10-K 1 c60617e10-k.txt ANNUAL REPORT 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 OR [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to . ------------------- ------------------- Commission File Number 33-97014-01 FIRST INDUSTRIAL SECURITIES, L.P. (Exact name of Registrant as specified in its Charter) DELAWARE 36-4036965 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 311 S. WACKER DRIVE, SUITE 4000, CHICAGO, ILLINOIS 60606 (Address of principal executive offices) (Zip Code) (312) 344-4300 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: GUARANTEE OF THE 9 1/2% SERIES A CUMULATIVE PREFERRED STOCK OF FIRST INDUSTRIAL REALTY TRUST, INC. (Title of class) NEW YORK STOCK EXCHANGE (Name of exchange on which registered) Securities registered pursuant to Section 12(g) of the Act: NONE 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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No . --- --- 2 FIRST INDUSTRIAL SECURITIES, L.P. TABLE OF CONTENTS

2 3 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. First Industrial Securities, L.P. (the "Company") intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities 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 Company, are generally identifiable by use of the words "believe", "expect", "intend", "anticipate", "estimate", "project" or similar expressions. The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations and future prospects of the Company include, but are not limited to, changes in: economic conditions generally and the real estate market specifically, legislative/regulatory changes, availability of capital, interest rates, competition, supply and demand for industrial properties in the Company's current market areas and general accounting principles, policies and guidelines. 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 Company and its business, including additional factors that could materially affect the Company's financial results, is included herein and in the Company's other filings with the Securities and Exchange Commission. 3 4 PART I ITEM 1. BUSINESS THE COMPANY GENERAL First Industrial Securities, L.P. (the "Company") is a Delaware limited partnership which owns 22 industrial properties (the "Properties"). The Properties consist of eight light industrial properties, five bulk warehouse properties, three R&D/Flex properties, three manufacturing properties and three regional warehouse properties. The markets in which the Properties are located include: Chicago, IL, Minneapolis/St. Paul, MN, Grand Rapids, MI, Detroit, MI, Central Pennsylvania and Milwaukee, WI. The Properties contain an aggregate of approximately 2.1 million square feet of gross leasable area ("GLA") which, as of December 31, 2000, was 99% leased to 39 tenants. At December 31, 2000, the Company had no employees. The Company's executive offices are located at 311 South Wacker Drive, Suite 4000, Chicago, Illinois 60606, and its telephone number is (312) 344-4300. The Company was formed in 1995 in connection with the issuance of 1,650,000 shares of $.01 par value Series A Cumulative Preferred Stock (the "Series A Preferred Stock") of First Industrial Realty Trust, Inc. ("FR"). The 1% general partner of the Company is First Industrial Securities Corporation ("Securities Corporation"), which is a wholly owned subsidiary of FR. The 99% limited partner of the Company is First Industrial, L.P. (the "Operating Partnership"), of which FR is the sole general partner. In connection with the issuance of the Series A Preferred Stock, FR contributed to Securities Corporation the gross proceeds from the issuance of the Series A Preferred Stock in exchange for preferred stock of Securities Corporation, and Securities Corporation contributed such proceeds to the Company in exchange for a preferred limited partnership interest in the Company. The Operating Partnership and First Industrial Pennsylvania, L.P. (the "Pennsylvania Partnership") contributed 19 properties to the Company in exchange for limited partnership interests in the Company (the "Contribution"). The Pennsylvania Partnership subsequently distributed its limited partnership interest to the Operating Partnership, which is the Company's limited partner. THE GUARANTEE AND LIMITED PARTNERSHIP AGREEMENT The Company has guaranteed the payment of dividends on, and payments upon liquidation or redemption of, the Series A Preferred Stock under a guarantee (the "Guarantee") contained in a Guarantee and Payment Agreement (the "Guarantee Agreement"). The Guarantee Agreement is administered by American National Bank and Trust Company, as guarantee agent (together with any subagents which it may appoint, the "Guarantee Agent"). The Guarantee Agent may enforce the Guarantee directly against the Company only at the direction of the holders of at least 25% of the outstanding Series A Preferred Stock. No holder of Series A Preferred Stock may seek directly to enforce the Guarantee. The Guarantee and the Guarantee Agreement will terminate upon confirmation to the Company from Fitch IBCA and Standard & Poor's Ratings Group that, immediately following such a termination, the Series A Preferred Stock would be rated at least BBB, whether or not the Series A Preferred Stock is so rated prior to such termination. The limited partnership agreement of the Company (the "Limited Partnership Agreement") and the Guarantee Agreement contain covenants generally restricting the Company's activities to the ownership and operation of the Properties and, under certain circumstances, other industrial properties. These covenants shall cease to have any effect upon the termination of the Guarantee. Under its Articles of Incorporation, Securities Corporation's sole purpose will be to act as general partner of the Company and to pay dividends on its common and preferred stock. These and other restrictions are intended to assure that even in the event of FR, the Operating Partnership or other affiliates of FR becoming subject to federal bankruptcy proceedings, neither Securities Corporation nor the Company nor their assets will be treated as subject to such bankruptcy proceedings under the doctrine of substantive consolidation or other doctrines (except to the extent liabilities are imposed by non-insolvency regulatory statutes on 4 5 affiliates) and that activities of FR, the Operating Partnership and other affiliates will not cause Securities Corporation or the Company to become insolvent or unable to pay their debts as they mature (including the Guarantee). ITEM 2. THE PROPERTIES GENERAL At December 31, 2000, the Company owned 22 industrial properties containing approximately 2.1 million square feet of GLA in five states. The properties are generally located in business parks which have convenient access to interstate highways and air transportation. The median age of the properties as of December 31, 2000 was approximately 11 years. The Company classifies its properties into five industrial categories: Light Industrial, Bulk Warehouse, R&D/Flex, Manufacturing and Regional Warehouse. While some properties may have characteristics which fall under more than one property type, the Company has used what it feels is the most dominating characteristic to categorize the property. The following table summarizes certain information as of December 31, 2000 with respect to the properties. PROPERTY SUMMARY

