s exclude the Dallas project that we did bought the land for, okay? That we’re going to start in the second half of this year. Let’s not count that and just exclude the other developments we have in process. In terms of new things that could easily be started over the next 12 months would be the First Park 33 in the Lehigh Valley, which is about 600,000 feet on land that we’ve owned for many years. We’ve got the entitlements, which should be true on First Nandina which is 1,450,000 square feet in the Inland Empire. And we’ve got another 180,000 some square foot or right next to First Inland Logistics in the Inland Empire that we could start. So those projects in and of themselves would be in total, including the land I would say just approximately $150 million with the new construction.

(Operator Instructions) Your next question comes from the line of Michael Muller with JPMorgan.

I was wondering Bruce, in your comments you talked about short term leasing when you were walking through the different buckets of leasing activity. Can you just talk a little bit about I guess when it comes to short term leases, what percentage of overall leasing is normal to have short term leases and kind of how that’s been trending over the past couple of years?

Why don’t I have Chris do that?

Yes, if you look at the trend as far as the new short term leasing, it’s been about 200,000 to 300,000 square feet a quarter and that was the average back in 2013. It’s up a little bit this quarter. As Bruce at mentioned beginning, in the Chicago asset, we had a short term lease there about 300,000 square feet. But typically we’re running about 200,000 to 300,000 square feet of new short term leasing.

Your next question is from Bill Crow with Raymond James Associates.

A question for you is where do you think stabilized occupancy can get to for your portfolio? Is this a portfolio that’s today because of some of the increased market presence, you’ve driven over the last couple of years is now a 95% or 96% sort of occupancy portfolio? Or are you closer to 93% to what will ultimately be the stabilization?

Bill we’ve taken the ground in terms of what our goal is when we had Investor Day in November last year in Los Angeles, which reset our goal is to get by the end of 2015 plus or minus 95%. So we think that we can get there and that’s our goal. That’s our stated goal that we put out in the market and this team when we focus, we try and hit our goal. So that’s what we think is doable. Bill Crow - Raymond James & Associates: You still have presence in some markets but might historically haven’t hit 95%. Is that fair to think about it like that?

No, absolutely, that's fair. In some markets like Atlanta 95% is a big number but overall in our portfolio our goal is plus or minus 95% by the end of 2015 and we probably stated that and we’re working hard to hit that.

Your next question is a follow up from Dave Rodgers with Robert W. Baird.

Hey guys, I didn’t hear if you provided it but the vacancy impact on the assets that you sold and what that did to occupancy in the first half or even through year-to-date with these sales you’ve done in the third quarter?

Yes, through second quarter it’s very minimal. There is very low impact on that and we’ll let you know what third quarter has done.

Okay, fair enough. And then last question. I didn't hear if you addressed this either. Retention is pretty good, I think, for you historically but I think it's been below some of your peers recently. Can you talk about kind of where you are seeing retention from large versus small tenants or geographically that's kind of maybe impacting that number differently for you than some of your peers? Anything that you're seeing that is unusual in there?.

Schultz, why don’t you use that?

Sure Dave, this is Peter. I would say we continue to see good demand around the country not only from new tenants but existing tenants and from a retention standpoint I wouldn’t say that there is any one area of the country that’s been better or worse. We continue to see incremental demand from our existing tenants for expansion as business continues to be good and their facilities are full as well as some new apartments that we’re seeing in the country. So we’re bullish about business.

Your next question is a follow up from Eric Frankel with Green Street Advisors.

Thank you. Just getting a little bit granular on the Minnesota development, $80 per square foot seems a little bit high. Is it little bit more flex here in nature or is that just what replacement cost is for generic industrial in the market?

Jojo?

No, the 97,000 square foot building has a little bit more features to that building. But we did get a commensurate increase in rent over a long term on that asset, Eric.

