First Industrial 10Q/A 2005 Q3 Quarterly report (amended)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q/A

AMENDMENT NO. 1 TO FORM 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended September 30, 2005

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the transition period from to

Commission filenumber 333-21873

First Industrial, L.P.

(Exact Name of Registrant as Specified in its Charter)


Delaware		36-3924586
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

311 S. Wacker Drive, Suite 4000, Chicago, Illinois 60606 (Address of Principal Executive Offices)

(312) 344-4300 (Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is an accelerated filer (as defined inRule 12b-2 of the Exchange Act). Yes þ No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Explanatory Note

This amendment to the quarterly report onForm 10-Q for the quarter ended September 30, 2005 of First Industrial L.P. includes revisions to historical financial data and related descriptions resulting from errors in the General Partner Preferred Unit and General Partner Unit account dollar balances. This amendment includes changes to Part I, Item 1, Item 2 and Item 4, but is not intended to update information presented in other items in this report as originally filed. We are not required to and we have not updated any forward-looking statements previously included in suchForm 10-Q.

FIRST INDUSTRIAL, L.P.

Form 10-Q

For the Period Ended September 30, 2005

INDEX


		Page

PART I: FINANCIAL INFORMATION
Item 1.	Financial Statements		2
	Consolidated Balance Sheets as of September 30, 2005 (Restated) and December 31, 2004 (Restated)		2
	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2005 and September 30, 2004 (Restated)		3
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2005 and September 30, 2004 (Restated)		4
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2005, and September 30, 2004 (Restated)		5
	Notes to Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		42
Item 4.	Controls and Procedures		42

PART II: OTHER INFORMATION
Item 1.	Legal Proceedings		43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		43
Item 3.	Defaults Upon Senior Securities		43
Item 4.	Submission of Matters to a Vote of Security Holders		43
Item 5.	Other Information		43
Item 6.	Exhibits		43
SIGNATURE			46
EXHIBIT INDEX			47
Certification of Principal Executive Officer
Certification of Principal Financial Officer
Certification of the Principal Executive Officer and Principal Financial Officer

PART I: FINANCIAL INFORMATION


Item 1.	*Financial Statements*

FIRST INDUSTRIAL, L.P.

CONSOLIDATED BALANCE SHEETS


				Restated			Restated
				September 30,			December 31,
				2005			2004

				(Unaudited)
				(Dollars in Thousands)
ASSETS
Assets:
	Investment in Real Estate:
		Land		$	448,056		$	423,836
		Buildings and Improvements			2,180,061			2,039,486
		Construction in Progress			31,658			23,092
		Less: Accumulated Depreciation			(348,530	)		(321,003	)

			Net Investment in Real Estate		2,311,245			2,165,411

	Real Estate Held for Sale, Net of Accumulated Depreciation and Amortization of $194 and $2,908 at September 30, 2005 and December 31, 2004, respectively				9,611			50,286
	Investments in and Advances to Other Real Estate Partnerships				354,962			339,967
	Cash and Cash Equivalents				—			3,069
	Restricted Cash				3,286			25
	Tenant Accounts Receivable, Net				6,732			6,509
	Investments in Joint Ventures				43,410			5,489
	Deferred Rent Receivable				19,626			15,928
	Deferred Financing Costs, Net				11,465			11,569
	Deferred Leasing Intangibles, Net				51,553			38,200
	Prepaid Expenses and Other Assets, Net				128,285			84,698

			Total Assets	$	2,940,175		$	2,721,151


LIABILITIES AND PARTNERS’ CAPITAL
Liabilities:
	Mortgage Loans Payable, Net			$	55,664		$	57,449
	Senior Unsecured Debt, Net				1,348,543			1,347,524
	Unsecured Line of Credit				380,500			167,500
	Accounts Payable and Accrued Expenses				96,240			68,577
	Deferred Leasing Intangibles, Net				10,952			8,451
	Rents Received in Advance and Security Deposits				25,818			26,441
	Distributions Payable				34,592			35,487

			Total Liabilities		1,952,309			1,711,429

Commitments and Contingencies					—			—
Partners’ Capital:
	General Partner Preferred Units (20,750 units issued and outstanding at September 30, 2005 and December 31, 2004, respectively)				121,584			121,584
	General Partner Units (43,220,245 and 42,834,091 units issued and outstanding at September 30, 2005 and December 31, 2004, respectively)				735,251			757,840
	Unamortized Value of General Partnership Restricted Units				(19,615	)		(19,611	)
	Limited Partners’ Units (6,595,015 and 6,455,914 units issued and outstanding at September 30, 2005 and December 31, 2004, respectively)				155,322			153,609
	Accumulated Other Comprehensive Loss				(4,676	)		(3,700	)

			Total Partners’ Capital		987,866			1,009,722

			Total Liabilities and Partners’ Capital	$	2,940,175		$	2,721,151

The accompanying notes are an integral part of the financial statements.

FIRST INDUSTRIAL, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS


						Restated						Restated

			Three Months			Three Months			Nine Months			Nine Months
			Ended			Ended			Ended			Ended
			September 30,			September 30,			September 30,			September 30,
			2005			2004			2005			2004

			(Dollars in Thousands, except per Unit data)
			(Unaudited)
Revenues:
	Rental Income		$	57,554		$	50,031		$	164,577		$	145,001
	Tenant Recoveries and Other Income			21,866			15,552			61,351			49,342
	Revenues from Build to Suit For Sale			10,694			—			10,694			—

		Total Revenues		90,114			65,583			236,622			194,343

Expenses:
	Real Estate Taxes			12,601			10,675			35,559			30,648
	Repairs and Maintenance			5,455			5,134			17,192			15,611
	Property Management			4,762			3,348			12,467			8,765
	Utilities			2,752			2,070			7,748			6,434
	Insurance			612			712			1,574			2,036
	Other			1,944			570			5,068			3,168
	General and Administrative			15,219			10,883			38,176			27,581
	Amortization of Deferred Financing Costs			540			510			1,557			1,419
	Depreciation and Other Amortization			29,075			19,774			77,063			56,871
	Expenses from Build to Suit for Sale			10,455			—			10,455			—

		Total Expenses		83,415			53,676			206,859			152,533

Other Income/ Expense:
	Interest Income			188			492			905			1,582
	Interest Expense			(27,368	)		(25,688	)		(78,974	)		(73,156	)
	Mark-to-Market/ Gain on Settlement of Interest Rate Protection Agreement			1,212			—			749			1,450
	Gain from Early Retirement of Debt, Net			82			—			82			—

		Total Other Income/ Expense		(25,886	)		(25,196	)		(77,238	)		(70,124	)

Loss from Continuing Operations Before Equity in Income in Joint Ventures, Equity in Income of Other Real Estate Partnerships and Income Tax Benefit				(19,187	)		(13,289	)		(47,475	)		(28,314	)
Equity in Income of Joint Ventures				3,977			35,303			3,757			35,848
Equity in Income of Other Real Estate Partnerships				20,490			6,173			37,019			20,745
Income Tax Benefit				3,108			838			7,222			3,209

Income from Continuing Operations				8,388			29,025			523			31,488

Income from Discontinued Operations (Including Gain on Sale of Real Estate of $22,952 and $10,630 for the Three Months ended September 30, 2005 and 2004, respectively, $63,091 and $62,378 for the Nine Months ended September 30, 2005 and 2004, respectively,)				23,549			13,548			66,485			72,711
Provision for Income Taxes Allocable to Discontinued Operations (Including $6,468 and $1,738 for the Three Months ended September 30, 2005 and 2004, respectively, and $12,210 and $5,464 for the Nine Months ended September 30, 2005 and 2004, respectively, allocable to Gain on Sale of Real Estate)				(6,625	)		(2,333	)		(13,083	)		(7,119	)

Income Before Gain on Sale of Real Estate				25,312			40,240			53,925			97,080
Gain on Sale of Real Estate				2,614			2,860			26,465			7,852
Provision for Income Taxes Allocable to Gain on Sale of Real Estate				(1,143	)		(964	)		(10,128	)		(2,395	)

Net Income				26,783			42,136			70,262			102,537
Less: Preferred Unit Distributions				(2,310	)		(2,344	)		(6,930	)		(12,178	)
Less: Redemption of Preferred Units				—			(600	)		—			(7,959	)

Net Income Available to Unitholders			$	24,473		$	39,192		$	63,332		$	82,400

Basic Earnings Per Unit:
	Income from Continuing Operations		$	0.15		$	0.60		$	0.20		$	0.36

	Net Income Available to Unitholders		$	0.50		$	0.83		$	1.30		$	1.76

Diluted Earnings Per Unit:
	Income from Continuing Operations		$	0.15		$	0.59		$	0.20		$	0.36

	Net Income Available to Unitholders		$	0.50		$	0.83		$	1.29		$	1.75

The accompanying notes are an integral part of the financial statements.

FIRST INDUSTRIAL, L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


					Restated						Restated

		Three Months			Three Months			Nine Months			Nine Months
		Ended			Ended			Ended			Ended
		September 30,			September 30,			September 30,			September 30,
		2005			2004			2005			2004

		(Dollars in Thousands, except per Unit data)
		(Unaudited)
Net Income		$	26,783		$	42,136		$	70,262		$	102,537
Other Comprehensive (Loss) Income:
	Reclassification of Settlement of Interest Rate Protection Agreements from Other Comprehensive Income		(159	)		—			(159	)		6,657
	Mark-to-Market of Interest Rate Protection Agreements		—			113			—			106
	Amortization of Interest Rate Protection Agreements		(270	)		(288	)		(817	)		(235	)

Comprehensive Income		$	26,354		$	41,961		$	69,286		$	109,065

The accompanying notes are an integral part of the financial statements.