5 6 DETAIL PROPERTY LISTING The following table lists all of the Properties as of December 31, 2000, none of which were subject to mortgage liens as of such date. PROPERTY LISTING

6 7 TENANT AND LEASE INFORMATION Many of the Company's leases have an initial term of between three and five years and provide for periodic rental increases that are either fixed or based on changes in the Consumer Price Index. Industrial tenants typically have net or semi-net leases and pay as additional rent their percentage of the property's operating costs, including the costs of common area maintenance, property taxes and insurance. As of December 31, 2000, 99% of the GLA of the Properties was leased. The following table sets forth, as of December 31, 2000, the annualized December 2000 base rent, and the total GLA leased, by tenants responsible for more than one percent of the aggregate annualized December 2000 base rent.

7 8 The following table shows scheduled lease expirations for all leases for the Company's Properties as of December 31, 2000.

(1) Lease expirations as of December 31, assuming tenants do not exercise existing renewal, termination, or purchase options. (2) Does not include existing vacancies of 22,941 aggregate square feet. 8 9 MATERIAL PROPERTIES At December 31, 2000, three of the Company's Properties (the "Material Properties") represent ten percent or more of the aggregate book value of the Properties as of December 31, 2000 or ten percent or more of the aggregate annualized rental revenues as of December 31, 2000. The following table shows the occupancy rate and average annual base rent per square foot for each of the Material Properties for the periods indicated:

--------------- (1) As of December 31 of the year indicated. The following table sets forth certain information concerning the tenants and leases in the Material Properties as of December 31, 2000.

----------------------- (1) The tenant has subleased 87,571 sq. ft. of this property to CP&P, Incorporated, which is a fast food paper and plastic supplier. PROPERTY MANAGEMENT The Company's properties are managed by the Operating Partnership, of which FR is the sole general partner. ITEM 3. LEGAL PROCEEDINGS The Company is involved in legal proceedings arising in the ordinary course of business. All such proceedings, taken together, are not expected to have a material impact on the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. 9 10 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS None. ITEM 6. SELECTED FINANCIAL DATA The following sets forth selected financial and operating data for the Company. The following data should be read in conjunction with the financial statements and notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this Form 10-K.

