Nov 5, 2009
Executives
Art Harmon - Director, IR and Corporate Communications Bruce Duncan - President and CEO Scott Musil - Acting CFO Jojo Yap - Chief Investment Officer Chris Schneider - SVP of Operations
Analysts
Ki Bin Kim - Macquarie Research Equities Dan Donlan - Janney Montgomery Scott LLC Ben Mackovak - Rivanna Capital Stuart Henry - Private Investor Ross Haberman - Haberman Value Fund Mark Lutenski - BMO Capital Markets
Operator
Good morning. My name is [Wes] and I will be your conference operator today.
At this time, I would like to welcome everyone to the First Industrial Third Quarter Earnings 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).
I'd now like to turn the conference over to Mr. Art Harmon, Director of Investor Relations for First Industrial.
Please go ahead, sir.
Art Harmon
Thanks, [Wes]. Hello, everyone and welcome to our call.
Before we discuss our third quarter 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, such as those related to our liquidity, management of our debt maturities and overall capital deployment, our planned dispositions, our development and joint venture activities, continued compliance with our financial covenants, and expected earnings. 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, 2008 filed with the SEC and subsequent reports on 10-Q.
Reconciliations from GAAP financial measures to non-GAAP financial measures are provided in our supplemental report available on firstindustrial.com under the Investor Relations tab. Today, we will begin our call with remarks by Bruce Duncan, our President and CEO, which will be followed by a review of our results our financial position and guidance by Scott Musil, our Acting Chief Financial Officer.
After which, we will be pleased to open it up for your questions. The other members of senior management in attendance today are Jojo Yap, our Chief Investment Officer, and Chris Schneider, Senior Vice president of Operations.
Now let me turn the call over to Bruce.
Bruce Duncan
Thanks, Art, and thank you all very much for joining us today on our call. Since we spoke with you last quarter, we continue to make further progress on our back to basics plan that we outlined for you earlier this year.
Our team of professionals in our regions and in our headquarters has been hard at work executing that plan on the capital and operational fronts, and I would like to thank them for their efforts and dedication. We still have a lot of work to do and the industry fundamentals remain challenging, but we are seeing some positive signs in our markets, which I will talk about in more detail in a minute, but first let me start with a discussion of what we’ve been doing on the capital front.
We are using a three pronged attack of secured financing, asset sales and most recently equity issuance, as we seek to improve our capital position by reducing our overall average. We have the deposit of a well laddered maturity schedule with a weighted average maturity of 7.5 years.
The focus of three pronged attack is taking care of our near-term maturities in 2011 and 2012. As of today, we have approximately $355 million of secured, of senior unsecured debt due in 2011 and approximately a $144 million due in 2012, and note that our current line of credit expires in September of 2012 as well.
With regard to new equity, we issued approximately 16.6 million shares, 13.6 million to our recent secondary equity offering and 3 million issued during the third quarter due to direct stock purchase feature of our dividend reinvestment program. In all, net proceeds were about $84 million.
We decided to raise the equity to add to our arsenal for our deleveraging plan and enhanced our ability to continue to reduce our short-term maturities. At the same time though, we are very mindful of balancing our deleveraging objectives with dilution in raising new equity capital.
On the secured debt side, we completed five transactions for growth proceeds of $47.1 million in the third quarter and additional three transactions for $54 million in the fourth quarter to-date. We have a solid pipeline of more than a $130 million of additional secured financing transactions committed or under application.
On the asset sale portion of our plan, we sold seven facilities and three land parcels for $25.2 million in the third quarter on balance sheet. We are on track for our 2009 goal of $80 million to $100 million in sales, with the total of $59 million completed to year-to-date, and several sales in our pipeline.
Five of the facilities, we sold this quarter were vacant and between these vacant facilities and the land, more than $18 million of this quarter sales were non income producing assets. We continue to be focused on sales to the user market, where we are getting the best execution.
One other source of future cash will be the federal tax refund of $27 million we expect to receive in the first quarter of next year, as detailed in our press release and which Scott will discuss in more detail. We use available proceeds to buyback a $123.7 million of debt in the third quarter, at an average purchase price of 84% of par, and $12 million in the fourth quarter to-date at an average of 85% of par.