FIRST INDUSTRIAL, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS


							Restated

				Nine Months			Nine Months
				Ended			Ended
				September 30,			September 30,
				2005			2004

				(Dollars in thousands)
				(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net Income			$	70,262		$	102,537
	Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
		Depreciation			61,873			51,643
		Amortization of Deferred Financing Costs			1,557			1,419
		Other Amortization			22,564			14,930
		Provision for Bad Debt			1,302			473
		Equity in Income of Joint Ventures			(3,757	)		(35,848	)
		Distributions from Joint Ventures			590			36,134
		Gain on Sale of Real Estate			(89,556	)		(70,230	)
		Mark to Market of Interest Rate Protection Agreement			(749	)		—
		Gain on Early Retirement of Debt			(82	)		—
		Equity in Income of Other Real Estate Partnerships			(37,019	)		(20,745	)
		Distributions from Investment in Other Real Estate Partnerships			37,019			20,745
		Increase in Build-to-Suit-for-Sale Costs Receivable			(10,694	)		—
		Increase in Tenant Accounts Receivable and Prepaid Expenses and Other Assets, Net			(17,467	)		(30,642	)
		Increase in Deferred Rent Receivable			(4,777	)		(3,519	)
		Increase in Accounts Payable and Accrued Expenses and Rents Received in Advance and Security Deposits			23,887			8,602

			Net Cash Provided by Operating Activities		54,953			75,499

CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchases of and Additions to Investment in Real Estate				(466,858	)		(294,956	)
	Net Proceeds from Sales of Investments in Real Estate				330,336			238,521
	Investments in and Advances to Other Real Estate Partnerships				(81,161	)		(62,913	)
	Distributions from Other Real Estate Partnerships in Excess of Equity in Income				66,166			62,396
	Contributions to and Investments in Joint Ventures				(41,473	)		(4,168	)
	Distributions from Joint Ventures				597			14,308
	Repayment of Mortgage Loans Receivable				32,050			21,204
	(Increase) Decrease in Restricted Cash				(3,261	)		36,993

			Net Cash (Used in) Provided by Investing Activities		(163,604	)		11,385

CASH FLOWS FROM FINANCING ACTIVITIES:
	Unit Contributions				6,664			38,786
	Unit Distributions				(103,079	)		(97,350	)
	Proceeds from the Sale of Preferred Units				—			200,000
	Preferred Unit Offering Costs				—			(5,576	)
	Redemption of Preferred Units				—			(321,438	)
	Repurchase of Restricted Common Units				(3,269	)		(3,746	)
	Preferred Unit Distributions				(8,162	)		(12,178	)
	Proceeds from Senior Unsecured Debt				—			134,496
	Other Proceeds from Senior Unsecured Debt				—			6,657
	Proceeds from Mortgage Loans Payable				1,167			1,400
	Repayments on Mortgage Loans Payable				(1,394	)		(876	)
	Proceeds from Unsecured Line of Credit				376,500			484,000
	Repayments on Unsecured Line of Credit				(163,500	)		(500,900	)
	Cash Book Overdraft				2,442			—
	Debt Issuance Costs				(1,787	)		(3,773	)

			Net Cash Provided By (Used in) Financing Activities		105,582			(80,498	)

Net (Decrease) Increase in Cash and Cash Equivalents					(3,069	)		6,386
Cash and Cash Equivalents, Beginning of Period					3,069			—

Cash and Cash Equivalents, End of Period				$	—		$	6,386

The accompanying notes are an integral part of the financial statements.

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per Unit data)

(Unaudited)


1.	Organization and Formation of Partnership

First Industrial, L.P. (the “Operating Partnership”) was organized as a limited partnership in the state of Delaware on November 23, 1993. The sole general partner is First Industrial Realty Trust, Inc. (the “Company”) with an approximate 86.8% and 86.4% ownership interest at September 30, 2005 and September 30, 2004, respectively. The limited partners of the Operating Partnership own approximately a 13.2% and 13.6% interest in the Operating Partnership at September 30, 2005 and September 30, 2004, respectively. The Company also owns a preferred general partnership interest in the Operating Partnership with an aggregate liquidation priority of $125,000. The Company is a real estate investment trust (“REIT”) as defined in the Internal Revenue Code. The Company’s operations are conducted primarily through the Operating Partnership.

The Operating Partnership is the sole member of several limited liability companies (the “L.L.C.s”), the sole stockholder of First Industrial Development Services, Inc., and holds at least a 99% limited partnership interest in each of eight limited partnerships (together, the “Other Real Estate Partnerships”).

The general partners of the Other Real Estate Partnerships are separate corporations, each with at least a .01% general partnership interest in the Other Real Estate Partnerships for which it acts as a general partner. Each general partner of the Other Real Estate Partnerships is a wholly-owned subsidiary of the Company.

The OREPS are considered to be a variable interest entity in accordance with FASB Interpretation No. 46R, “Consolidation of Variable Interest Entities.” As the Company controls the Operating Partnership, the Operating Partnership acts in the capacity of an agent of the Company (the general partners) with respect to all matters concerning the OREPs; therefore management has determined that the Company, as the principal, is the primary beneficiary. Accordingly, the OREPs, along with the Joint Ventures, are accounted for under the equity method of accounting. The operating data of the Other Real Estate Partnerships and the Joint Ventures is not consolidated with that of the Consolidated Operating Partnership as presented herein.

The financial statements of the Operating Partnership report the L.L.C.s and First Industrial Development Services, Inc. (the “Consolidated Operating Partnership”) on a consolidated basis. As of September 30, 2005, the Consolidated Operating Partnership owned 810 industrial properties (inclusive of developments in process) containing an aggregate of approximately 66.8 million square feet of gross leasable area (“GLA”). On a combined basis, as of September 30, 2005, the Other Real Estate Partnerships owned 98 industrial properties containing an aggregate of approximately 9.1 million square feet of GLA.

On September 14, 2005 and March 21, 2005, the Operating Partnership, through entities it, directly or indirectly, wholly-owns, entered into joint venture arrangements with an institutional investor to invest in industrial properties (the “September 2005 Joint Venture” and the “March 2005 Joint Venture”). The Operating Partnership, through entities it, directly or indirectly, wholly-owns, owns a ten percent equity interest in and provides property management, leasing, development, disposition and portfolio management services to the September 2005 Joint Venture and the March 2005 Joint Venture. In addition, the Company has the opportunity to earnperformance-based incentives when industrial assets are sold and returns exceed certain thresholds.

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

limited liability companies of which it is the sole member, also owned a minority interest in and provided property management services to another joint venture which invested in industrial properties (the “December 2001 Joint Venture”; together with the September 2005 Joint Venture, the March 2005 Joint Venture, the September 1998 Joint Venture and the May 2003 Joint Venture, the “Joint Ventures”). During the year ended December 31, 2004, the December 2001 Joint Venture sold all of its industrial properties.

The Other Real Estate Partnerships and the Joint Ventures are accounted for under the equity method of accounting. The operating data of the Other Real Estate Partnerships and the Joint Ventures is not consolidated with that of the Consolidated Operating Partnership as presented herein.


2.	Summary of Significant Accounting Policies

The accompanying unaudited interim financial statements have been prepared in accordance with the accounting policies described in the financial statements and related notes included in the Consolidated Operating Partnership’s 2004Form 10-K and should be read in conjunction with such financial statements and related notes. The following notes to these interim financial statements highlight significant changes to the notes included in the December 31, 2004 audited financial statements included in the Consolidated Operating Partnership’s 2004Form 10-K and present interim disclosures as required by the Securities and Exchange Commission.

In order to conform with generally accepted accounting principles, management, in preparation of the Consolidated Operating Partnership’s financial statements, is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of September 30, 2005 and December 31, 2004, and the reported amounts of revenues and expenses for each of the nine and three months ended September 30, 2005 and September 30, 2004. Actual results could differ from those estimates.

During 2005 the Consolidated Operating Partnership entered into a contract with a third party to construct an industrial property. Thisbuild-to-suit for sale contract required an up front earnest money deposit and requires the remaining purchase price to be paid at closing. The Consolidated Operating Partnership uses thepercentage-of-completion contract method of accounting in accordance withSOP 81-1 “Accounting for Performance of Construction-Type and Certain Production-Type Contracts”. During the period of performance, costs are accumulated on the balance sheet in Prepaid Expenses and Other Assets and revenues and expenses are recognized in continuing operations.

The Consolidated Operating Partnership accounts for all acquisitions entered into subsequent to June 30, 2001 in accordance with Financial Accounting Standards Board’s (“FASB”) Statement of Financial Accounting Standard No. 141, “Business Combinations” (“FAS 141”). Upon acquisition of a property, the Consolidated Operating Partnership allocates the purchase price of the property based upon the fair value of the assets acquired, which generally consist of land, buildings, tenant improvements, leasing commissions and intangible assets includingin-place leases and above market and below market leases. The Consolidated Operating Partnership allocates the purchase price to the fair value of the tangible assets of an acquired property by valuing the property as if it were vacant. Acquired above and below market leases are valued based on the present value of the difference between prevailing market rates and thein-place rates over the remaining lease term. Above market leases, Net of $5,385 are included in Deferred Leasing Intangibles, Net at September 30, 2005. Deferred Leasing Intangibles, Net, included in liabilities of $10,952 represents Below Market Leases, Net at September 30, 2005. Acquired above and below market leases are amortized over the remainingnon-cancelable terms of the respective leases as an adjustment to rental revenue on the Consolidated Operating Partnership’s consolidated statements of operations and comprehensive income.

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The purchase price is further allocated toin-place lease values based on management’s evaluation of the specific characteristics of each tenant’s lease and the Consolidated Operating Partnership’s overall relationship with the respective tenant. The net value ofin-place lease intangibles, of $46,168 at September 30, 2005, which is included as a component of Deferred Leasing Intangibles, Net is amortized to expense over the remaining lease term and expected renewal periods of the respective lease. If a tenant terminates its lease early, the unamortized portion of the tenant improvements, leasing commissions, above and below market leases and thein-place lease value is immediately charged to expense.

In the opinion of management, the accompanying unaudited interim financial statements reflect all adjustments necessary for a fair statement of the financial position of the Consolidated Operating Partnership as of September 30, 2005 and December 31, 2004 and the results of its operations and comprehensive income for each of the nine and three months ended September 30, 2005 and September 30, 2004, and its cash flows for the nine months ended September 30, 2005 and September 30, 2004, and all adjustments are of a normal recurring nature.


	*Restatement:*

In the consolidated statement of operations for the nine and three months ended September 30, 2004 and cash flows for the nine months ended September 30, 2004 presented in itsForm 10-Q filed November 9, 2004, the Consolidated Operating Partnership allocated its entire tax provision/benefit to income from discontinued operations. The Consolidated Operating Partnership has determined that its tax provision/benefit should be allocated between income from continuing operations, income from discontinued operations and gain on sale of real estate. The Consolidated Operating Partnership has restated its consolidated statement of operations for the nine and three months ended September 30, 2004 and cash flows for the nine months ended September 30, 2004 to reflect this new allocation in thisForm 10-Q. See Note 12 for further disclosure about the restatement.