10 11 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The following discussion should be read in conjunction with "Selected Financial Data" and the historical Financial Statements and Notes thereto appearing elsewhere in this Form 10-K. First Industrial Securities, L.P. (the "Company") is a Delaware limited partnership formed on August 14, 1995, the 1% general partner of which is First Industrial Securities Corporation ("Securities Corporation"), a wholly owned subsidiary of First Industrial Realty Trust, Inc. ("FR"), and the 99% limited partner of which is First Industrial, L.P. (the "Operating Partnership"), of which FR is the sole general partner. Securities Corporation also owns a preferred limited partnership interest in the Company. RESULTS OF OPERATIONS COMPARISON OF YEAR ENDED DECEMBER 31, 2000 TO YEAR ENDED DECEMBER 31, 1999 At December 31, 2000, the Company owned 22 industrial properties comprising approximately 2.1 million square feet of gross leasable area ("GLA") compared to 21 industrial properties comprising approximately 2.0 million square feet of GLA at December 31, 1999. During 2000, the Company placed in service a regional warehouse property in Carol Stream, IL with .1 million of GLA. Total revenues increased by approximately $1.0 million, or 9.5%, due primarily to an increase in occupancy and the lease up of one of Company's properties that was under redevelopment as discussed below. Average occupancy for in-service properties for the year ended December 31, 2000 and 1999 was 97.6% and 94.8%, respectively. Property expenses, which include real estate taxes, repairs and maintenance, property management, utilities, insurance and other expenses increased by approximately $.3 million or 9.4%, due primarily to a property that was placed in service during 2000 located in Carol Stream, IL, and the completion and lease up of one of the Company's properties that was under redevelopment. Depreciation and amortization remained relatively unchanged. The valuation provision on real estate held for sale of $.7 million for the year ended December 31, 2000 represents a valuation provision on three of the Company's properties located in Grand Rapids, Michigan. The $1.3 million gain on sale of properties for the year ended December 31, 1999 resulted from the sale of two industrial properties. Gross proceeds from these sales were approximately $11.8 million. COMPARISON OF YEAR ENDED DECEMBER 31, 1999 TO YEAR ENDED DECEMBER 31, 1998 At December 31, 1999, the Company owned 21 industrial properties comprising approximately 2.0 million square feet of gross leasable area ("GLA") compared to 19 industrial properties comprising approximately 2.2 million square feet of GLA at December 31, 1998. During 1999, the Company sold two industrial properties comprising approximately .4 million square feet of GLA. During this same period, the limited partner of the Company contributed four industrial properties comprising approximately .2 million square feet of GLA. Total revenues decreased by approximately $1.0 million, or 8.9%, due primarily to the decrease in rental income and recovery income from one of the Company's properties that was under redevelopment. Property expenses, which include real estate taxes, repairs and maintenance, property management, utilities, insurance and other expenses decreased by approximately $.3 million or 10.3% due primarily to one of the properties that was under redevelopment. 11 12 Depreciation and amortization remained relatively unchanged. The $1.3 million gain on sale of properties for the year ended December 31, 1999 resulted from the sale of two industrial properties. Gross proceeds from these sales were approximately $11.8 million. LIQUIDITY AND CAPITAL RESOURCES As of December 31, 2000 and 1999, the Company had no outstanding indebtedness. YEAR ENDED DECEMBER 31, 2000 Net cash provided by operating activities of approximately $7.6 million for the year ended December 31, 2000 was primarily comprised of net income of approximately $6.0 million, adjustments for non-cash items of approximately $2.6 million, offset by the net change in operating assets and liabilities of approximately $1.0 million. The adjustments for non-cash items of approximately $2.6 million are primarily comprised of depreciation and amortization of approximately $2.0 million and a valuation provision on the properties held for sale located in Grand Rapids, Michigan of approximately $.7 million, offset by the effect of the straight-lining of rental income of approximately $.1 million. Net cash used in investing activities of approximately $1.0 million for the year ended December 31, 2000 was primarily comprised of construction expenditures related to the redevelopment of one of the Company's properties located in Maple Grove, Minnesota ($.4 million) as well as various other capital improvements ($.6 million). Net cash used in financing activities of approximately $6.4 million for the year ended December 31, 2000 consisted of preferred limited partner distributions totaling, in the aggregate, approximately $3.9 million and general and limited partner distributions totaling, in the aggregate, approximately $2.5 million. YEAR ENDED DECEMBER 31, 1999 Net cash provided by operating activities of approximately $7.6 million for the year ended December 31, 1999 was primarily comprised of net income of approximately $7.3 million and adjustments for non-cash items of approximately $.7 million, offset by the net change in operating assets and liabilities of approximately $.4 million. The adjustments for non-cash items of approximately $.7 million is comprised of depreciation and amortization of approximately $1.9 million and the effect of straight-lining of rental income of approximately $.1 million, offset by the gain on sales of real estate of approximately $1.3 million. Net cash provided by investing activities of approximately $7.2 million for the year ended December 31, 1999 was primarily comprised of approximately $11.6 million of net proceeds from the sale of real estate and the receipt of approximately $.3 million from a deferred maintenance escrow established in connection with the issuance of FR's 9.5%, $.01 par value, Series A Cumulative Preferred Stock (the "Series A Preferred Stock"), offset by capital expenditures related to the redevelopment of one of the Company's properties located in Maple Grove, Minnesota (approximately $1.8 million) and the development of one of the Company's properties located in Carol Stream, Illinois (approximately $2.3 million) as well as various other capital improvements (approximately $.6 million). Net cash used in financing activities of approximately $16.2 million for the year ended December 31, 1999 consisted of preferred limited partner distributions totaling approximately $3.9 million and general and limited partner distributions totaling approximately $13.1 million offset by general and limited partnership cash contributions totaling approximately $.8 million. 12 13 YEAR ENDED DECEMBER 31, 1998 Net cash provided by operating activities of approximately $8.5 million for the year ended December 31, 1998 was primarily comprised of net income of approximately $6.8 million and adjustments for non-cash items of approximately $2.0 million, offset by the net change in operating assets and liabilities of approximately $.3 million. The adjustments for non-cash items are comprised of depreciation and amortization of approximately $1.9 million and a provision for bad debts of approximately $.1 million, offset by the effect of straight-lining of rental income. Net cash used in investing activities of approximately $1.6 million for the year ended December 31, 1998 was primarily comprised of capital expenditures related to an expansion of one of the Company's properties located in Auburn Hills, Michigan that was completed and placed in service on February 1, 1998 and various other capital improvements. Net cash used in financing activities of approximately $6.0 million for the year ended December 31, 1998 consisted of preferred limited partner distributions totaling approximately $3.9 million and general and limited partner distributions totaling approximately $2.1 million. SEGMENT REPORTING Management views the Company as a single segment. REAL ESTATE HELD FOR SALE At December 31, 2000, the Company had four industrial properties comprising approximately .5 million square feet of GLA held for sale. Income from operations of the four industrial properties held for sale for the year ended December 31, 2000, 1999 and 1998 is approximately $1.3 million, $1.0 million and $1.0 million, respectively. Net carrying value of the four industrial properties held for sale at December 31, 2000 is approximately $11.3 million. There can be no assurance that such properties held for sale will be sold. During 2000, the Company recognized a valuation provision of approximately $.7 million on three of the four properties held for sale. DISTRIBUTIONS/DIVIDENDS AND CONTRIBUTIONS In 2000, the Company distributed $3.9 million to Securities Corporation in respect of its preferred limited partnership interest in the Company, and Securities Corporation paid preferred stock dividends of $3.9 million to FR, in each case, the amount equal to the aggregate dividend payable on FR's Series A Preferred Stock. In 2000, the Company paid general and limited partner distributions to Securities Corporation and the Operating Partnership, respectively, in the aggregate amount of approximately $2.5 million. PREFERRED LIMITED PARTNER On March 9, 2001, FR called for the redemption of all of its Series A Preferred Stock at a price of $25.00 per share, plus accrued and unpaid dividends. The redemption date will be April 9, 2001. On April 9, 2001, the Company will redeem the preferred limited partner's interest in the amount of $41.25 million and the guarantee will terminate. SHORT-TERM AND LONG-TERM LIQUIDITY NEEDS The Company 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 Company believes that its principal short-term liquidity needs are to fund normal recurring expenses and to pay the quarterly preferred limited partnership distribution. The Company anticipates that these needs will be met with cash flows provided by operating activities. The Company expects to fund its long-term (greater than one year) liquidity requirements for non-recurring capital improvements, property redevelopments and property developments with its cash 13 14 flow from operations, capital contributions and, in part, with a deferred maintenance escrow established in connection with the issuance of 1,650,000 shares of FR's $.01 par value Series A Cumulative Preferred Stock which is included in restricted cash on the balance sheet. INFLATION Inflation has not had a significant impact on the Company because of the relatively low inflation rates in the Company's markets of operation. Most of the Company's leases require the tenants to pay their share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing the Company's exposure to increases in costs and operating expenses resulting from inflation. In addition, many of the leases are for terms less than five years which may enable the Company to replace existing leases with new leases at higher base rentals if rents of existing leases are below the then-existing market rate. OTHER In December 1999, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 101 ("SAB 101"), Revenue Recognition, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements. SAB 101 was required to be implemented in the fourth fiscal quarter of 2000. The adoption of SAB 101 did not have an effect on the Company's results of operations or its financial position as the Company's revenue recognition practices were compliant with the pronouncement. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK None. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See Index to Financial Statements and Financial Statement Schedule on page F-1 of this Form 10-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES None. 14 15 PART III ITEM 10 AND 11. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT AND EXECUTIVE COMPENSATION The directors and executive officers of Securities Corporation, the general partner of the Company are as follows: Name Age Office ---- --- ------ Michael W. Brennan 44 President, Chief Executive Officer and Director Michael J. Havala 41 Chief Financial Officer and Director Dr. Ronald E. Muller 61 Independent Director The independent director receives an annual director's fee of $10,000. No other director or executive officer of Securities Corporation receives any separate compensation as such. The following biographical descriptions set forth certain information with respect to the directors and executive officers of Securities Corporation: Michael W. Brennan. Mr. Brennan has been President and Chief Executive Officer and a Director of Securities Corporation since November 1998. Prior to this, Mr. Brennan was the Chief Operating Officer of Securities Corporation since its inception. Mr. Brennan has been President, Chief Executive Officer and a Director of FR since November 1998. From December 1995 to November 1998, Mr. Brennan was the Chief Operating Officer and a Director of FR and from April 1994 to December 1995, he was Senior Vice President, Asset Management of FR. Between 1988 and 1994, he was a partner of The Shidler Group and the President of the Brennan/Tomasz/Shidler Investment Corporation and was in charge of asset management, leasing, project finance, accounting and treasury functions for The Shidler Group's Chicago operations. Michael J. Havala. Mr. Havala has been Chief Financial Officer and a Director of Securities Corporation since its inception and has been the Chief Financial Officer of FR since April 1994. Between 1989 and 1994 he was Chief Financial Officer for The Shidler Group's Midwest region with responsibility for accounting, finance and treasury functions. Dr. Ronald E. Muller. Dr. Muller has been a Director of Securities Corporation since May 1999. Since 1990, he has been Chairman, Chief Executive Officer and a managing partner of REM Capital Corporation, an international financial advisory, merchant banking and insurance advisory group, having held the same positions for its predecessor company, DSL Capital Corporation, from 1985 to 1990. From 1979 to 1985, Dr. Muller served as Chief Executive Officer of the Center for International Technical Cooperation, a provider of integrated financial, technical and managerial advisory services to U.S. and emerging market companies and governmental organizations. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Securities Corporation owns a 1% general partner interest and the preferred limited partner interest in the Company. The Operating Partnership owns a 99% limited partner interest in the Company. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Company's Properties are managed by the Operating Partnership pursuant to a property management agreement. Management fees incurred are based on 3.25% of gross receipts. These fees totaled approximately $.4 million for the year ended December 31, 2000. 15 16 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K (a) FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULE AND EXHIBITS (1 & 2) See Index to Financial Statements and Financial Statement Schedule on page F-1 of this Form 10-K (3) Exhibits: Exhibit No. Description ----------- ----------- 4.1 The Limited Partnership Agreement of First Industrial Securities, L.P. (incorporated by reference to Exhibit 4.1 of the Company's Annual Report on Form 10-K for the year ended December 31, 1995, File No. 33-97014-01) 4.2 Amended and Restated Articles of Incorporation of First Industrial Securities Corporation (incorporated by reference to Exhibit 4.2 of the Company's Annual Report on Form 10-K for the year ended December 31, 1995, File No. 33-97014-01). 4.3 Articles Supplementary of First Industrial Securities Corporation (incorporated by reference to Exhibit 4.3 of the Company's Annual Report on Form 10-K for the year ended December 31, 1995, File No. 33-97014-01) 4.4 Bylaws of First Industrial Securities Corporation (incorporated by reference to Exhibit 4.4 of the Company's Annual Report on Form 10-K for the year ended December 31, 1995, File No. 33-97014-01) 10.1 Guarantee and Payment Agreement (incorporated by reference to Exhibit 10.1 of the Company's Annual Report on Form 10-K for the year ended December 31, 1995, File No. 33-97014-01) 10.2 Agency and Advance Agreement (incorporated by reference to Exhibit 10.2 of the Company's Annual Report on Form 10-K for the year ended December 31, 1995, File No. 33-97014-01) 10.3 Guarantee Agency Agreement (incorporated by reference to Exhibit 10.3 of the Company's Annual Report on Form 10-K for the year ended December 31, 1995, File No. 33-97014-01) 10.4 Property Management Agreement (incorporated by reference to Exhibit 10.4 of the Company's Annual Report on Form 10-K for the year ended December 31, 1995, File No. 33-97014-01) (b) REPORTS ON FORM 8-K None. 16 17 SIGNATURES 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 SECURITIES, L.P. BY: FIRST INDUSTRIAL SECURITIES CORPORATION, ITS SOLE GENERAL PARTNER Date: March 9, 2001 By: /s/ Michael W. Brennan ------------------------------ Michael W. Brennan President and Chief Executive Officer (Principal Executive Officer) Date: March 9, 2001 By: /s/ Michael J. Havala ------------------------------ Michael J. Havala Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