In executing these purchases, since the end of the second quarter, we have reduced our 2011 and 2012 unsecured note maturities by combining $90 million. Moving now to our bottom line results in the third quarter, FFO came in at $0.57 per share, including gains from retirement of debt, plus several other onetime items.
Scott will walk you through these in more detail. Occupancy was 81.7% at quarter end for our in-service portfolio.
Tenant retention for the quarter was solid at 82.4%, ahead of our first cap average of 61%. We expect our full year 2009 retention to average out in the mid 60s.
Looking at customer demand with vacancies near all time high, all of our markets remained very competitive as our public peers and regional competitors are generally focused on occupancy. On the first site 12 of our 29 markets showed an increase in occupancy compared to only 4 in the previous quarter.
Customer activity and interest has definitely picked up over the last few months, as we are again increasing traffic to our vacancies in nearly all of our markets across North America. This has yet to translate into a significant number of signed leases, but this increased activity is definitely a marked departure from where we were earlier in the year.
In our conversation with customers and prospects, many businesses are shifting from a wait and see or even a survival mode and becoming more focused instead on growth plans and related supply chain needs. Some of the traffic is no doubt choppy, very choppy but most is related to businesses with real needs considering their options.
Our people in the field are focused, are making sure we win more than out share. We are aggressively pursuing tenants to improve occupancy, using our definitive advantages in the marketplace, which includes the ability to fund TIs and free rent where they make economic sense and our record in reputation for great customer service.
Our ability to fund TIs particularly important when we are going up against local competitors to may be cash strap. On the expense side, we made a difficult but necessary decision to further reduce our staffing in line with our expected levels of business activity.
This includes lower joint venture activity, given changes to our 2006 net lease program and another net lease program with the same partner, which I’ll discuss in a minute and lower expected activity levels in our other repositioning and development ventures. We have eliminated 46 positions throughout the organization and closed our offices in Calgary, Irvine, Salt Lake City and Toronto, with asset in those markets to be managed through nearby offices.
Overall savings are expected to be about $8 million per year, which puts our annual run rate for G&A heading into next year in the mid $30 million range. With regard to our expected levels of business activity, as we previously announced on September 18th, 2009, we received a notice from our co-investment partner to deal with exercising the buy/sale provision in the joint venture agreement.
We hold a 15% interest in this venture and the buy/sale provision also apply to an asset in another program with that partner in which we do not have an equity interest. Under that buy/sell provision, we have a 60 day period during which to respond and we are still evaluating our alternatives.
However, we anticipate accepting the counterparties offered price to purchase our interest in all the programs, real property assets. As a result, it recognizes an impairment charge of approximately $5.6 million in the third quarter, reflecting the difference between our basis in our joint venture interest and the offered price.
Pending our decision, we will no longer receive management fees from this program and an additional asset, these total were approximately $0.5 million in the third quarter of 2009. In addition, effective September 2, 2009, we no longer serves as asset, property and leasing manager for two properties in another program with this partner in which we had no equity investment.
Our fees from this other contract were approximately $100,000 in the third quarter of 2009. As noted in our press release, we received a onetime termination fee of approximately $900,000 in the third quarter.
In discussing capital, I also want to reiterate our dividend policy. As we discussed in prior quarters, our policy is to distribute the minimum amount required to maintain our REIT status.
We will look at our estimate for taxable income in the fourth quarter, and to the extent, we are required to pay common dividend in 2009, we may elect to satisfy this obligation by distributing a combination of stock and cash. Looking at our levels of taxable income for the first nine months of the year, if annualized, it would not require us to pay a common dividend.
Based on our current guidelines for 2009, which excludes the impact of future asset sales, we would not generate taxable income at levels that would require a common dividend distribution in 2009, but no final determination with respect to a distribution has been made. On the investment front, we are certainly closely monitoring our markets, and believe that longer term, there may be some good opportunities to use our platform for investments with capital partners, but right now deleveraging is our primary focus.
I would note however that in monitoring the transaction market, there does not seem to be many distressed sales of industrial properties. Regarding FFO per share for the year, we are now seeing it in a range from $1.58 to $1.68.
A reduction from previous guidance reflecting the impact of the equity issuances, the G&A reduction and other items that Scott will walk you through. We will provide our 2010 guidance, when we report our fourth quarter and full year 2009 results early next year.