General Partner Unit and General Partner Preferred Unit account dollar balances on the consolidated balance sheet at September 30, 2005 and December 31, 2004 have been restated to correct errors. The errors relate to how the Consolidated Operating Partnership recorded the redemption of its Series D, Series E and Series H General Partner Preferred Units and the issuance of its Series F, Series G and Series H General Partner Preferred Units. At September 30, 2005 and December 31, 2004, the Consolidated Operating Partnership incorrectly recorded the redemption of its Series D, Series E and Series H General Partner Preferred Units as a reduction to the General Partner Unit account dollar balance instead of as a reduction to the General Partner Preferred Unit account dollar balance and the issuance of its Series F, Series G and Series H General Partner Preferred Units as an increase to the General Partner Unit account dollar balance instead of as an increase to the General Partner Preferred Unit account dollar balance. The table below summarizes the financial statement captions impacted on the balance sheet as of September 30, 2005 and December 31, 2004:


	As Previously
Balance Sheet Caption	Reported		Adjustment			As Restated

General Partner Preferred Units — December 31, 2004 and September 30, 2005	$	240,697	$	(119,113	)	$	121,584
General Partner Units — December 31, 2004	$	638,727	$	119,113		$	757,840
General Partner Units — September 30, 2005	$	616,138	$	119,113		$	735,251

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	*Income Taxes:*

In accordance with partnership taxation, each of the partners is responsible for reporting their share of taxable income or loss. Accordingly, a provision has been made for federal income taxes in the accompanying consolidated financial statements only as it relates to the activities conducted in its taxable REIT subsidiary, First Industrial Development Services, Inc. which has been accounted for under Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“FAS 109”). Additionally, the Operating Partnership and certain of its subsidiaries are subject to certain state and local income taxes; these taxes are included within the provision for income taxes in the accompanying consolidated financial statements. In accordance with FAS 109, the total benefit/expense has been separately allocated to income from continuing operations, income from discontinued operations and gain on sale of real estate.


	*Stock Incentive Plan:*

Prior to January 1, 2003, the Consolidated Operating Partnership accounted for its stock incentive plans under the recognition and measurement principles of Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). Under APB 25, compensation expense is not recognized for options issued in which the strike price is equal to the fair value of the Company’s stock on the date of grant. On January 1, 2003, the Consolidated Operating Partnership adopted the fair value recognition provisions of the FASB Statement of Financial Accounting Standards No. 123, “Accounting for Stock Based Compensation” (“FAS 123”), as amended by Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure”. The Consolidated Operating Partnership is applying the fair value recognition provisions of FAS 123 prospectively to all employee option awards granted after December 31, 2002. The Consolidated Operating Partnership has not awarded options to employees or directors of the Company subsequent to the adoption of FAS 123, and therefore no stock-based employee compensation expense is included in net income available to unitholders related to the fair value recognition provisions of FAS 123.

The following table illustrates the pro forma effect on net income and earnings per unit as if the fair value recognition provisions of FAS 123 had been applied to all outstanding and unvested option awards in each period presented:


	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,

	2005			2004			2005			2004

Net Income Available to Unitholders — as reported	$	24,473		$	39,192		$	63,332		$	82,400
Less: Total Stock-Based Employee Compensation Expense Determined Under the Fair Value Method		(18	)		(92	)		(83	)		(333	)

Net Income Available to Unitholders — pro forma	$	24,455		$	39,100		$	63,249		$	82,067

Net Income Available to Unitholders per Share — as reported — Basic	$	0.50		$	0.83		$	1.30		$	1.76

Net Income Available to Unitholders per Share — pro forma — Basic	$	0.50		$	0.83		$	1.30		$	1.76

Net Income Available to Unitholders per Share — as reported — Diluted	$	0.50		$	0.83		$	1.29		$	1.75

Net Income Available to Unitholders per Share — pro forma — Diluted	$	0.50		$	0.83		$	1.29		$	1.74

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	*Discontinued Operations:*

On January 1, 2002, the Consolidated Operating Partnership adopted the FASB Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“FAS 144”). FAS 144 addresses financial accounting and reporting for the disposal of long-lived assets. FAS 144 requires that the results of operations and gains or losses on the sale of property be presented in discontinued operations if both of the following criteria are met: (a) the operations and cash flows of the property have been (or will be) eliminated from the ongoing operations of the Consolidated Operating Partnership as a result of the disposal transaction and (b) the Consolidated Operating Partnership will not have any significant continuing involvement in the operations of the property after the disposal transaction. FAS 144 also requires prior period results of operations for these properties to be restated and presented in discontinued operations in prior consolidated statements of operations.


	*Reclassification:*

Certain 2004 items have been reclassified to conform to 2005 presentation.


	*Recent Accounting Pronouncements:*

In December, 2004, the FASB issued Statement of Financial Accounting Standards No. 153, “Exchanges of Nonmonetary Assets — An Amendment of APB Opinion No. 29” (“FAS 153”). The amendments made by FAS 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have “commercial substance.” FAS 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The Operating Partnership does not believe that the adoption of FAS 153 will have a material effect on the Operating Partnership’s consolidated financial statements.

In December, 2004, the FASB issued Statement of Financial Accounting Standards No. 123: (Revised 2004) — Share-Based Payment (“FAS 123R”). FAS 123R replaces FAS 123, which the Company adopted on January 1, 2003. FAS 123R requires that the compensation cost relating to share-based payment transactions be recognized in financial statements and measured based on the fair value of the equity or liability instruments issued. FAS 123R is effective as of the first interim or annual reporting period that begins after December, 2005. The Operating Partnership does not believe that the adoption of FAS 123R will have a material effect on the Operating Partnership’s consolidated financial statements.

In May, 2005, the FASB issued Statement of Financial Accounting Standards No. 154, “Accounting Changes and Error Corrections” (“FAS 154”) which supersedes APB Opinion No. 20, “Accounting Changes” and Statement of Financial Accounting Standards No. 3, “Reporting Accounting Changes in Interim Financial Statements.” FAS 154 changes the requirements for the accounting for and reporting of changes in accounting principle. The statement requires the retroactive application to prior periods’ financial statements of changes in accounting principles, unless it is impracticable to determine either the period specific effects or the cumulative effect of the change. FAS 154 does not change the guidance for reporting the correction of an error in previously issued financial statements or the change in an accounting estimate. FAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.

In June, 2005, the FASB ratified the consensus reached by the Emerging Issues Task Force (“EITF”) regardingEITF 04-05, “Investor’s Accounting for an Investment in a Limited Partnership When the Investor is the Sole General Partner and the Limited Partners Have Certain Rights.” The conclusion provides a framework for addressing the question of when a sole general partner, as defined inEITF 04-05, should consolidate a limited partnership. The EITF has concluded that the general partner of a limited partnership should consolidate a limited partnership unless (1) the limited partners possess substantive kick-out rights as defined in paragraph B20 of FIN 46R, or (2) the limited partners possess substantive

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

participating rights similar to the rights described in Issue 96-16, “Investor’s Accounting for an Investee When the Investor has a Majority of the Voting Interest by the Minority Shareholder or Shareholders Have Certain Approval or Veto Rights.” In addition, the EITF concluded that the guidance should be expanded to include all limited partnerships, including those with multiple general partners. The adoption of EITF 04-05 did not effect the results of operations, financial position or liquidity of the Operating Partnership.

In June 2005, the FASB ratified the consensus reached by the EITF regardingEITF 05-6, “Determining the Amortization Period for Leasehold Improvements.” The guidance requires that leasehold improvements acquired in a business combination, or purchased subsequent to the inception of a lease, be amortized over the lesser of the useful life of the assets or a term that includes renewals that are reasonably assured at the date of the business combination or purchase. The guidance is effective for periods beginning after June 29, 2005.EITF 05-6 does not impact the Consolidated Operating Partnership’s results of operations, financial position, or liquidity.


3.	Investments in and Advances to Other Real Estate Partnerships

The investments in and advances to Other Real Estate Partnerships reflects the Operating Partnership’s limited partnership equity interests in the entities referred to in Note 1 to these financial statements.

Summarized combined condensed financial information as derived from the financial statements of the Other Real Estate Partnerships is presented below:

Condensed Combined Balance Sheets:


			September 30,		December 31,
			2005		2004

ASSETS
Assets:
	Investment in Real Estate, Net		$	303,090	$	312,679
	Other Assets, Net			67,522		39,829

		Total Assets	$	370,612	$	352,508


LIABILITIES AND PARTNERS’ CAPITAL
Liabilities:
	Mortgage Loans Payable		$	2,399	$	2,456
	Other Liabilities			10,217		7,136

		Total Liabilities		12,616		9,592

	Partners’ Capital			357,996		342,916

		Total Liabilities and Partners’ Capital	$	370,612	$	352,508

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Condensed Combined Statements of Operations:


	Three Months			Three Months			Nine Months			Nine Months
	Ended			Ended			Ended			Ended
	September 30,			September 30,			September 30,			September 30,
	2005			2004			2005			2004

Total Revenues, Including Interest Income	$	11,741		$	11,376		$	32,825		$	30,667
Property Expenses		(3,481	)		(3,015	)		(10,898	)		(9,492	)
Interest Expense		(43	)		(45	)		(130	)		(134	)
Amortization of Deferred Financing Costs		(1	)		(1	)		(2	)		(2	)
Depreciation and Other Amortization		(3,719	)		(2,995	)		(10,138	)		(8,484	)
Gain on Sale of Real Estate		—			53			864			1,644
Income from Discontinued Operations (Including Gain (Loss) on Sale of Real Estate of $15,600 and $(20) for the Three Months Ended September 30, 2005 and 2004, respectively, and $22,647 and $3,715 for the Nine Months Ended September 30, 2005 and 2004, respectively)		16,085			858			24,726			6,729

Net Income	$	20,582		$	6,231		$	37,247		$	20,928


4.	Investments in Joint Ventures

As of September 30, 2005, the September 1998 Joint Venture owned 41 industrial properties comprising approximately 1.3 square feet of GLA, the May 2003 Joint Venture owned 11 industrial properties comprising approximately 4.7 million square feet of GLA, the March 2005 Joint Venture owned 28 industrial properties comprising approximately 3.4 million square feet of GLA and several land parcels and the September 2005 Joint Venture owned 218 industrial properties comprising approximately 14.1 million square feet of GLA and several land parcels. During the nine months ended September 30, 2005, the Operating Partnership sold seven industrial properties and several land parcels to the March 2005 Joint Venture at a total sales price of $89,023.

The Consolidated Operating Partnership deferred 15% of the gain on sale of real estate and acquisition fees in the May 2003 Joint Venture, 10% of the gain on sale of real estate in the March 2005 Joint Venture and 10% of the acquisition fee in the September 2005 Joint Venture which is equal to the Company’s respective economic interests. Total deferrals were $2,646 for the nine months ended September 30, 2005. The deferrals reduce the Consolidated Operating Partnership’s investment in the joint ventures and are amortized into income over the life of the properties, generally 30 to 45 years. If the Joint Ventures sell any of these properties to a third party, the Consolidated Operating Partnership will recognize the unamortized portion of the deferred gain and fees as equity in income of joint ventures. If the Consolidated Operating Partnership repurchases any of these properties, the deferrals will be netted against the basis of the property purchased (which reduces the basis of the property).

At September 30, 2005 and December 31, 2004, the Consolidated Operating Partnership has a receivable from the Joint Ventures of $4,764 and $1,261, respectively, which mainly relates to borrowings made, as allowed by the partnership agreement, by the September 1998 Joint Venture from the Consolidated Operating Partnership and a receivable from the March 2005 Joint Venture relating to proceeds from the sale of a land parcel.