17 18 EXHIBIT INDEX Exhibit No. Description ----------- ----------- 4.1 The Limited Partnership Agreement of First Industrial Securities, L.P. (incorporated by reference to Exhibit 4.1 of the Company's Annual Report on Form 10-K for the year ended December 31, 1995, File No. 33-97014-01) 4.2 Amended and Restated Articles of Incorporation of First Industrial Securities Corporation (incorporated by reference to Exhibit 4.2 of the Company's Annual Report on Form 10-K for the year ended December 31, 1995, File No. 33-97014-01). 4.3 Articles Supplementary of First Industrial Securities Corporation (incorporated by reference to Exhibit 4.3 of the Company's Annual Report on Form 10-K for the year ended December 31, 1995, File No. 33-97014-01) 4.4 Bylaws of First Industrial Securities Corporation (incorporated by reference to Exhibit 4.4 of the Company's Annual Report on Form 10-K for the year ended December 31, 1995, File No. 33-97014-01) 10.1 Guarantee and Payment Agreement (incorporated by reference to Exhibit 10.1 of the Company's Annual Report on Form 10-K for the year ended December 31, 1995, File No. 33-97014-01) 10.2 Agency and Advance Agreement (incorporated by reference to Exhibit 10.2 of the Company's Annual Report on Form 10-K for the year ended December 31, 1995, File No. 33-97014-01) 10.3 Guarantee Agency Agreement (incorporated by reference to Exhibit 10.3 of the Company's Annual Report on Form 10-K for the year ended December 31, 1995, File No. 33-97014-01) 10.4 Property Management Agreement (incorporated by reference to Exhibit 10.4 of the Company's Annual Report on Form 10-K for the year ended December 31, 1995, File No. 33-97014-01) 18 19 FIRST INDUSTRIAL SECURITIES, L.P. INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