With that let me turn it over to Scott to discuss the quarter in more detail as well as our guidance for the balance of the year. Scott?
Scott Musil
Thanks Bruce. Funds from operations were $0.57 per share compared to $0.44 per share in the year ago quarter.
FFO results were held by a few items including a $0.36 per share gain and early retirement of debt and a $0.13 per share benefit for income taxes. Results also include the impact of an impairment charge of approximately $6.9 million or $0.14 per share for the third quarter with respect to a property in the Inland Empire.
Based on our revised leasing assumptions for our intended holding period for the property, we determined that property’s book value was impaired. Results also included $0.11 per share impairment charge related to our Net Lease Joint Co-Investment Program as detailed in our press release.
We also recorded $1.4 million restructuring charge in the quarter related to the expense in staffing reductions as first discussed. EPS for the quarter was a loss of $0.04 per share compared to income of $0.08 per share for the year ago quarter.
As Bruce mentioned our occupancy at quarter end for our in service portfolio was 81.7%, down from 82.1% last quarter. Our in-service portfolio now represents 98% of all of our properties.
Our all-in occupancy at quarter end was 79.7% compared to 80.1% last quarter. In the quarter, we commenced 4.3 million square feet of leases on our balance sheet including 0.8 million square feet of new leases, 2.8 million square feet of renewals and 0.7 million square feet of short-term leases.
Tenant retention was solid at 82.4%, same store NOI on a cash basis was negative 7.8% excluding lease term fees and run rates were down 9.4%. Fees management were in line with our expectations and reflective of the competitive market conditions.
Leasing costs averaged 220 per square foot for the quarter, which is a fairly normal rate when compared with our historical annual averages. Moving to our capital market activities and capital position, during the quarter we completed the issuance of 3 million shares to the company’s common stock generating approximately 15.9 million in net proceeds under the direct stock purchase component of the company’s dividend reinvestment and direct stock repurchase plan.
Since the end of the quarter, we completed an equity offering totaling 13.6 million shares for total net proceeds of $68.3 million. As of today, our total shares in units outstanding are approximately 67 million.
On a secured debt side in the third quarter, we closed five transactions with multiple lenders generating gross borrowing proceeds of approximately $47.1 million. These borrowings were secured by 21 properties totaling 1.6 million square feet and had a weighted average interest rate of 6.99% with maturities ranging from five to seven years.
Since quarter end, we closed three additional secured financing transactions totaling $54 million, secured by 14 properties totaling approximately 1.9 million square feet, with the weighted average interest rate of 7.32% and maturities averaging five years. We also have lender commitments for an additional three secured financing transactions, at 14 properties totaling 1.8 million square feet for potential gross borrowing proceeds of $62 million at a weighted average interest rate of 7.4% and maturity is ranging from five to 10 years.
We are also under application for an additional six secured financing transactions with respect to 25 properties totaling approximately 2.2 million square feet, with total potential gross borrowing proceeds of approximately $72 million at a weighted average interest rate of 7.05% and maturities approximating five years. The sales of seven properties and three land parcels as Bruce noted, resulted an additional proceeds of 25.3 million during the quarter.
Quickly summarizing our capital structure and position, our weighted average maturity at 7.5 years, significantly longer than many other companies in our industry. Following our June refinancing, 85% of our assets are encumbered by mortgages.
We have less than $19 million of debt maturing and regularly scheduled principal payments through the end of 2010. As Bruce discussed, our senior unsecured note maturities in March 2011 and September of 2011 along with those in 2012 remain the primary focus on our debt reduction plan.
In the third quarter with our available capital, we were successful in repurchasing a total of $123.7 million of senior unsecured debt at an average purchased price of 84% of par. This consisted of $44.1 million of our 7.375% March 2011 senior notes, $1 million of our 4.625% September 2011 exchangeable notes, $40.3 million of our 6.875% April 2012 senior notes, and $38.4 million of senior notes with maturity beyond 2012.
As a result of these transactions, we recorded a gain of approximately $18.2 million in the third quarter. Our line balance as of today is $356 million with our borrowing capacity under our line plus available cash totaling $150 million.
