First Industrial Realty Trust

1. First IndustrialRealty Trust Caitlin E. Bizzotto Zhenzhong (Linden) Lu Xiaoting Yang Zheng (Andrea) Zhang RCMP Presentation 11.08. 2007

2. Outline • Company Profile - Caitlin • Overall Look - Andrea • Stock Performance - Xiaoting • Valuation - Linden & Xiaoting • Recommendation - Caitlin

3. Position • Purchased on Dec 10, 1999 • 500 shares at $24.625 and 500 shares for $24.75 • Original Book Value of $24,687.50 • The current stock price is $36.98 • Unrealized gain of $12,292.5 • Comprises approximately 9.92% of the portfolio’s market value.

4. Company Profile

5. First Industrial Realty Trust, Inc. • NYSE: FR • Chicago, Illinois-based real estate investment trust (REIT) focused on industrial properties. • Founded in 1993 by Jay H. Shidler, Chairman of the Board, IPO in 1994 • Lease, develop, redevelop, buy, sell, and manage industrial facilities in the nation's top 25 industrial markets. • Diversified industrial real estate • Mission: create industrial real estate solutions that mutually benefit customers and investors • Offers a diverse range of industrial facilities. Most facilities benefit a company's supply chain

6. What is REIT? • Real Estate Investment Trust (REIT): a company that owns and operates income-producing real estates. • REITs’ shares are traded publicly on major stock exchanges, giving anyone the ability to invest in large-scale real estate. • REITs are required to distribute 90% of their taxable income annually in the form of dividends, giving high yields to its investors • Diversification advantage of REIT • Give individual investors opportunity to access real estate market • relatively low correlation between REITs and other stocks and bonds

7. Overall Look

8. The Economy • Overall growth of economy • Value of investment fluctuate depending on general conditions of economy • Occupancy rate • Foreign Exchange: depreciated dollar hurts import but promote export • Fuel: higher manufacturing cost leads to lower demand for industrial space • Interest rate: • The credit crunch may remain in effect, therefore hard for the company to borrow • Increasing international trade: companies seeking lower manufacturing cost will continue to evolve in global and production distribution patterns, driven up the demand for large distribution facilities at sea ports and inland ports

9. The Economy • Demographics • Population growth in southern regions such as south California, Phoenix, Texas and Southern Florida is growing faster than the rest of the country, leading more demand in the future

10. The Industry • Traditionally, small local players dominated the market due to lack of access of capital market • Now, in a transition to an Oligopolistic Industry • Customers bargaining power low • Risk: Harder to liquidate investments than other industries

11. Suppliers • Capital suppliers • Debt • The consolidation process of banking industry: results fewer suppliers • Equity: capital market • Joint Venture with large institutional investors such as pension funds • Good resource for financing but may restrict the management’s ability to make “buy-sell” decisions when there is an advantageous opportunity

12. Competitive Advantage of FR • Differentiated strategy by providing more sophisticated solution and value-added brand • I-N-D-L Platform • Industry Focus • National Scope • Diverse Facility Types • Local Management & Expertise • Disciplined Investing • Well diversified • <1% revenue comes from largest customer

13. Stock Performance

14. Historical Price performance Source: Google finance

15. Weight within the Portfolio

16. Correlation within the Portfolio

17. Valuation

18. Valuation • DCF (assumptions and WACC) • Dividend Discount Model • Multiples

19. Beta: 1.05(Bloomberg)Cost of Equity: 10.07%Cost of Debt: 6.03%Weight of Equity: 47%Weight of Debt: 53% WACC: 7.46% WACC

20. Major Revenue Sources • Rental Revenue • Occupancy Rate 94.7% • Rental Price • Rental Property Growth Rate • Revenue from Capital Cycling • Cost of Capital • Ability to identify properties with low capitalization rate and turn them to properties with high capitalization rate

21. Key Assumptions for DCF • Total Asset Growth Rate 2007 2008 2009 2010 2011 3% 2% 3% 4% 4% • Asset grows 3% up to 3rd quarter, we believe credit crunch will slow down asset growth for next couple of years • Net Investment is a percentage of Total Asset • Rental revenue is a percentage of Net Investment • Income from Discontinued Operations • Historical average 24.45% • Forecast 7%

22. Discount Cash Flow • DCF Analysis yields a share price of $33.69 • DCF relies on too many assumptions which are hard to predict • Asset growth rate, growth rate of income from capital recycling, etc.

23. DividendDiscount Model • Dividend per Share 2002 2003 2004 2005 2006 2007 $2.725 $2.74 $2.75 $2.785 $2.81 2.84 • Historical average growth rate= 0.83% • Dividend growth rate= 0.83% • WACC 7.46% • DDM yields a share price $42.68

24. DDM:Sensitivity Analysis

25. Multiples • Our Competitors • Brandywine Realty Trust (BDN) • Highwoods Properties Inc. (HIW) • Liberty Property Trust (LRY)

26. Multiples

27. Multiples • The most possible price should be in the range of $37.78(P/FFO) to $45.92(M/B)

28. Recommendation • The closing price on November 7th, 2007 of First Industrial (FR) is $36.98 • Our valuation models give:

29. Recommendation • Although DCF gives a below market price intrinsic value, we feel that many assumptions are conservative. • Price/FFO multiple suggests that the stock is trading at a discount comparing to peers • Company has high level of disclosure • Focused business model • Experienced management • Undervalued according to DDM • We recommend: HOLD!