F-1 20 REPORT OF INDEPENDENT ACCOUNTANTS To the Partners of First Industrial Securities, L.P. In our opinion, the accompanying balance sheets and the related statements of operations, of changes in partners' capital and of cash flows present fairly, in all material respects, the financial position of First Industrial Securities, L.P. (the "Company") at December 31, 2000 and 1999, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Chicago, Illinois February 9, 2001 F-2 21 FIRST INDUSTRIAL SECURITIES, L.P. BALANCE SHEETS (Dollars in thousands)

The accompanying notes are an integral part of the financial statements. F-3 22 FIRST INDUSTRIAL SECURITIES, L.P. STATEMENTS OF OPERATIONS (Dollars in thousands)

The accompanying notes are an integral part of the financial statements. F-4 23 FIRST INDUSTRIAL SECURITIES, L.P. STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (Dollars In thousands) General Partner and Limited Preferred Limited Total Partner Partner -------- -------- ----------------- Balance at December 31, 1997 .... $ 75,301 $ 34,043 $ 41,258 Distributions.................... (5,970) (2,029) (3,941) Net Income ................... 6,796 2,847 3,949 -------- -------- -------- Balance at December 31, 1998 .... $ 76,127 $ 34,861 $ 41,266 Contributions ............... 11,127 10,684 443 Distributions ............... (16,970) (12,919) (4,051) Net Income .................. 7,340 3,386 3,954 -------- -------- -------- Balance at December 31, 1999 .... $ 77,624 $ 36,012 $ 41,612 Distributions ................... (6,420) (2,475) (3,945) Net Income ................... 6,012 2,071 3,941 -------- -------- -------- Balance at December 31, 2000 .... $ 77,216 $ 35,608 $ 41,608 ======== ======== ======== The accompanying notes are an integral part of the financial statements. F-5 24 FIRST INDUSTRIAL SECURITIES, L.P. STATEMENTS OF CASH FLOWS (Dollars In thousands)