The line balance reflects the near term pay down with capital from our offering and other capital raising activities. Assuming, we could use the proceeds from the $134 million of secured debt we have under commitment and applications, plus the $139 million available capacity under our line of credit to repurchase our unsecured notes coming during 2011 and 2012.
We could reduce this debt from $499 million at September 30 to $226 million at the end of the year. Keep in mind this excludes any proceeds from property sales and our IRS refund.
As Bruce mentioned another source of expected cash in the near future is the federal tax refund we anticipate receiving in the first quarter of 2010. During the third quarter, we significantly restructure the operations of a taxable REIT subsidiary after receiving a favorable private letter ruling from the IRS.
As a result of the restructuring, the subsidiary recognized tax losses on a number of properties investment and investments in certain of its joint ventures whose tax bases was greater than the fair market value. Under the federal income tax rules, we believe the subsidiary is able to carry back these losses to offset taxable income it had previously recognized.
We expect to apply for and receive a federal income tax refund of approximately $27 million before the end of the first quarter of 2010. We do note that tax refund could be challenged by the IRS or delayed if our filing of the necessary tax returns is later than anticipated.
For other reasons that we not foresee, which could result in a delay or reduction of the expected refund. With regard to our loan covenants, we were in compliance as of the end of the quarter and we expect to remain in compliance for the balance of the year, subject to achieving our 2009 plan.
As we noted in our 10-K in March in our last conference call, reductions in net operating income below our projections or limitations and our ability to sell properties could impact our ability to meet our financial covenants. With regard to JV debt maturities as provided in our supplemental, the total debt for our JVs is $1.4 million and our share is 10% to 15% depending on the venture.
None of the joint venture debt is re-coursed to First Industrial. For the remainder of 2009, we have only $9 million maturing, which is in our 2009 net lease venture, 2003 net lease venture.
We are currently working with the existing lender to extend this maturity. We are also currently working on refinancing debt coming due in 2010 and will continue to look for opportunities to sell assets to reduce this debt.
Regarding 2009 guidance, as noted in our press release, we are reducing our FFO per share guidance range from a range of $1.65 to a $1.75 per share to a range of a $1.58 to a $1.68 per share, primarily reflecting the effects of our recent stock issuances, the impairment charges we discussed, our further expense reductions and the impact of gains from debt repurchases completed since our last call. This guidance includes the impact of approximately $0.13 per share of restructuring charges.
Also note that our guidance does not reflect the impact of any further debt buybacks that may occur in the quarter after today, nor the impact of any asset sales and NAREIT compliant gains. To reiterate some of the key components of guidance for 2009, which are found in our press release, from a portfolio point of view for the year, we expect averaging service occupancy to be 82% to 83%, a tightening of the range by 0.5% on both sides and all in occupancy to be 80% to 81% a similar tightening.
Our forecast for same-store NOI for year is projected to be negative 4% to negative 5%, a tightening from the prior range of negative 4% to negative 6%. Our estimate for rental rate change for the year remains negative 5% to negative 7%.
Our JV FFO range is $10 million to $12 million with a change from prior guidance due to the impairment charge partially offset by onetime termination fee of $9 million. We now expect our G&A expense for 2009 to be $39.5 million to $40.5 million, adjusted downward from our prior figure reflective of the recent expense reduction.
With that, let me turn it back over to Bruce. Bruce?
Bruce Duncan
Thanks Scott. Before we open up to questions, let me summarize.
We make good progress in executing our back to basics plan, which we laid out to you at the beginning of the year. We certainly have more work to do and our team is focused on doing it.
We will continue to delever and improve our capital position. We had continued to work to optimize our cost structure, while maintaining our platform to serve our customers.
We are encouraged by the level of customer activity in the marketplace. Our team is focused on enhancing the value of the enterprise by winning new tenants to fill our vacancies and retaining those we have.
As we have noted before, we have a significant opportunity to increase our cash flow by just getting our occupancy back up to 90%. With that we’ll be happy to take your questions.
As a courtesy to all of the callers, we ask that you limit your question to one plus a follow up in order to give other participants a chance to get their questions answered. Of course you are welcome to get back into the queue.
So now we ask, can we please open it up for questions.
Operator
(Operator Instructions) Your first question comes from Ki Bin Kim of Macquarie.