On the built-to-suit

On the built-to-suit

Great, okay and then in your disclosures -- in the leasing spreads page I think all the new development leases having that roughly 10 years average lease term. Is that for Chicago, Pennsylvania and I guess in Minnesota included in that as well?

For the quarter the development number was about 329,000 square feet. The biggest part of that was the Rust-Oleum expansion of 250,000 square feet. So that’s what’s included there, and in a smaller lease that we did in LA the 43,000 square feet. So that’s the majority of it.

Bruce just final question. I know you’ve mentioned that supply is still below average in historical norms. But it does certainly seem that there is a few more developers and players in the market and some names, I haven’t even heard of. Can you just comment on the environment and what kind of capital is funding that or is it -- whether it’s equity or debt or what have you?

I would say again, we acknowledge there is more development today than there was a year ago. But we just think that the demand is still out stripping supply. But again as the cycle goes, you’ll get more development because the markets are strong and rents are up. So, you’ll see some more development. I think what you’re seeing in terms of -- it's all availability to capital but what you’ve seen now, the REITs, like a year ago or three years ago, we were the only ones developing. Now you have not only private developers teamed up with strong equity sources pension funds or private equity are doing some development. And you’re starting to see some of the smaller banks in certain markets; i.e. Texas that are lending more prelease than they have in the past. Again they just don’t check but over time there is no question that if we have this discussion five years from now, we’re going to say things are overbuilt in five years from now. But right now things are in check and we feel pretty good, as is demand is good, rents are good and you’ve seen that with absorption throughout the country. So, we’re still bullish on it but there is no question there is more development Eric taking place now than there was a year ago.

(Operator Instructions) Your next question is a follow up from Ki Bin Kim with SunTrust.

Just a couple of quick questions. The equity you purchased, that's on a ground lease, I don’t think I’ve seen that too often. But can you just talk a little bit about that deal?

Yes, it’s on a leasehold interest effectively 60 years. It affords us all the rights and abilities as if we own the fee estate. And we -- also in addition to that we have a right of first refusal on the land. So like you said Ki Bin, it’s few and far between but it’s a great asset and the leasehold interest gives us again the rights like a fee estate owner.

And Ki the owner is a governmental agency. So…

Yes, I [multiple speakers] years but. And you said you have an option after the 50 years. Is that what you said?

No, it’s a right of first refusal. And dollar fee [ph] interest.

And just last one from me if I look across your market, there is a few of them that are in the low 80% range and given your kind of wide portfolio, you always kind of expect that amount. But I was wondering are those longer term kind of bounce around in the low 80s and mid-80s type [indiscernible] markets like Tampa, Atlanta or do you use spaces that have been leased in the past couple of years because I know you guys give that stat previously. That you think can move up much higher.

Ki Bin, its Peter. I would say a couple of things. First in Southern New Jersey that’s a market where we have lower occupancy and it’s really one building that had been leased long term but is now available. In South Florida we have half of our remaining building that’s been available that we really haven’t just found the right fit for but it’s well located asset, a couple of miles north of the Miami Airport, certainly leasable. The larger markets like Atlanta, Atlanta has still lag as you know. We’re about 85% of Q2. But Atlanta is getting better. There has been five consecutive quarters of positive absorption and we made some headway there. This quarter we’re backfilling more than half of the 400,000 square foot move out that we talked in Q1 and we accomplished that through a long term expansion of one of our existing tenants. And then finally Tampa, which you probably know is a smaller tenant driven market we have made some pretty good headway in Tampa over the last several years which has really been without the benefit of much improvement in the housing industry which is certainly been a big driver of demand there. But we still have some more work to do.

Ladies and gentlemen, this concludes the question-and-answer session for today. I will now turn the call over to Bruce Duncan for any closing remarks.

Thank you for joining us today. If you have any questions please feel free to call Art. Scott and myself would be happy to take them and we appreciate your interest and look forward to talking you next quarter. Thank you.

Thank you ladies and gentlemen. This concludes today’s First Industrial second quarter results conference call. You may now disconnect.