The accompanying notes are an integral part of the financial statements. F-6 25 FIRST INDUSTRIAL SECURITIES, L.P. NOTES TO FINANCIAL STATEMENTS (Dollars in thousands, except per share data ) 1. ORGANIZATION First Industrial Securities, L.P. ("the Company") is a Delaware limited partnership formed on August 14, 1995, the 1% general partner of which is First Industrial Securities Corporation ("Securities Corporation"), a wholly owned subsidiary of First Industrial Realty Trust, Inc. ("FR"), and the 99% limited partner of which is First Industrial, L.P. (the "Operating Partnership"), of which FR is the sole general partner. Securities Corporation also owns a preferred limited partnership interest in the Company. The limited partnership agreement of the Company (the "Limited Partnership Agreement") and the Guarantee Agreement (hereinafter defined) contain covenants generally restricting the Company's activities to the ownership and operation of the properties and, under certain circumstances, other industrial properties. These covenants shall cease to have any effect upon the termination of the Guarantee. Under its Articles of Incorporation, Securities Corporation's sole purpose will be to act as general partner of the Company and to pay dividends on its common and preferred stock. These and other restrictions are intended to assure that even in the event of FR, the Operating Partnership or other affiliates of FR becoming subject to federal bankruptcy proceedings, neither Securities Corporation nor the Company nor their assets will be treated as subject to such bankruptcy proceedings under the doctrine of substantive consolidation or other doctrines (except to the extent liabilities are imposed by non-insolvency regulatory statutes on affiliates) and that activities of FR, the Operating Partnership and other affiliates will not cause Securities Corporation or the Company to become insolvent or unable to pay their debts as they mature (including the Guarantee). 2. FORMATION TRANSACTIONS THE INITIAL CAPITALIZATION The Company was capitalized with a capital contribution of $1 on August 28, 1995 by Securities Corporation. THE CONTRIBUTION TRANSACTIONS On November 17, 1995, FR completed a public offering of 1,500,000 shares of $.01 par value 9 1/2% Series A Cumulative Preferred Stock at $25.00 per share, and on December 14, 1995, FR issued 150,000 shares of $.01 par value 9 1/2% Series A Cumulative Preferred Stock for $25.00 per share pursuant to the underwriters' exercise of their over-allotment option (together the "Series A Preferred Shares"). The issuance of 1,650,000 Series A Preferred Shares is thus referred to as the "Offering". Gross proceeds to FR from the Offering were $41,250. FR contributed to Securities Corporation the gross proceeds from the Offering in exchange for preferred stock of Securities Corporation, and Securities Corporation contributed such proceeds to the Company in exchange for a preferred limited partnership interest in the Company. The Operating Partnership and First Industrial Pennsylvania, L.P. (the "Pennsylvania Partnership"), a Delaware limited partnership and a subsidiary of the Operating Partnership, contributed to the Company, in return for limited partnership interests, 14 properties and five properties (described below) on November 17, 1995 and December 14, 1995, respectively, encumbered by liens collateralizing debt under FR's $150,000 revolving line of credit. An amount of such debt equal to the gross proceeds of the Offering was repaid by the Company and such liens on the properties described below were released. F-7 26 FIRST INDUSTRIAL SECURITIES, L.P. NOTES TO FINANCIAL STATEMENTS (Dollars in thousands, except per share data ) 2. FORMATION TRANSACTIONS, CONTINUED The Pennsylvania Partnership contributed its limited partnership interest in the Company to the Operating Partnership. The foregoing is herein collectively referred to as the "Contribution Transactions". The Company commenced operations on November 17, 1995. THE PROPERTIES Upon consummation of the Offering and the Contribution Transactions (collectively, the "Formation Transactions"), the Company owned 19 properties located in four states containing an aggregate of approximately 2.1 million square feet (unaudited) of gross leasable area ("GLA"). Of the properties: (a) Four were acquired by the Operating Partnership prior to FR's initial public offering (the "Initial Offering") in June 1994; (b) Two were acquired concurrently with the consummation of the Initial Offering; and (c) Thirteen were acquired or developed by either the Operating Partnership or the Pennsylvania Partnership subsequent to the Initial Offering. On February 1, 1998, the Company completed a 70,000 square foot (unaudited) expansion of an existing industrial property located in Auburn Hills, Michigan. The cost of the expansion was approximately $2,630 and was funded with cash flows from operations. On July 31, 1998, a governmental entity condemned two parcels of land. The Company received gross proceeds of approximately $108 as consideration for these parcels of land. The gain is reflected in total revenues. During 1999, the Company sold two industrial properties comprising approximately 400,000 square feet (unaudited) of GLA. Gross proceeds from the sale were approximately $11,800. In accordance with the Guarantee Agreement (hereinafter defined), the Company replaced the sold industrial properties with four industrial properties comprising approximately 185,000 square feet (unaudited) of GLA with a net book value of approximately $10,387, which were contributed by the limited partner of the Company. During 2000, the Company completed development of one industrial property and one redevelopment comprising approximately .2 million square feet (unaudited) of GLA at a cost of approximately $5,483. THE GUARANTEE In connection with the Offering, the Company entered into a Guarantee and Payment Agreement (the "Guarantee Agreement") pursuant to which the Company guaranteed the payment of dividends on, and payments on liquidation or redemption of, the Series A Preferred Shares. The guarantee was created through the execution of the Guarantee Agreement between the Company and Securities Corporation, for the benefit of a guarantee agent. The Guarantee Agreement is administered and enforced for the benefit of the holders of the Series A Preferred Shares by the guarantee agent. The guarantee agent may enforce the guarantee directly against the Company only with the approval of the holders of at least 25% of the outstanding Series A Preferred Shares. No holder may seek directly to enforce the guarantee. F-8 27 FIRST INDUSTRIAL SECURITIES, L.P. NOTES TO FINANCIAL STATEMENTS (Dollars in thousands, except per share data ) 2. FORMATION TRANSACTIONS, CONTINUED Under the terms of the Guarantee Agreement, the Company was required to deposit approximately $414 into a restricted cash escrow account with the guarantee agent (the "Restricted Escrow"). These funds were set aside to pay for certain repair and maintenance items of the contributed properties. The balance of the Restricted Escrow at December 31, 2000 and 1999 is $67 and $64, respectively, and is included in restricted cash. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES In order to conform with generally accepted accounting principles, management, in preparation of the Company's financial statements, is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of December 31, 2000 and 1999, and the reported amounts of revenues and expenses for the years ended December 31, 2000, 1999 and 1998. Actual results could differ from those estimates. SEGMENT REPORTING Management views the Company as a single segment. REVENUE RECOGNITION Rental income is recognized on a straight-line method under which contractual rent increases are recognized evenly over the lease term. Tenant recovery income includes payments from tenants for taxes, insurance and other property operating expenses and are recognized as revenues in the period the related expenses are incurred by the Company. The Company evaluates and, if applicable, provides for an allowance for doubtful accounts against the portion of accounts receivable which is estimated to be uncollectible. Accounts receivable in the balance sheets is shown net of an allowance for doubtful accounts of $92 as of December 31, 2000 and 1999. GENERAL AND ADMINISTRATIVE Expenses incurred related to the operations of the properties are reflected in property management expense, therefore, there is no allocation of FR's general and administrative expense. INVESTMENT IN REAL ESTATE AND DEPRECIATION Real estate assets are carried at cost. The Company reviews its properties on a quarterly basis for impairment and provides an allowance if impairments are determined. First, to determine if impairment may exist, the Company reviews its properties and identifies those which have had either an event of change or event of circumstance warranting further assessment of recoverability. Then, the Company estimates the fair value of those properties on an individual basis by capitalizing the expected net operating income. Such amounts are then compared to the property's depreciated cost to determine whether an impairment exists. For properties management considers held for sale, the Company ceases depreciating the properties and values the properties at the lower of depreciated cost or fair value. F-9 28 FIRST INDUSTRIAL SECURITIES, L.P. NOTES TO FINANCIAL STATEMENTS (Dollars in thousands, except per share data ) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED Real estate taxes and other directly related expenses incurred during construction periods are capitalized and depreciated commencing with the date placed in service, on the same basis as the related assets. Depreciation expense is computed using the straight-line method based on the following useful lives: Years --------- Buildings and Improvements......................... 38 to 40 Land Improvements.................................. 15 Construction expenditures for tenant improvements, leasehold improvements and leasing commissions are capitalized and amortized over the terms of each specific lease, and repairs and maintenance are charged to expense when incurred. Expenditures for improvements are capitalized. When assets are sold or retired, their costs and related accumulated depreciation are removed from the accounts with the resulting gains or losses reflected in net income or loss. CASH AND CASH EQUIVALENTS Cash and cash equivalents include all cash and liquid investments with an initial maturity of three months or less. The carrying amount approximates fair value due to the short maturity of these investments. INCOME TAXES No federal income taxes are payable by the Company and none have been provided for in the accompanying financial statements. In accordance with partnership taxation, each of the partners is responsible for reporting their share of taxable income or loss. FAIR VALUE OF FINANCIAL INVESTMENTS The Company's financial instruments include short-term investments, tenant accounts receivable, accounts payable and other accrued expenses. The fair value of these financial instruments was not materially different from their carrying amount or contract values due to their short term nature. RECENT ACCOUNTING PRONOUNCEMENTS In December 1999, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 101 ("SAB 101"), Revenue Recognition, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements. SAB 101 was required to be implemented in the fourth fiscal quarter of 2000. The adoption of SAB 101 did not have an effect on the Company's results of operations or its financial position as the Company's revenue recognition practices were compliant with the pronouncement. F-10 29 FIRST INDUSTRIAL SECURITIES, L.P. NOTES TO FINANCIAL STATEMENTS (Dollars in thousands, except per share data ) 4. REAL ESTATE HELD FOR SALE At December 31, 2000, the Company has 4 properties comprising approximately .5 million square feet (unaudited) of GLA held for sale. The Company plans to substitute properties in place of these properties if the sales occur. There can be no assurance that such properties held for sale will be sold. The following table discloses certain information regarding the four properties held for sale by the Company.