Ki Bin Kim - Macquarie Research Equities
So in regards to your (inaudible) strategy could you provide more commentary, so what the side that bulk going forward of how much assets you want to sell and if the strategy there just over you can is that market specific?
Bruce Duncan
I would say Ki Bin what we are trying to do, you look at what we saw in the past if we are focusing more on the building we sold this quarter most of them were vacant buildings. We had 100,000 square foot building in LA that we sold.
We sold a couple of big smaller condos in office condos or industrial condos Miami. Sold a (inaudible) in Phoenix and so again it’s more one offs transactions where we defined users, that we think it’s paying the fair price for the assets.
We sold these properties, we’re having about $75 a foot for them and most of them were vacant so it’s one-off We anticipate next year probably and again we haven’t finalized it, but my guess it would be, sales would be in the same range of this year a $80 million to a $100 million, but we haven’t really finalized our thinking and budgets for next year.
Ki Bin Kim - Macquarie Research Equities
If you completely sold out of a burn market and I am guessing it’s different per market, is there additional cost savings coming out of closing down a regional office and what would that kind of absolute dollar be?
Bruce Duncan
I think it depends on the market and the presence you have in it. I would say that there are savings we’re doing that.
I would say in the short-term, longer term but we’re going to reduce our exposure to certain markets. In the short-term, I wouldn’t anticipate that we’re going to do a large transaction to reduce our exposure to those markets, if I don’t think it’s the time to do it, I think it’s a tough market.
I don’t think you want to do large transactions. I think you’ll get much better pricing by doing one-offs.
So, that would be our focus.
Operator
Your next question comes from Dan Donlan of Janney Montgomery Scott.
Dan Donlan - Janney Montgomery Scott LLC
Hi, good morning. I was just curious looking at your year-over-year occupancy.
How much is the decline in occupancy on a year-over-year basis related to some of the acquisitions and redevelopments that won in service coming into the in-service portfolio, could you quantify that?
Bruce Duncan
Let me ask, it’s a good question. Let me ask Chris to take that.
Chris Schneider
So the year-over-year occupancy for the developments that were placed in service in 2009, the beginning of the year we were at about 55% occupied and those developments now are about 57%, 58% occupied, so that the development that we placed in service had a big impact as far as the drop.
Dan Donlan - Janney Montgomery Scott LLC
What’s you prospects for those spaces and then maybe more specifically what type of assets are they? Is it bulk warehouse, is it more manufacturing or may be some color on that please?
Chris Schneider
We are starting to see a little bit of pickup. In the fourth quarter, actually we have 63,000 square foot lease that was signed in our Baltimore portfolio, in one of that.
As far as the development pipeline that came into service, majority of it’s the bulk warehouse assets. So, we are starting to see a little bit more pickup in that activity.
Bruce Duncan
I would say that, if you look, as we mentioned in the commentary that we are seeing much more activity in terms of people looking at space. I think that’s pretty encouraging, so wait and see whether it’s a real trend or not.
Right now we are feeling much better today than we were six months ago.
Operator
Your next question comes from [Matt Weiser] of 4086 Advisors.
Unidentified Analyst
Two quick questions, one you already covered. How much cash did you say you have currently?
Bruce Duncan
Cash we currently have is about $11 million and that coupled with our availability and our line of credit gets us to about $150 million.
Unidentified Analyst
Then, secondly, are there any other possibilities of your JVs buying new guys out or you guys somehow losing your management contracts with any of those joint ventures in the near future?
Bruce Duncan
Well, I would say that that all of our joint ventures have options for partners to get out of the partnership in terms of exercising buy/sells and that we do not anticipate that any other issues as we are right now today. They do have this legal right to get out and they can exercise it by itself.
Unidentified Analyst
They can do that currently right there is like no time period that they have to wait.
Bruce Duncan
No.
Operator
Your next question comes from Ben Mackovak of Rivanna Capital.
Ben Mackovak - Rivanna Capital
What was the carrying value on the balance sheet of the joint venture interest that saw the $5.6 million impairment and also the Inland Empire property that saw the 6.9 impairment?
Scott Musil
The carrying value of our joint venture interest was I think little over $10 million. The carrying value of the property in the Inland Empire I believe is a little over $10 million as well.
Ben Mackovak - Rivanna Capital
So it’s before the impairment or right now.
Scott Musil
That’s before the impairment.