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During the nine months ended September 30, 2005 and 2004, the Consolidated Operating Partnership invested the following amounts in the joint ventures as well as received distributions and recognized fees from acquisition, disposition, property management, development and asset management services in the following amounts:


	For the Nine Months Ended

	September 30,		September 30,
	2005		2004

Contributions	$	40,099	$	2,525
Distributions	$	1,187	$	50,442
Fees	$	5,054	$	2,190


5.	Mortgage Loans Payable, Net, Senior Unsecured Debt, Net and Unsecured Line of Credit


	*Mortgage Loans Payable:*

On January 12, 2005, in conjunction with the acquisition of a parcel of land, the seller provided the Operating Partnership a mortgage loan in the amount of $1,167 (the “Acquisition Mortgage Loan XV”). The Acquisition Mortgage Loan XV is collateralized by a land parcel in Lebanon, TN, does not require principal payments prior to maturity on January 12, 2006 and has a 0% interest rate. Since the Acquisition Mortgage XV is non-interest bearing, a discount should be applied with an offsetting amount allocated to the basis of the land. The Consolidated Operating Partnership has concluded that the discount is not material and has not accounted for the discount or the land basis adjustment.

On March 31, 2005, the Consolidated Operating Partnership, through the Operating Partnership, assumed a mortgage loan in the amount of $1,977 (the “Acquisition Mortgage Loan XVI”). The Acquisition Mortgage Loan XVI is collateralized by one property in New Hope, MN, bears interest at a fixed rate of 5.50% and provides for monthly principal and interest payments based on a20-year amortization schedule. The Acquisition Mortgage Loan XVI matures on September 30, 2024. In conjunction with the assumption of the Acquisition Mortgage Loan XVI, the Consolidated Operating Partnership recorded a premium in the amount of $32 which will be amortized as an adjustment to interest expense through March 31, 2009. Including the impact of the premium recorded, the Consolidated Operating Partnership’s effective interest rate on the Acquisition Mortgage Loan XVI is 5.30%. The Acquisition Mortgage Loan XVI may be prepaid on April 1, 2009 without incurring a prepayment fee.

On June 27, 2005, the Consolidated Operating Partnership, through the Operating Partnership, assumed a mortgage loan in the amount of $3,056 (the “Acquisition Mortgage Loan XVII”). The Acquisition Mortgage Loan XVII is collateralized by one property in Villa Rica, GA, bears interest at a fixed rate of 7.38% and provides for monthly principal and interest payments based on a15-year amortization schedule. The Acquisition Mortgage Loan XVII matures on May 1, 2016. In conjunction with the assumption of the Acquisition Mortgage Loan XVII, the Consolidated Operating Partnership recorded a premium in the amount of $258 which will be amortized as an adjustment to interest expense through May 1, 2016. Including the impact of the premium recorded, the Consolidated Operating Partnership’s effective interest rate on the Acquisition Mortgage Loan XVII is 5.70%. The Acquisition Mortgage Loan XVII may not be prepaid until maturity without incurring a prepayment fee.

On June 30, 2005, the Consolidated Operating Partnership, through the Operating Partnership, assumed a mortgage loan in the amount of $6,513 (the “Acquisition Mortgage Loan XVIII”). The Acquisition Mortgage Loan XVIII is collateralized by one property in Hammonton, NJ, bears interest at a fixed rate of 7.58% and provides for monthly principal and interest payments based on a20-year amortization schedule. The Acquisition Mortgage Loan XVIII matures on March 1, 2011. In conjunction with the assumption of the Acquisition Mortgage Loan XVIII, the Consolidated Operating Partnership

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

recorded a premium in the amount of $749 which will be amortized as an adjustment to interest expense through November 30, 2010. Including the impact of the premium recorded, the Consolidated Operating Partnership’s effective interest rate on the Acquisition Mortgage Loan XVIII is 4.93%. The Acquisition Mortgage Loan XVIII may be prepaid on December 1, 2010 without incurring a prepayment fee.

On September 30, 2004, the Consolidated Operating Partnership assumed a mortgage loan in the amount of $12,057 and borrowed an additional $1,400 (collectively referred to as the “Acquisition Mortgage Loan XIII”). The Acquisition Mortgage Loan XIII was collateralized by three properties in Phoenix, Arizona, bore interest at a fixed rate of 5.60% and provided for monthly principal and interest payments based on a30-year amortization schedule. The Acquisition Mortgage Loan XIII matures on November 10, 2012. In conjunction with the assumption of the Acquisition Mortgage Loan XIII, the Consolidated Operating Partnership recorded a premium in the amount of $467 which was being amortized over the remaining life of the Acquisition Mortgage Loan XIII as an adjustment to interest expense. On July 13, 2005, the Consolidated Operating Partnership sold the properties that collateralized the Acquisition Mortgage Loan XIII. In conjunction with the sale, the buyer assumed the Acquisition Mortgage Loan XIII and the Consolidated Operating Partnership paid $291 in fees related to the assignment of the Acquisition Mortgage Loan XIII. Consequently, the Consolidated Operating Partnership wrote-off the remaining premium on the note of $424. Both the $291 of financing fees and $424 premium write-off are included in the Gain on Early Retirement of Debt on the Consolidated Operating Partnership’s Statement of Operations.


	*Unsecured Line of Credit:*

On August 23, 2005, the Consolidated Operating Partnership, through the Operating Partnership, amended and restated its $300,000 unsecured line of credit (the “Unsecured Line of Credit”), which was due September 28, 2007, and bore interest at a floating rate of LIBOR plus .7%, or the Prime Rate, at the Consolidated Operating Partnership’s election. The amended and restated unsecured line of credit (the “2005 Unsecured Line of Credit”) will mature on September 28, 2008, has a borrowing capacity of $500,000, with the right, subject to certain conditions, to increase the borrowing capacity up to $600,000 and bears interest at a floating rate of LIBOR plus .625%, or the Prime Rate, at the Consolidated Operating Partnership’s election. The net unamortized deferred financing fees related to the Unsecured Line of Credit and any additional deferred financing fees incurred related to the 2005 Unsecured Line of Credit are being amortized over the life of the 2005 Unsecured Line of Credit in accordance with Emerging Issues Task Force Issue 98-14, “Debtor’s Accounting for Changes inLine-of-Credit or Revolving-Debt Arrangements” except for $51, which represents the write off of deferred financing costs and is included in the gain from early retirement of debt.

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table discloses certain information regarding the Consolidated Operating Partnership’s mortgage loans payable, senior unsecured debt and unsecured line of credit:


											Interest
	Outstanding Balance at						Accrued Interest Payable at				Rate at

	September 30,			December 31,			September 30,		December 31,		September 30,			Maturity
	2005			2004			2005		2004		2005			Date

Mortgage Loans Payable, Net
Assumed Loan I	$	2,496		$	2,874		$	—	$	22		9.250	%		09/01/09
Assumed Loan II		1,866			1,995			—		15		9.250	%		01/01/13
Acquisition Mortgage Loan IV		1,962			2,037			15		15		8.950	%		10/01/06
Acquisition Mortgage Loan VIII		5,347			5,461			37		38		8.260	%		12/01/19
Acquisition Mortgage Loan IX		5,546			5,664			38		39		8.260	%		12/01/19
Acquisition Mortgage Loan X		15,865	(1)		16,251	(1)		95		99		8.250	%		12/01/10
Acquisition Mortgage Loan XII		2,519	(1)		2,565	(1)		14		15		7.540	%		01/01/12
Acquisition Mortgage Loan XIII		—			13,862	(1)		—		42		5.600	%		11/10/12
Acquisition Mortgage Loan XIV		6,480	(1)		6,740	(1)		35		13		6.940	%		07/01/09
Acquisition Mortgage Loan XV		1,167			—			—		—		0.000	%		01/12/06
Acquisition Mortgage Loan XVI		1,977	(1)		—			9		—		5.500	%		09/30/24
Acquisition Mortgage Loan XVII		3,262	(1)		—			18		—		7.375	%		05/01/16
Acquisition Mortgage Loan XVIII		7,177	(1)		—			41		—		7.580	%		03/01/11

Total	$	55,664		$	57,449		$	302	$	298

Senior Unsecured Debt, Net
2005 Notes	$	50,000		$	50,000		$	1,246	$	383		6.900	%		11/21/05
2006 Notes		150,000			150,000			3,500		875		7.000	%		12/01/06
2007 Notes		149,991	(2)		149,988	(2)		4,307		1,456		7.600	%		05/15/07
2017 Notes		99,883	(2)		99,876	(2)		2,500		625		7.500	%		12/01/17
2027 Notes		15,054	(2)		15,053	(2)		407		138		7.150	%		05/15/27
2028 Notes		199,821	(2)		199,815	(2)		3,209		7,009		7.600	%		07/15/28
2011 Notes		199,670	(2)		199,624	(2)		655		4,343		7.375	%		03/15/11
2012 Notes		199,097	(2)		198,994	(2)		6,340		2,903		6.875	%		04/15/12
2032 Notes		49,407	(2)		49,390	(2)		1,787		818		7.750	%		04/15/32
2009 Notes		124,839	(2)		124,806	(2)		1,932		292		5.250	%		06/15/09
2014 Notes		110,781	(2)		109,978	(2)		2,675		669		6.420	%		06/01/14

Total	$	1,348,543		$	1,347,524		$	28,558	$	19,511

Unsecured Line of Credit
2005 Unsecured Line of Credit	$	380,500		$	167,500		$	1,352	$	549		4.520	%		09/28/08

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


(1)	At September 30, 2005, the Acquisition Mortgage Loan X, the Acquisition Mortgage Loan XII, the Acquisition Mortgage Loan XIV, the Acquisition Mortgage Loan XVI, the Acquisition Mortgage Loan XVII and the Acquisition Mortgage Loan XVIII includes unamortized premiums of $2,005, $238, $462, $28, $252, and $715, respectively. At December 31, 2004, the Acquisition Mortgage Loan X, the Acquisition Mortgage Loan XII, the Acquisition Mortgage Loan XIII, and the Acquisition Mortgage Loan XIV include unamortized premiums of $2,291, $267, $453 and $553, respectively.

(2)	At September 30, 2005, the 2007 Notes, 2017 Notes, 2027 Notes, 2028 Notes, 2011 Notes, 2012 Notes, 2032 Notes, 2009 Notes and the 2014 Notes are net of unamortized discounts of $9, $117, $16, $179, $330, $903, $593, $161 and $14,219, respectively. At December 31, 2004, the 2007 Notes, 2017 Notes, 2027 Notes, 2028 Notes, 2011 Notes, 2012 Notes, 2032 Notes, 2009 Notes and the 2014 Notes are net of unamortized discounts of $13, $124, $16, $185, $376, $1,006, $610, $194 and $15,023, respectively.