During 2000, the Company recognized a valuation provision of $731 on three of the four properties held for sale. The fair value was determined by a quoted market price less transaction costs. 5. PARTNERS' CAPITAL During 2000, the Company distributed $3,920 to Securities Corporation in respect of its preferred limited partnership interest in the Company, and Securities Corporation paid a preferred stock dividend of $3,920 to FR, in each case, the amount equal to the aggregate dividend payable on FR's Series A Preferred Shares. During 2000, the Company paid general and limited partner distributions to Securities Corporation and the Operating Partnership, respectively, in the aggregate amount of approximately $2,500. During 1999, the Company distributed $3,920 to Securities Corporation in respect of its preferred limited partnership interest in the Company, and Securities Corporation paid a preferred stock dividend of $3,920 to FR, in each case, the amount equal to the aggregate dividend payable on FR's Series A Preferred Shares. During 1999, the Company paid general and limited partner distributions to Securities Corporation and the Operating Partnership, respectively, in the aggregate amount of approximately $13,050 that were partially offset by general and limited partner cash contributions from Securities Corporation and the Operating Partnership, respectively, in the aggregate amount of approximately $804. During 1999, the limited partner contributed four industrial properties comprising approximately 185,000 square feet (unaudited) of GLA with a net book value of $10,387 to the Company. During 1998, the Company distributed $3,920 to Securities Corporation in respect of its preferred limited partnership interest in the Company, and Securities Corporation paid a preferred stock dividend of $3,920 to FR, in each case, the amount equal to the aggregate dividend payable on FR's Series A Preferred Stock. During 1998, the Company paid general and limited partner distributions to Securities Corporation and the Operating Partnership, respectively, in the aggregate amount of $2,050. F-11 30 FIRST INDUSTRIAL SECURITIES, L.P. NOTES TO FINANCIAL STATEMENTS (Dollars in thousands, except per share data ) 6. SALES OF REAL ESTATE During the year ended December 31, 1999, the Company sold two industrial properties comprising approximately 400,000 square feet (unaudited) of GLA. Gross proceeds from the sale were approximately $11,800. The gain on sale of real estate was approximately $1,291. In accordance with the Guarantee Agreement, the Company replaced the sold industrial properties with four industrial properties comprising approximately 185,000 square feet (unaudited) of GLA with a net book value of approximately $10,387. 7. FUTURE RENTAL REVENUES The Company's properties are leased to tenants under net and semi-net operating leases. Minimum lease payments receivable, excluding tenant reimbursements of expenses, under noncancelable operating leases in effect as of December 31, 2000 are approximately as follows: 2001 $ 9,211 2002 7,918 2003 6,552 2004 3,952 2005 2,693 Thereafter 6,078 -------- Total $ 36,404 ======== Three of the Company's properties represent ten percent or more of the aggregate book value of the assets as of December 31, 2000 and 1999, or ten percent or more of the Company's aggregate rental revenues as of December 31, 2000 and 1999. 8. RELATED PARTY TRANSACTIONS The 22 industrial properties owned by the Company are managed by the Operating Partnership, of which FR is the sole general partner. Management fees incurred are based on 3.25% of gross receipts. Such fees totaled $383, $364 and $407 for the years ended December 31, 2000, 1999 and 1998, respectively. At December 31, 2000 and 1999, there were no accrued management fees due to the Operating Partnership. 9. SUPPLEMENTAL INFORMATION TO STATEMENT OF CASH FLOWS The following table discloses the non-cash operating, investing and financing activities that resulted from the contribution of four industrial properties comprising approximately 185,000 square feet (unaudited) of GLA from the limited partner during the year ended December 31, 1999. Year Ended December 31, 1999 ----------------- Land........................................ $ 1,665 Building.................................... 10,025 Accumulated Depreciation.................... (1,303) Deferred Rent Receivable.................... 40 Tenant Accounts Receivable.................. (21) Other Assets, Net........................... 17 Accounts Payable and Accrued Expenses....... (100) Limited Partner Contribution................ (10,323) ----------- $ -- =========== F-12 31 FIRST INDUSTRIAL SECURITIES, L.P. NOTES TO FINANCIAL STATEMENTS (Dollars in thousands, except per share data ) 10. COMMITMENTS AND CONTINGENCIES In the normal course of business, the Company is involved in legal actions arising from the ownership of their properties. In management's opinion, the liabilities, if any, that may ultimately result from such legal actions are not expected to have a material adverse effect on the financial position, results of operations or liquidity of the Company. One property has a lease granting the tenant the option to purchase the property. Such option is exercisable prior to January 31, 2007 at a fixed purchased price which is in excess of the property's depreciated cost. The Company has no notice of any exercise of any tenant purchase option. 11. SUBSEQUENT EVENT (UNAUDITED) On March 9, 2001, FR called for the redemption of all of its outstanding Series A Preferred Shares at the price of $25.00 per share, plus accrued and unpaid dividends. The redemption date will be April 9, 2001. On April 9, 2001, the Company will redeem the preferred limited partner's interest of $41,250 and the guarantee will terminate. 12. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