Ben Mackovak - Rivanna Capital
Did you say 67 or 57 million shares outstanding?
Scott Musil
67.
Ben Mackovak - Rivanna Capital
Going back to that equity deal, which is above when we got involved what was the strategy behind announcing it in the morning, but then not pricing until the next day, it seemed like it kind of just hurt you guys more than anything?
Scott Musil
We announced it very early in the morning I believe it was Tuesday and we price it actually that night. So it wasn’t price the next day, and we had a very, very high demand of calls that day.
So we’re very happy with the offering.
Operator
Your next question comes from Stuart Henry, Private Investor.
Stuart Henry - Private Investor
I would like to drill down a little bit more on the analyst question regarding your available on balance sheet space. Could you quantify perhaps how many buildings you have available in, say 300 to 500 square foot range and then say 500,000 square feet up to a 1 million?
Bruce Duncan
As far as the availability of the space, our average building size is about 22,000 square feet, I am sorry, average [tenant size] is about 22,000 square feet. So, our, as far as the availability, it’s pretty much spread across the tenant size, so the building sizes.
Art Harmon
Stuart, this is Art. I will look out that information with Chris after the call and get back to you.
Stuart Henry - Private Investor
Do you understand what I am trying to get at? I am trying to understand how many big boxes are out there?
Not necessarily a Circuit City site box, but just, but big vacant boxes to try to get an idea of how quickly the occupancy might possibly change? As a follow-up, I’d like to ask a little bit about your leverage target.
Where are you trying to get to on a total debt to, say, total un-depreciated assets basis.
Bruce Duncan
Well, Stuart, I think right now, in terms of leverage again we are trying to reduce our leverage. I would say that in terms of the golden [mountain], like to get to, I mean it’s hard to set a target, because we got work to do to get it down.
So I wouldn’t say that, but again the trend is to reduce our leverage and we’re doing that by asset sales, the equity issuances and even continue to buyback debt at a discount, but it’s going to get it down, from where it is now because it’s at too high level, and we know that and we are working on that but the federal level right now is there is work to be done.
Operator
(Operator Instructions) Your next question comes from Dan Donlan of Janney Montgomery Scott.
Dan Donlan - Janney Montgomery Scott LLC
We are just curious on your lease expiration. Could you may be talk a little bit about where some of those properties or some of those leases are expiring.
Then may be by property type as well just a little bit of clarity?
Bruce Duncan
Sure. Chris, you want to handle that?
Chris Schneider
I guess we’ll make a first comment on as far as our overall lease expiration, if you look at right now in the third quarter of 2009 and look forward to 2010, we’ve got about 18.7% or 19% of our lease is rolling in 2010. If you look back historically last couple of years for the same timeframe in third quarter of 2008 and third quarter of 2007, we are about right at the same percentage of lease expiration.
So, we feel comfortable about the lease expiration and the velocity we are going to see. As far as where the lease expirations are, pretty spread across all our markets and as far as the tenant size, we are seeing that pretty evenly spread across that but as far as, historically where we have been in the past, it’s very consistent.
Dan Donlan - Janney Montgomery Scott LLC
It sounds like it’s spread across all types and all areas. Then if I could, just may be two questions.
The drip plan issuances, is that something you guys plan to do this quarter as well?
Chris Schneider
Well, we have 5 million shares available on the drip, we issued 3 million, we’ve got about 2 million available and it’s something we’ll look at periodically.
Dan Donlan - Janney Montgomery Scott LLC
Then what were lease termination fees, I couldn’t found that in the self, I am sure it’s in there I just couldn’t find it for the quarter?
Chris Schneider
Yeah. They were 515,000 for the quarter.
Dan Donlan - Janney Montgomery Scott LLC
515,000, okay.
Bruce Duncan
Dan, that’s fairly normally that tend to run $0.5 million to $1 million in the typical quarter.
Scott Musil
Yeah. First two quarter (inaudible) about 480,000 or around there, so it’s been pretty difficult.
Dan Donlan - Janney Montgomery Scott LLC
I have one more question, if I may. If you guys were to reprice the credit facility, could you give us maybe some type of spread to LIBOR, you think you guys could achieve or have you guys had this discussions yet or just may be some guidance there?