The following is a schedule of the stated maturities and scheduled principal payments of the mortgage loans, senior unsecured debt and unsecured line of credit, exclusive of premiums and discounts, for the next five years ending December 31, and thereafter:


	Amount

Remainder of 2005	$	50,498
2006		155,086
2007		152,153
2008		382,833
2009		132,195
Thereafter		924,769

Total	$	1,797,534


	*Other Comprehensive Income:*

In conjunction with the prior issuances of senior unsecured debt, the Consolidated Operating Partnership entered into interest rate protection agreements to fix the interest rate on anticipated offerings of senior unsecured debt. In the next 12 months, the Consolidated Operating Partnership will amortize approximately $1,059 into net income by reducing interest expense.


	*Derivatives:*

On January 13, 2005, the Consolidated Operating Partnership, through First Industrial Development Services, Inc., entered into an interest rate protection agreement which hedged the change in value of a build to suit development project the Consolidated Operating Partnership is in the process of constructing. This interest rate protection agreement has a notional value of $50,000, is based on the five year treasury, has a strike rate of 3.936% and settled on October 4, 2005. Per FAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“FAS 133”), fair value and cash flow hedge accounting for hedges of non-financial assets and liabilities is limited to hedges of the risk of changes in the market price of the entire hedged item because changes in the price of an ingredient or component of a non-financial item generally do not have a predictable, separately measurable effect on the price of the item. Since the interest rate protection agreement is hedging a component of the change in value of the build to suit development, the interest rate protection agreement does not qualify for hedge accounting and the change in value of the interest rate protection agreement will be recognized immediately in net income as opposed to other comprehensive income. Included inmark-to-market/gain on settlement of interest rate protection agreement for the three and nine months ended September 30, 2005 is themark-to-market/gain on

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

settlement of the IRPA as well as a deferred gain of $159 that was reclassed out of OCI relating to a settled interest rate protection agreement that no longer qualifies for hedge accounting under FAS 133. Accordingly, the Company recognized $1,212 and $749 in net gain from themark-to-market of the interest rate protection agreement for the three and nine months ended September 30, 2005, respectively.


6.	Partners’ Capital

The Operating Partnership has issued general partnership units, limited partnership units (together, the “Units”) and preferred general partnership units. The general partnership units resulted from capital contributions from the Company. The limited partnership units are issued in conjunction with the acquisition of certain properties. Subject tolock-up periods and certain adjustments, limited partnership units are convertible into common stock, $.01 par value, of the Company on a one-for-one basis or cash at the option of the Company. The preferred general partnership units resulted from preferred capital contributions from the Company. The Operating Partnership will be required to make all required distributions on the preferred general partnership units prior to any distribution of cash or assets to the holders of the general and limited partnership units except for distributions required to enable the Company to maintain its qualification as a REIT.


	*Unit Contributions:*

During the nine months ended September 30, 2005, certain employees exercised 247,764 non-qualified employee stock options. Net proceeds to the Company were approximately $6,664. The Company contributed the net proceeds to the Consolidated Operating Partnership and the Consolidated Operating Partnership, through the Operating Partnership, issued Units to the Company in the same amount.

During the nine months ended September 30, 2005, the Company awarded 189,878 shares of restricted common stock to certain employees of the Company and 9,135 shares of restricted common stock to certain Directors of the Company. The Operating Partnership issued Units to the Company in the same amount. These shares of restricted common stock had a fair value of approximately $8,340 on the date of grant. The restricted common stock vests over periods from one to ten years. Compensation expense will be charged to earnings over the respective vesting period.

During the nine months ended September 30, 2005, the Operating Partnership issued 220,745 Units having an aggregate market value of approximately $8,875 in exchange for three properties.


	*Distributions:*

On January 24, 2005, the Operating Partnership paid a fourth quarter 2004 distribution of $0.6950 per Unit, totaling approximately $34,255. On April 18, 2005, the Operating Partnership paid a first quarter 2005 distribution of $0.6950 per Unit, totaling approximately $34,339. On July 18, 2005, the Operating Partnership paid a second quarter 2005 distribution of $0.6950 per Unit, totaling approximately $34,485.

On March 31, 2005, the Operating Partnership paid first quarter 2005 distributions of $53.906 per Unit on its 8.625% Series C Cumulative Preferred Units (the “Series C Preferred Units”), a semi-annual distribution of $3,118.00 per Unit on its Series F Preferred Units and a semi-annual distribution of $3,618.00 per Unit on its Series G Preferred Units. The preferred unit distributions paid on March 31, 2005, totaled approximately $3,542. On June 30, 2005, the Operating Partnership paid second quarter 2005 distributions of $53.906 per Unit Series C Preferred Units, totaling approximately $1,078 and accrued dividends of $780 on its Series F Preferred Units and $452 on its Series G Preferred Units. On September 30, 2005, the Operating Partnership paid third quarter 2005 distributions of $53.906 per Unit on its 8.625% Series C Cumulative preferred Units, a semi-annual distribution of $3,118.00 per Unit on its

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Series F Preferred Units and a semi-annual distribution of $3,618.00 per Unit on its Series G Preferred Units. The preferred unit distributions paid on September 30, 2005, total approximately $3,542.


7.	Acquisition of Real Estate

During the nine months ended September 30, 2005, the Consolidated Operating Partnership acquired 79 industrial properties and several land parcels comprising approximately 10.7 million square feet of GLA and several land parcels. The gross purchase price for 78 industrial properties totaled approximately $373,971. Additionally, one industrial property was acquired through foreclosure due to a default on a mortgage loan receivable.


8.	Sale of Real Estate, Real Estate Held for Sale and Discontinued Operations

During the nine months ended September 30, 2005, the Consolidated Operating Partnership sold 55 industrial properties comprising approximately 7.2 million square feet of GLA and several land parcels. Gross proceeds from the sales of the 55 industrial properties and several land parcels were approximately $397,745. The gain on sale of real estate, net of income taxes was approximately $67,218. Forty-six of the 55 sold industrial properties meet the criteria established by FAS 144 to be included in discontinued operations. Therefore, in accordance with FAS 144, the results of operations and gain on sale of real estate, net of income taxes for the 46 sold industrial properties that meet the criteria established by FAS 144 are included in discontinued operations. The results of operations and gain on sale of real estate, net of income taxes for nine industrial properties and several land parcels that do not meet the criteria established by FAS 144 are included in continuing operations.

At September 30, 2005, the Consolidated Operating Partnership classified four industrial properties comprising approximately .09 million square feet of GLA held for sale. In accordance with FAS 144, the results of operations of the four industrial properties held for sale at September 30, 2005 are included in discontinued operations. There can be no assurance that such industrial properties held for sale will be sold.

Income from discontinued operations for the nine months ended September 30, 2005 reflects the results of operations and gain on sale of real estate, net of income taxes of 46 industrial properties that were sold during the nine months ended September 30, 2005 as well as the results of operations of four industrial properties held for sale at September 30, 2005.

Income from discontinued operations for the nine months ended September 30, 2004, reflects the results of operations of 46 industrial properties that were sold during the nine months ended September 30, 2005, 86 industrial properties that were sold during the year ended December 31, 2004, four industrial properties identified as held for sale at September 30, 2005, as well as the gain on sale of real estate from 47 industrial properties which were sold during the nine months ended September 30, 2004.

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table discloses certain information regarding the industrial properties included in discontinued operations by the Consolidated Operating Partnership, for the three and nine months ended September 30, 2005 and September 30, 2004.


				Restated						Restated

	Three Months			Three Months			Nine Months			Nine Months
	Ended			Ended			Ended			Ended
	September 30,			September 30,			September 30,			September 30,
	2005			2004			2005			2004

Total Revenues	$	1,533		$	6,441		$	10,432		$	24,607
Operating Expenses		(471	)		(1,850	)		(3,817	)		(8,003	)
Depreciation and Amortization		(436	)		(1,606	)		(2,848	)		(6,077	)
Interest Expense		(29	)		(67	)		(373	)		(194	)
Provision for Income Taxes		(157	)		(595	)		(873	)		(1,655	)
Gain on Sale of Real Estate		22,952			10,630			63,091			62,378
Provision for Income Taxes Allocable to Gain on Sale		(6,468	)		(1,738	)		(12,210	)		(5,464	)

Income from Discontinued Operations	$	16,924		$	11,215		$	53,402		$	65,592

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


9.	Supplemental Information to Statement of Cash Flows

Supplemental disclosure of cash flow information:


		Nine Months			Nine Months
		Ended			Ended
		September 30,			September 30,
		2005			2004

Interest paid, net of capitalized interest		$	69,493		$	63,877

	Interest capitalized	$	2,363		$	870

Supplemental schedule of non-cash investing and financing activities:
	Distribution payable on units	$	34,592		$	32,872

	Distribution payable on preferred units	$	—		$	—

Exchange of limited partnership units for general partnership units:
	Limited partnership units	$	(1,951	)	$	(4,114	)
	General partnership units		1,951			4,114

		$	—		$	—

In conjunction with the property and land acquisitions, the following liabilities were assumed:
	Accounts payable and accrued expenses	$	(3,848	)	$	(2,188	)

	Issuance of Limited Partnership Units	$	(8,875	)	$	—

	Mortgage debt	$	(11,545	)	$	(12,057	)

Foreclosed property acquisition and write-off of defaulted note receivable		$	3,870		$	—

Write-off of retired assets		$	22,607		$	—

In conjunction with certain property sales, the Operating Partnership provided seller financing and assigned a mortgage note payable:
	Notes receivable	$	39,893		$	19,667

	Mortgage note payable	$	13,242		$	—

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


10.	Earnings Per Unit (“EPU”)

The computation of basic and diluted EPU is presented below:


							Restated						Restated

				Three Months			Three Months			Nine Months			Nine Months
				Ended			Ended			Ended			Ended
				September 30,			September 30,			September 30,			September 30,
				2005			2004			2005			2004

Numerator:
	Income from Continuing Operations			$	8,388		$	29,025		$	523		$	31,488
	Gain On Sale of Real Estate, Net of Income Taxes				1,471			1,896			16,337			5,457
	Less: Preferred Unit Distributions				(2,310	)		(2,344	)		(6,930	)		(12,178	)
	Less: Redemption of Preferred Units				—			(600	)		—			(7,959	)

	Income from Continuing Operations Available to Unitholders — For Basic and Diluted EPU				7,549			27,977			9,930			16,808

	Discontinued Operations, Net of Income Taxes				16,924			11,215			53,402			65,592

	Net Income Available to Unitholders			$	24,473		$	39,192		$	63,332		$	82,400

Denominator:
	Weighted Average Units — Basic				49,042,416			46,995,781			48,810,589			46,711,977
		Effect of Dilutive Securities that Result in the Issuance Of General Partner Units:
			Employee and Director Common Stock Options		114,573			193,358			149,311			230,449
			Employee and Director Shares of Restricted Stock		90,781			120,807			91,765			107,891

	Weighted Average Units Outstanding — Diluted				49,247,770			47,309,946			49,051,665			47,050,317
Basic EPU:
	Income from Continuing Operations Available to Unitholders			$	0.15		$	0.60		$	0.20		$	0.36

	Discontinued Operations, Net of Income Taxes			$	0.35		$	0.24		$	1.09		$	1.40

	Net Income Available to Unitholders			$	0.50		$	0.83		$	1.30		$	1.76

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


				Restated				Restated

		Three Months		Three Months		Nine Months		Nine Months
		Ended		Ended		Ended		Ended
		September 30,		September 30,		September 30,		September 30,
		2005		2004		2005		2004

Diluted EPU:
	Income from Continuing Operations Available to Unitholders	$	0.15	$	0.59	$	0.20	$	0.36

	Discontinued Operations, Net of Income Taxes	$	0.34	$	0.24	$	1.09	$	1.39

	Net Income Available to Unitholders	$	0.50	$	0.83	$	1.29	$	1.75


11.	Commitments and Contingencies

In the normal course of business, the Consolidated Operating Partnership is involved in legal actions arising from the ownership of its properties. In management’s opinion, the liabilities, if any, that may ultimately result from such legal actions are not expected to have a materially adverse effect on the consolidated financial position, operations or liquidity of the Consolidated Operating Partnership.