F-13 32 REPORT OF INDEPENDENT ACCOUNTANTS To the Partners of First Industrial Securities, L.P.: Our audits of the financial statements referred to in our report dated February 9, 2001 of First Industrial Securities, L.P. which report and financial statements are included in this Annual Report on Form 10-K also included an audit of the financial statement schedule listed in the Index to Financial Statements and Financial Statement Schedule on page F-1 of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related financial statements. PricewaterhouseCoopers LLP Chicago, Illinois February 9, 2001 S-1 33 FIRST INDUSTRIAL SECURITIES, L.P. SCHEDULE III: REAL ESTATE AND ACCUMULATED DEPRECIATION AS OF DECEMBER 31, 2000 (DOLLARS IN THOUSANDS)

NOTES: (a) Initial cost for each respective property is total acquisition costs associated with its purchase. (b) Depreciation is computed based upon the following estimated lives: Buildings and Improvements 38 to 40 years Tenant Improvements and Leasehold Improvements Life of lease Land Improvements 15 years (c) At December 31, 2000, aggregate cost of land, buildings and improvements for federal income tax purposes was approximately $88.1 million. (d) During 2000, the Company recognized a valuation provision of $731 on these properties. These properties are owned by the Company. The Company guarantees the payment of the Series A Cumulative Preferred Stock dividends and amounts upon redemption, liquidation, dissolution or winding - up. 34 FIRST INDUSTRIAL SECURITIES, L.P. SCHEDULE III: REAL ESTATE AND ACCUMULATED DEPRECIATION (continued) AS OF DECEMBER 31, 2000 (Dollars In thousands) The changes in total real estate assets for the years ended December 31, 2000 and 1999 are as follows:

The changes in accumulated depreciation for the years ended December 31, 2000 and 1999 are as follows: First Industrial Securities, L.P. ---------------------------------- 2000 1999 ------------ ----------- Balance, Beginning of Year .... $ 8,971 $ 7,163 Properties Contributed ........ -- 1,303 Properties Sold ............... -- (1,199) Depreciation for Year ......... 1,763 1,704 ------- ------- Balance, End of Year........... $10,734 $ 8,971 ======= ======= S-3

FIRST INDUSTRIAL SECURITIES L P 10-K