Scott Musil
What we have seen in the market and heard from other folks is that what you’re seeing on repricing or new line deals is that there is LIBOR floors possibly into that 1.5% and the spreads are between 2% to 3%. So that’s what we have heard and seen on some past deals that have been done.
Operator
Your next question comes from Ki Bin Kim of Macquarie.
Ki Bin Kim - Macquarie Research Equities
I just want to quickly follow-up on that previous question. What’s the plan B for your credit facility to secure it, going forward?
Bruce Duncan
I think we like the flexibility of any unsecured lots. To me, we’ve got a bunch of maturities coming due in 2011 and 2012 of secured debt.
I mean on senior unsecured debt and then we have a line that’ll typically lay on what security you could get it when you redo the line versus making sure you have the flexibility to deal with your other maturities coming due.
Ki Bin Kim - Macquarie Research Equities
Second question. If you could comment on what percent of tenants or leases are expiring in 2010?
Have you already had active dialogue with and from those conversations any reason to believe that retention rate going forward might be different then what we have seen?
Bruce Duncan
We are not giving that sort of doing our 2010 guidance now. We do have active discussions with our tenants and so we continue to have that finalizing our budgets for 2010 and we’ll report that back when we get together in the beginning of the year.
Operator
Your next question comes from Ross Haberman of Haberman and Fund
Ross Haberman - Haberman Value Fund
I just have a quick clerical question. The net debt after these repurchases, I was wondering if you can give us that and has that differed from the $2 billion you show on your balance sheet as at the end of the quarter?
Bruce Duncan
I am sorry. So, we’ve only done a little bit of, I think about $10 million or $11 million of debt repurchases since the quarter end, so what you saw at September 30th is our debt position.
Scott Musil
It is the reduction in the line from the equity guidance.
Ross Haberman - Haberman Value Fund
So the net debt is about $1 billion or was it about $1.950 billion or so?
Scott Musil
We had about $1 billion, say $2 billion of debt as of the end of the third quarter. Yes, and we took down our line about $140 million since that point of time and we had about $11 million of note repurchases since that point of time.
Ross Haberman - Haberman Value Fund
Okay. Just the other question, I might have missed it.
In terms of lease renewals, which you’ve recently seen, what kind of reductions in per square foot prices have you seen and you expect to see over the next six months to a year on new lease renewals?
Bruce Duncan
We’re just counting on what we did for this quarter.
Scott Musil
Yes. For this, the current quarter overall our rental rates decreased to about 9.4% and renewals was about 8.4% and new deals was about 12.7%.
For the entire year, renewal rates were down about 2.8% and new rates were down about 2.4%.
Bruce Duncan
Guidance for this year is about roughly the same kind of change from fourth quarter on rental rates?
Scott Musil
Yeah. Both were from the third quarter, right.
Ross Haberman - Haberman Value Fund
It is, okay. Does it seem like that’s slowing down or any feelings to that effect?
Bruce Duncan
I would say on the rental rate side that, although we’ve seen more velocity in terms of people looking at [stakes]. It’s still very competitive out there on rate.
So, I wouldn’t want to say that we think it’s probably not in the terms of rates.
Operator
Your next question comes from the Ben Mackovak of Rivanna Capital.
Ben Mackovak - Rivanna Capital
Are you guys still seeing opportunities to buyback debt and a discount that seems like hands down, the best way to delever?
Bruce Duncan
I always say that there is opportunity. Again, as you see with that in the bond market, whatever.
There’s less opportunities today than there was, but we’ve been successful again in the third quarter buying back $123 million of debt. So we continue to look at that option.
So, if there is an opportunity there, we are perusing it.
Operator
Your next question comes from [Mary] Lutenski of BMO Capital Markets.
Mark Lutenski - BMO Capital Markets
This is Mark Lutenski. Just two questions for you.
How have you seen demand for new projects change and does renting from a new property hold the same appeal that it used to, especially considering all the available space out there?
Unidentified Company Representative
(Inaudible). Overall activity traffic has increased from the second quarter through the third quarter, and the demand has actually increased for all types of properties, whether they are newer [RFP double there].
What we are seeing is, the demand has been coming really from [my law of] average activity. Is it from full related company especially the company that specializes in process or folding tools?