The Consolidated Operating Partnership has committed to the construction of certain industrial properties totaling approximately 4.1 million square feet of GLA. The estimated total construction costs are approximately $206.6 million. Of this amount, approximately $107.1 million remains to be funded. There can be no assurance the actual completion cost will not exceed the estimated completion cost stated above.

At September 30, 2005, the Consolidated Operating Partnership had 16 letters of credit outstanding in the aggregate amount of $7,396. These letters of credit expire between March 2006 and April 2007.

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


12.	Restatement of Consolidated Statement of Operations

In the consolidated statement of operations for the three and nine months ended September 30, 2004 and cash flows for the nine months ended September 30, 2004 presented in itsForm 10-Q filed November 9, 2004, the Consolidated Operating Partnership allocated its entire tax provision/benefit to income from discontinued operations. The Consolidated Operating Partnership has determined that its tax provision/benefit should be allocated between income from continuing operations, income from discontinued operations and gain on sale of real estate. The Consolidated Operating Partnership has restated its consolidated statement of operations for the three and nine months ended September 30, 2004 and cash flows for the nine months ended September 30, 2004 to reflect this new allocation in thisForm 10-Q.


		For the Three Months Ended September 30, 2004

		As Previously
		Reported on
		Form 10-Q			Restatement			Restated
		Filed			of Benefit			Amounts			Adjustment for			As Reported
		November 9,			(Expense) of			for 2004			Discontinued			on 2005
		2004			Income Tax			10-Q			Operations			10-Q

Loss from Continuing Operations
	Before Income Tax Benefit, Equity in Income of Joint Ventures and Equity in Income of Other Real Estate Partnerships	$	(11,256	)	$	—		$	(11,256	)	$	(2,033	)	$	(13,289	)
Equity in Income of Joint Ventures			34,453			850			35,303			—			35,303
Equity in Income of Other Real Estate Partnerships			6,173			—			6,173			—			6,173
Income Tax Benefit			—			838			838			—			838

	Income from Continuing Operations		29,370			1,688			31,058			(2,033	)		29,025
Income from Discontinued Operations			11,515			—			11,515			2,033			13,548
Income Tax Provision Allocable to Discontinued Operations			(1,609	)		(724	)		(2,333	)		—			(2,333	)

Income Before Gain on Sale of Real Estate			39,276			964			40,240			—			40,240
Gain on Sale of Real Estate			2,860			—			2,860			—			2,860
Income Tax Provision Allocable to Gain on Sale of Real Estate			—			(964	)		(964	)		—			(964	)

Net Income			42,136			—			42,136			—			42,136

Less: Preferred Unit Distributions			(2,344	)		—			(2,344	)		—			(2,344	)
Less: Redemption of Preferred Units			(600	)		—			(600	)		—			(600	)

Net Income Available to Unitholders		$	39,192		$	—		$	39,192		$	—		$	39,192

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


		For the Three Months Ended September 30, 2004

		As Previously
		Reported on
		Form 10-Q		Restatement			Restated
		Filed		of Benefit			Amounts		Adjustment for			As Reported
		November 9,		(Expense) of			for 2004		Discontinued			on 2005
		2004		Income Tax			10-Q		Operations			10-Q

Basic Earnings Per Unit:
	Income from Continuing Operations	$	0.62	$	0.02		$	0.64	$	(0.04	)	$	0.60

	Income from Discontinued Operations	$	0.21	$	(0.02	)	$	0.19	$	0.04		$	0.24

	Net Income Available to Unitholders	$	0.83	$	—		$	0.83	$	—		$	0.83

Diluted Earnings Per Unit:
	Income from Continuing Operations	$	0.62	$	0.02		$	0.64	$	(0.04	)	$	0.59

	Income from Discontinued Operations	$	0.21	$	(0.02	)	$	0.19	$	0.04		$	0.24

	Net Income Available to Unitholders	$	0.83	$	—		$	0.83	$	—		$	0.83

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


		For the Nine Months Ended September 30, 2004

		As Previously
		Reported on
		Form 10-Q			Restatement			Restated
		Filed			of Benefit			Amounts			Adjustment for			As Reported
		November 9,			(Expense) of			for 2004			Discontinued			on 2005
		2004			Income Tax			10-Q			Operations			10-Q

(Loss) Income from Continuing Operations Before Income Tax Benefit, Equity in Income of Joint Ventures and Equity in Other Real Estate Partnerships		$	(22,494	)	$	—		$	(22,494	)	$	(5,820	)	$	(28,314	)
Equity in Income of Joint Ventures			34,998			850			35,848			—			35,848
Equity in Income of Other Real Estate Partnerships			20,745			—			20,745			—			20,745
Income Tax Benefit			—			3,209			3,209			—			3,209

	Income from Continuing Operations		33,249			4,059			37,308			(5,820	)		31,488
Income from Discontinued Operations			66,891			—			66,891			5,820			72,711
Income Tax Provision Allocable to Discontinued Operations			(5,455	)		(1,664	)		(7,119	)		—			(7,119	)

Income Before Gain on Sale of Real Estate			94,685			2,395			97,080			—			97,080
Gain on Sale of Real Estate			7,852			—			7,852			—			7,852
Income Tax Provision Allocable to Gain on Sale of Real Estate			—			(2,395	)		(2,395	)		—			(2,395	)

Net Income			102,537			—			102,537			—			102,537

Less: Preferred Unit Distributions			(12,178	)		—			(12,178	)		—			(12,178	)
Less: Redemption of Preferred Units			(7,959	)		—			(7,959	)		—			(7,959	)

Net Income Available to Unitholders		$	82,400		$	—		$	82,400		$	—		$	82,400

Basic Earnings Per Unit:
	Income from Continuing Operations	$	0.45		$	0.04		$	0.48		$	(0.12	)	$	0.36

	Income from Discontinued Operations	$	1.32		$	(0.04	)	$	1.28		$	0.12		$	1.40

	Net Income Available to Unitholders	$	1.76		$	—		$	1.76		$	—		$	1.76

Diluted Earnings Per Unit:
	Income from Continuing Operations	$	0.45		$	0.04		$	0.48		$	(0.12	)	$	0.36

	Income from Discontinued Operations	$	1.31		$	(0.04	)	$	1.27		$	0.12		$	1.39

	Net Income Available to Unitholders	$	1.75		$	—		$	1.75		$	—		$	1.75


13.	Related Party Transactions

At September 30, 2005 and December 31, 2004, the Consolidated Operating Partnership has a receivable balance of $10,218 and $9,650, respectively from a wholly-owned entity of the Company.

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


14.	Subsequent Events

From October 1, 2005 to November 2, 2005, the Consolidated Operating Partnership acquired 18 industrial properties and one land parcel for a purchase price of approximately $56,367 (approximately $1,172 of which was funded through the issuance of limited partnership interests in the Operating Partnership (“Units”)), excluding costs incurred in conjunction with the acquisition of these industrial properties. The Consolidated Operating Partnership also sold four industrial properties and one land parcel for approximately $11,937 of gross proceeds during this time period.

On October 17, 2005, the Operating Partnership paid a third quarter 2005 distribution of $.6950 per Unit, totaling approximately $34,592.

On October 4, 2005, the Consolidated Operating Partnership settled the interest rate protection agreement which hedged the change in value of a build-to-suit development project the Consolidated Operating Partnership is in the process of constructing for proceeds of $675.

On October 17, 2005, the Operating Partnership, through First Industrial Development Services, Inc., entered into an interest rate protection agreement which hedged the change in value of a build to suit development project the Operating Partnership is in the process of constructing. This interest rate protection agreement has a notional value of $50,000, is based on the 3 Month LIBOR rate, has a strike rate of 4.8675%, and has an effective date of December 30, 2005 and a termination date of December 30, 2010. Per FASB Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“FAS 133”), fair value and cash flow hedge accounting for hedges of non-financial assets and liabilities is limited to hedges of the risk of changes in the market price of the entire hedged item because changes in the price of an ingredient or component of a non-financial item generally do not have a predictable, separately measurable effect on the price of the item. Since the interest rate protection agreement is hedging a component of the change in value of the build to suit development, the interest rate protection agreement does not qualify for hedge accounting and the change in value of the interest rate protection agreement will be recognized immediately in net income as opposed to other comprehensive income.

On November 8, 2005, the Company issued 6,000,000 depositary shares, each representing 1/10,000 of a share of Series I Flexible Cumulative Redeemable Preferred Stock, $.01 par value (the “Series I Depositary Shares”), in a private placement at an initial offering price of $25.00 per depositary share for an aggregate initial offering price of $150,000. The net proceeds received from the Series I Depositary Shares were contributed to the Operating Partnership in exchange for preferred limited partnership units (“Series I Preferred Units”). Dividends on the Series I Depositary Shares are payable monthly in arrears commencing December 31, 2005 at an initial dividend rate of One-Month LIBOR plus 1.25%, subject to reset on the four-month, six-month andone-year anniversary of the date of issuance. The Operating Partnership will make distributions to the Company on the Series I Preferred Units corresponding to the dividends to be paid by the Company on the Series I Depositary Shares. Pursuant to the purchase agreement with respect to the Series I Depositary Shares, the Company, at its option, may issue, and the initial purchaser of the Series I Depositary Shares shall purchase, on or before November 18, 2005 an additional 4,000,000 shares of the Series I Depositary Shares at an initial offering price of $25.00 per depositary share.


Item 2.	*Management’s Discussion and Analysis of Financial Condition and Results of Operations*

The following discussion and analysis of First Industrial, L.P.’s (the “Operating Partnership”) financial condition and results of operations should be read in conjunction with the financial statements and notes thereto appearing elsewhere in thisForm 10-Q.