As the consumers buy (inaudible) at a lower price or more value priced items. We see demand from healthcare, that continues to have an activity that’s, I would say, above average versus the market.
You see activity at government service, for example, like the GSA and government related services have continued their funding. Finally, what part of the industry continues to get a request for business is the 3PLs that the company is trying to bring out their excess cost in their supply chain.
So it’s more the type of industries than the product type. Does that answer your question?
Mark Lutenski - BMO Capital Markets
I was just curios you know you have lot of properties at 0% leasing that you are developing and I am wondering, do interest in tenants even care for properties do anymore. Or they just go.
Are they more interested in properties that are better located or how have their priorities changed?
Bruce Duncan
Priorities, if you compare year-over-year I mean let’s say when a lot of companies were plus with capital. It was probably more supply chain reconfiguration.
Today the values is number one. Value price is number one in their list and how do I continue to cut costs in my supply chain is one.
So again, but then I think over time as we change again it becomes more strategic, but right now the focus is valued.
Mark Lutenski - BMO Capital Markets
Given all of the headcount reduction that you guys have done, what gives you confidence that you have sufficient manpower to manage the properties in all of the markets that you have for the long-term?
Bruce Duncan
Well, I think if you go to our offices and you talk to people, when you talk to our competitors and you talk to our customers, they would say we handle, we have great capacity now and again in our routine business, but also to do more. So, I think that the reductions we’ve made, although they have been substantial, they’ve really as it relates to operating the properties and leasing and properties and it’s been very little touch there if you will vis-à-vis the rest of the operation.
I think we got very good capacity and got great people. I think it’s sort of universal.
If you go around and meet our people as they fit, some of our competitors have done. We’ve got very talented people, they are engaged and focused and doing a great job for us.
We do have that capacity, the reductions that we’ve made to handle our existing business and even to do some more when the opportunity does exist.
Operator
(Operator Instructions). Your next question comes from Anthony (inaudible) of Bestway Realty Trust.
Unidentified Analyst
The Realty Trust I manage and participate with began buying First Industrial, July 09/02 at 31.59. Currently as we speak, the stock price goes by 4.31, any comments on the stock price today?
Bruce Duncan
It’s low. We hope we could drive a bit value and get it up, but the market endpoint, we think it’s a good opportunity, its one person’s opinion.
We think when you look at where we are today, you look at us from a price per pound, if you will, you take our total debt-to-equity value by square footage. We think we’re priced attractively that way, if you look at our price in terms of FFO, I mean I think it is attractive.
Again all that’s based upon -- if we didn’t have the debt, as much debt as we had, we are higher leveraged and our goal that we were focused on, let me talk about on the call is to reduce our leverage and we are doing that by asset sales. We are doing that by the equity issuances.
As we get that debt delevered, I think that, we should trade in a better amount than what we were trading at. It should, but we don’t.
There is work to be done and we are focused on as deleveraging and you could tell how to, with Scott’s comment in terms of what we have done in terms of pretty secured financing done. (Inaudible) is maturities they are coming up in 2011 as well than the equity issuances.
We made a great debt in terms of being able to handle those maturities. I think if the market gets more and more comfort that we would be able to do that than we should trade better within the one person’s opinion, but we are focused on.
Operator
Your next question comes from Dan Donlan of Janney Montgomery Scott.
Dan Donlan - Janney Montgomery Scott LLC
Last question for me. We are just curious if you could comment on who is buying your assets with your sales in the quarter, and you sold some vacant buildings, is it users or is it investors or just may be some color there?
Please.
Bruce Duncan
It’s really users. If you look at our buyers in most part, the users are going to take the space, only two of the buildings were leased.
The rest were just vacant though. So, again we find that market to be very efficient, the prices being paid are good pricing.
We’re continuing to look at that market.
Operator
At this time, I am showing no further questions. I’ll turn the conference back to management for any closing remarks.
Bruce Duncan
Great, thanks. Thanks all of you for participating on our call.
Again, we look forward to keeping you updated on progress next quarter and we hope to see some you next week when we are out in [Avery] Conference in Phoenix. If you have any questions.
Please feel free to call Scott, or Art and myself and we’d happy to answer. Thanks again.
Operator
Ladies and gentlemen, that concludes the First Industrial third quarter earnings conference call. We appreciate your time and attention.
You may now disconnect.