This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Operating Partnership intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of complying with those safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Operating Partnership, are generally identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions. The Operating Partnership’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on the operations and future prospects of the Operating Partnership on a consolidated basis include, but are not limited to, changes in: economic conditions generally and the real estate market specifically, legislative/regulatory changes (including changes to laws governing the taxation of real estate investment trusts), availability of financing, interest rate levels, competition, supply and demand for industrial properties in the Operating Partnership’s current and proposed market areas, potential environmental liabilities, slippage in development orlease-up schedules, tenant credit risks, higher-than-expected costs and changes in general accounting principles, policies and guidelines applicable to real estate investment trusts. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Further information concerning the Operating Partnership and its business, including additional factors that could materially affect the Operating Partnership’s financial results, is included herein and in the Operating Partnership’s other filings with the Securities and Exchange Commission.

GENERAL

The Operating Partnership was organized as a limited partnership in the state of Delaware on November 23, 1993. The sole general partner of the Operating Partnership is First Industrial Realty Trust, Inc. (the “Company”) with an approximate 86.8% ownership interest at September 30, 2005. The limited partners of the Operating Partnership own, in the aggregate, approximately a 13.2% interest in the Operating Partnership at September 30, 2005. The Company also owns a preferred general partnership interest in the Operating Partnership with an aggregate liquidation priority of $125 million. The Company is a real estate investment trust (“REIT”) as defined in the Internal Revenue Code. The Company’s operations are conducted primarily through the Operating Partnership.

The Operating Partnership is the sole member of several limited liability companies (the “L.L.C.s”) and the sole shareholder of First Industrial Development Services, Inc. and holds at least a 99% limited partnership interest in each of eight limited partnerships (together, the “Other Real Estate Partnerships”).

The general partners of the Other Real Estate Partnerships are separate corporations, each with at least a .01% general partnership interest in the Other Real Estate Partnership for which it acts as a general partner. Each general partner of the Other Real Estate Partnerships is a wholly-owned subsidiary of the Company.

The financial statements of the Operating Partnership report the L.L.C.s and First Industrial Development Services, Inc. (the “Consolidated Operating Partnership”) on a consolidated basis.

As of September 30, 2005, the Consolidated Operating Partnership owned 810 industrial properties (inclusive of developments in process) containing an aggregate of approximately 66.8 million square feet of gross leasable area (“GLA”). On a combined basis, as of September 30, 2005, the Other Real Estate Partnerships owned 98 industrial properties containing an aggregate of approximately 9.1 million square feet of GLA.

On September 14, 2005 and March 21, 2005, the Operating Partnership, through entities it, directly or indirectly, wholly-owns, entered into a joint venture arrangement with an institutional investor to invest in industrial properties (the “September 2005 Joint Venture” and the “March 2005 Joint Venture”). The Operating Partnership, through entities it, directly or indirectly, wholly-owns, owns a ten percent equity interest in and provides property management, leasing, development, disposition and portfolio management services to the September 2005 Joint Venture and the March 2005 Joint Venture. In addition, the Company has the opportunity to earn performance-based incentives when industrial assets are sold and returns exceed certain thresholds.

The Operating Partnership, through separate wholly-owned limited liability companies of which it is the sole member, also owns minority equity interests in, and provides asset and property management services to, two other joint ventures which invest in industrial properties (the “September 1998 Joint Venture” and the “May 2003 Joint Venture”). The Operating Partnership, through separate wholly-owned limited liability companies of which it is the sole member, also owned a minority interest in and provided property management services to another joint venture which invested in industrial properties (the “December 2001 Joint Venture”; together with the September 2005 Joint Venture, the March 2005 Joint Venture, the September 1998 Joint Venture and the May 2003 Joint Venture, the “Joint Ventures”). During the year ended December 31, 2004, the December 2001 Joint Venture sold all of its industrial properties.

MANAGEMENT’S OVERVIEW

Management believes the Consolidated Operating Partnership’s financial condition and results of operations are, primarily, a function of the Consolidated Operating Partnership’s performance in four key areas: leasing of industrial properties, acquisition and development of additional industrial properties, redeployment of internal capital and access to external capital.

The Consolidated Operating Partnership generates revenue primarily from rental income and tenant recoveries from the lease of industrial properties under long-term (generally three to six years) operating leases. Such revenue is offset by certain property specific operating expenses, such as real estate taxes, repairs and maintenance, property management, utilities and insurance expenses, along with certain other costs and expenses, such as depreciation and amortization costs and general and administrative and interest expenses. The Consolidated Operating Partnership’s revenue growth is dependent, in part, on its ability to (i) increase rental income, through increasing either or both occupancy rates and rental rates at the Consolidated Operating Partnership’s properties, (ii) maximize tenant recoveries and (iii) minimize operating and certain other expenses. Revenues generated from rental income and tenant recoveries are a significant source of funds, in addition to income generated from gains/losses on the sale of the Consolidated Operating Partnership’s properties (as discussed below), for the Consolidated Operating Partnership’s distributions. The leasing of property, in general, and occupancy rates, rental rates, operating expenses and certain non-operating expenses, in particular, are impacted, variously, by property specific, market specific, general economic and other conditions, many of which are beyond the control of the Consolidated Operating Partnership. The leasing of property also entails various risks, including the risk of tenant default. If the Consolidated Operating Partnership were unable to maintain or increase occupancy rates and rental rates at the Consolidated Operating Partnership’s properties or to maintain tenant recoveries and operating and certain other expenses consistent with historical levels and proportions, the Consolidated Operating Partnership’s revenue growth would be limited. Further, if a significant number of the Consolidated Operating Partnership’s tenants were unable to pay rent (including tenant recoveries) or if the Consolidated Operating Partnership were unable to rent its properties on favorable terms, the Consolidated Operating Partnership’s financial condition, results of operations, cash flow and ability to pay

dividends on, and the market price of, the Consolidated Operating Partnership’s common stock would be adversely affected.

The Consolidated Operating Partnership’s revenue growth is also dependent, in part, on its ability to acquire existing, and acquire and develop new, additional industrial properties on favorable terms. The Consolidated Operating Partnership continually seeks to acquire existing industrial properties on favorable terms, and, when conditions permit, also seeks to acquire and develop new industrial properties on favorable terms. Existing properties, as they are acquired, and acquired and developed properties, as they lease-up, generate revenue from rental income and tenant recoveries, income from which, as discussed above, is a source of funds for the Consolidated Operating Partnership’s distributions. The acquisition and development of properties is impacted, variously, by property specific, market specific, general economic and other conditions, many of which are beyond the control of the Consolidated Operating Partnership. The acquisition and development of properties also entails various risks, including the risk that the Consolidated Operating Partnership’s investments may not perform as expected. For example, acquired existing and acquired and developed new properties may not sustain and/or achieve anticipated occupancy and rental rate levels. With respect to acquired and developed new properties, the Consolidated Operating Partnership may not be able to complete construction on schedule or within budget, resulting in increased debt service expense and construction costs and delays in leasing the properties. Also, the Consolidated Operating Partnership faces significant competition for attractive acquisition and development opportunities from other well-capitalized real estate investors, including both publicly-traded real estate investment trusts and private investors. Further, as discussed below, the Consolidated Operating Partnership may not be able to finance the acquisition and development opportunities it identifies. If the Consolidated Operating Partnership were unable to acquire and develop sufficient additional properties on favorable terms, or if such investments did not perform as expected, the Consolidated Operating Partnership’s revenue growth would be limited and its financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, the Consolidated Operating Partnership’s common stock would be adversely affected.

The Consolidated Operating Partnership also generates income from the sale of properties (including existing buildings, buildings which the Consolidated Operating Partnership has developed or re-developed on a merchant basis, and land). The Consolidated Operating Partnership is continually engaged in, and its income growth is dependent in part on, systematically redeploying its capital from properties and other assets with lower yield potential into properties and other assets with higher yield potential. As part of that process, the Consolidated Operating Partnership sells, on an ongoing basis, select stabilized properties or properties offering lower potential returns relative to their market value. The gain/loss on the sale of such properties is included in the Consolidated Operating Partnership’s income and is a significant source of funds, in addition to revenues generated from rental income and tenant recoveries, for the Consolidated Operating Partnership’s distributions. Also, a significant portion of the proceeds from such sales is used to fund the acquisition of existing, and the acquisition and development of new, industrial properties. The sale of properties is impacted, variously, by property specific, market specific, general economic and other conditions, many of which are beyond the control of the Consolidated Operating Partnership. The sale of properties also entails various risks, including competition from other sellers and the availability of attractive financing for potential buyers of the Consolidated Operating Partnership’s properties. Further, the Consolidated Operating Partnership’s ability to sell properties is limited by safe harbor rules applying to REITs under the Internal Revenue Code which relate to the number of properties that may be disposed of in a year, their tax bases and the cost of improvements made to the properties, along with other tests which enable a REIT to avoid punitive taxation on the sale of assets. If the Consolidated Operating Partnership were unable to sell properties on favorable terms, the Consolidated Operating Partnership’s income growth would be limited and its financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, the Consolidated Operating Partnership’s common stock would be adversely affected.

Currently, the Consolidated Operating Partnership utilizes a portion of the net sales proceeds from property sales, borrowings under unsecured lines of credit and proceeds from the issuance, when and as

warranted, of additional equity securities to finance acquisitions and developments. Access to external capital on favorable terms plays a key role in the Consolidated Operating Partnership’s financial condition and results of operations, as it impacts the Consolidated Operating Partnership’s cost of capital and its ability and cost to refinance existing indebtedness as it matures and to fund acquisitions and developments through the issuance, when and as warranted, of additional equity securities. The Consolidated Operating Partnership’s ability to access external capital on favorable terms is dependent on various factors, including general market conditions, interest rates, credit ratings on the Consolidated Operating Partnership’s capital stock and debt, the market’s perception of the Consolidated Operating Partnership’s growth potential, the Consolidated Operating Partnership’s current and potential future earnings and cash distributions and the market price of the Consolidated Operating Partnership’s capital stock. If the Consolidated Operating Partnership were unable to access external capital on favorable terms, the Consolidated Operating Partnership’s financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, the Consolidated Operating Partnership’s common stock would be adversely affected.

RESTATEMENT

In the consolidated statement of operations for the three and nine months ended September 30, 2004 and cash flows for the nine months ended September 30, 2004 presented in itsForm 10-Q filed November 9, 2004, the Company allocated its entire tax provision/benefit to income from discontinued operations. The Consolidated Operating Partnership has determined that its tax provision/benefit should be allocated between income from continuing operations, income from discontinued operations and gain on sale of real estate. The Consolidated Operating Partnership has restated its consolidated statement of operations for the three and nine months ended September 30, 2004 and cash flows for the nine months ended September 30, 2004 to reflect this new allocation in thisForm 10-Q.


	As Previously
Balance Sheet Caption	Reported		Adjustment			As Restated

	(in millions)
General Partner Preferred Units — December 31, 2004 and September 30, 2005	$	240.7	$	(119.1	)	$	121.6
General Partner Units — December 31, 2004	$	638.7	$	119.1		$	757.8
General Partner Units — September 30, 2005	$	616.1	$	119.1		$	735.3

RESULTS OF OPERATIONS

Comparison of Nine months ended September 30, 2005 to Nine months ended September 30, 2004

The Consolidated Operating Partnership’s net income available to unitholders was $63.3 million and $82.4 million for the nine months ended September 30, 2005, and September 30, 2004, respectively. Basic and diluted net income available to unitholders was $1.30 and $1.29 per unit, respectively, for the nine months ended September 30, 2005, and $1.76 and $1.75 per unit, respectively, for the nine months ended September 30, 2004.

The tables below summarize the Consolidated Operating Partnership’s revenues, property expenses and depreciation and other amortization by various categories for the nine months ended September 30, 2005 and September 30, 2004. Same store properties are in service properties owned prior to January 1, 2004. Acquired properties are properties that were acquired subsequent to December 31, 2003. Sold properties are properties that were sold subsequent to December 31, 2003. Properties that are not in service are properties that are under construction that have not reached stabilized occupancy or were placed in service after December 31, 2003 or acquisitions acquired prior to January 1, 2004 that were not placed in service as of December 31, 2003. These properties are placed in service as they reach stabilized occupancy (generally defined as 90% occupied). Other revenues are derived from the operations of the Consolidated Operating Partnership’s maintenance company, fees earned from the Consolidated Operating Partnership’s joint ventures, fees earned for developing properties for third parties and other miscellaneous revenues. Other expenses are derived from the operations of the Consolidated Operating Partnership’s maintenance company and other miscellaneous regional expenses.

The Consolidated Operating Partnership’s future financial condition and results of operations, including rental revenues, may be impacted by the future acquisition and sale of properties. The Consolidated Operating Partnership’s future revenues and expenses may vary materially from historical rates.


		Nine Months			Nine Months
		Ended			Ended
		September 30,			September 30,
		2005			2004			$ Change			% Change

REVENUES ($ in 000’s)
Same Store Properties		$	161,575		$	161,902		$	(327	)		(.20	)%
Acquired Properties			33,187			6,270			26,917			429.30	%
Sold Properties			11,365			27,084			(15,719	)		(58.04	)%
Properties Not In Service			18,483			17,038			1,445			8.48	%
Other			22,444			6,656			15,788			237.20	%

		$	247,054		$	218,950		$	28,104			12.84	%
Discontinued Operations			(10,432	)		(24,607	)		14,175			(57.61	)%

	Total Revenues	$	236,622		$	194,343		$	42,279			21.75	%

At September 30, 2005 and September 30, 2004 occupancy rates of the Consolidated Operating Partnership’s same store properties were 89.3% and 89.1%, respectively. Revenues from same store properties remained relatively unchanged. Revenues from acquired properties increased $26.9 million due to the 156 industrial properties acquired subsequent to December 31, 2003 totaling approximately 19.6 million square feet of GLA. Revenues from sold properties decreased $15.7 million, due to the 145 industrial properties sold subsequent to December 31, 2003, totaling approximately 14.0 million square feet of GLA. Revenues from properties not in service remained relatively unchanged. Other revenues increased

by approximately $15.8 million due primarily tobuild-to-suit-for-sale revenues of $10.6 million and an increase in joint venture fees and assignment fees.


		Nine Months			Nine Months
		Ended			Ended
		September 30,			September 30,
		2005			2004			$ Change			% Change

PROPERTY EXPENSES ($ in 000’s)
Same Store Properties		$	54,330		$	51,887		$	2,443			4.71	%
Acquired Properties			9,576			2,320			7,256			312.76	%
Sold Properties			4,153			8,680			(4,527	)		(52.15	)%
Properties Not In Service			7,392			7,241			151			2.09	%
Other			18,429			4,537			13,892			306.19	%

		$	93,880		$	74,665		$	19,215			25.73	%
Discontinued Operations			(3,817	)		(8,003	)		4,186			(52.31	)%

	Total Property Expenses	$	90,063		$	66,662		$	23,401			35.10	%

Property expenses include real estate taxes, repairs and maintenance, property management, utilities, insurance and other property related expenses. Property expenses from same store properties remained relatively unchanged. Property expenses from acquired properties increased by $7.3 million due to properties acquired subsequent to December 31, 2003. Property expenses from sold properties decreased by $4.5 million or 52.1%, due to properties sold subsequent to December 31, 2003. Property expenses from properties not in service remained relatively unchanged. Other expenses increased $13.9 million due primarily tobuild-to-suit-for-sale costs of $10.5 million and increases in employee compensation.

General and administrative expense increased by approximately $10.6 million, or 38.4%, due primarily to increases in employee compensation related to compensation for new employees as well as an increase in incentive compensation and an increase in outside professional fees.

Amortization of deferred financing costs remained relatively unchanged.


	Nine Months			Nine Months
	Ended			Ended
	September 30,			September 30,
	2005			2004			$ Change			% Change

DEPRECIATION and OTHER AMORTIZATION ($ in 000’s)
Same Store Properties	$	50,393		$	46,465		$	3,928			8.45	%
Acquired Properties		16,834			1,600			15,234			952.13	%
Sold Properties		2,964			6,953			(3,989	)		(57.37	)%
Properties Not In Service and Other		8,720			6,965			1,755			25.20	%
Corporate Furniture, Fixtures and Equipment		1,000			965			35			3.63	%

	$	79,911		$	62,948		$	16,963			26.95	%
Discontinued Operations		(2,848	)		(6,077	)		3,229			(53.13	)%

Total Depreciation and Other Amortization	$	77,063		$	56,871		$	20,192			35.50	%

The increase in depreciation and other amortization for same store properties remained relatively unchanged. Depreciation and other amortization from acquired properties increased by $15.2 million due to properties acquired subsequent to December 31, 2003. Depreciation and other amortization from sold properties decreased by $4.0 million or 57.4%, due to properties sold subsequent to December 31, 2003. Depreciation and other amortization for properties not in service and other increased $1.8 million due to developments placed in service during 2004 and 2005. Amortization of corporate furniture, fixtures and equipment remained relatively unchanged.

The Consolidated Operating Partnership recognized $.08 million gain on the early retirement of debt. This includes $.05 million write-off of financing fees associated with the Consolidated Operating Partnership’s previous line of credit agreement which was amended and restated on August 23, 2005. The gain on early retirement of debt also includes payment of $.29 million of financing fees and write-off of loan premium of $.42 million on the Acquisition Mortgage Loan XIII which was assigned to the buyers of the properties collateralizing the Acquisition Mortgage Loan XIII on July 13, 2005.

Interest income decreased by approximately $.7 million due primarily to a decrease in the average mortgage loans receivable outstanding during the nine months ended September 30, 2005, as compared to the nine months ended September 30, 2004.

Interest expense increased by approximately $5.8 million primarily due to an increase in the weighted average debt balance outstanding for the nine months ended September 30, 2005 ($1,639.6 million), as compared to the nine months ended September 30, 2004 ($1,503.4 million), as well as an increase in the weighted average interest rate for the nine months ended September 30, 2005 (6.66%), as compared to the nine months ended September 30, 2004 (6.59%), offset by an increase in capitalized interest.

The Consolidated Operating Partnership recognized $.7 million relating to the mark-to-market of an interest rate protection agreement that was entered into in January 2005 in order to hedge the change in value of a build to suit development project as well as a deferred gain that was reclassed out of Other Comprehensive Income relating to a settled interest rate protection agreement that no longer qualifies for hedge accounting treatment.

Equity in income of Other Real Estate Partnerships increased by approximately $16.3 million due primarily to an increase in gain on sale of real estate for the nine months ended September 30, 2005 as compared to the nine months ended September 30, 2004.

Equity in income of joint ventures decreased by approximately $32.1 million due primarily to the gain recognized for the nine months ended September 30, 2004 related to the sale of all of the properties in the December 2001 Joint Venture.

Income tax benefit increased by $4.0 million due primarily to an increase in general and administrative expense (“G&A”) in the Consolidated Operating Partnership’s taxable REIT subsidiary (the “TRS”) due to additional G&A costs, which increases operating losses incurred in the nine months ended September 30, 2005 compared to the nine months ended September 30, 2004 associated with additional investment activity in the TRS. The increase in the income tax benefit is partially offset by an increase in state tax expense.

The $26.5 million gain on sale of real estate for the nine months ended September 30, 2005 resulted from the sale of nine industrial properties and several land parcels that do not meet the criteria established by FAS 144 for inclusion in discontinued operations.

The following table summarizes certain information regarding the industrial properties included in discontinued operations by the Consolidated Operating Partnership, for the nine months ended September 30, 2005 and September 30, 2004.


				Restated

	Nine Months			Nine Months
	Ended			Ended
	September 30,			September 30,
	2005			2004

	($ in 000’s)
Total Revenues	$	10,432		$	24,607
Operating Expenses		(3,817	)		(8,003	)
Depreciation and Amortization		(2,848	)		(6,077	)
Interest Expense		(373	)		(194	)
Provision for Income Taxes		(873	)		(1,655	)
Gain on Sale of Real Estate, Net of Income Taxes		50,881			56,914

Income from Discontinued Operations	$	53,402		$	65,592

Income from discontinued operations (net of income taxes) for the nine months ended September 30, 2005 reflects the results of operations and gain on sale of real estate, net of income taxes, relating to 46 industrial properties that were sold during the nine months ended September 30, 2005 and the results of operations from four properties identified as held for sale at September 30, 2005.

Comparison of Three Months Ended September 30, 2005 to Three Months Ended September 30, 2004

The Consolidated Operating Partnership’s net income available to unitholders was $24.5 million and $39.2 million for the three months ended September 30, 2005, and September 30, 2004, respectively. Basic and diluted net income available to unitholders was $.50 per unit for the three months ended September 30, 2005, and $0.83 per unit for the three months ended September 30, 2004.

The tables below summarize the Consolidated Operating Partnership’s revenues, property expenses and depreciation and other amortization by various categories for the three months ended September 30, 2005 and September 30, 2004. Same store properties are in service properties owned prior to July 1, 2004. Acquired properties are properties that were acquired subsequent to June 30, 2004. Sold properties are properties that were sold subsequent to June 30, 2004. Properties that are not in service are properties that are under construction that have not reached stabilized occupancy or were placed in service after June 30, 2004 or acquisitions acquired prior to July 1, 2004 that were not placed in service as of June 30, 2004. These properties are placed in service as they reach stabilized occupancy (generally defined as 90% occupied). Other revenues are derived from the operations of the Consolidated Operating Partnership’s maintenance company, fees earned from the Consolidated Operating Partnership’s joint ventures, fees earned for developing properties for third parties and other miscellaneous revenues. Other expenses are derived from the operations of the Consolidated Operating Partnership’s maintenance company and other miscellaneous regional expenses.


		Three Months			Three Months
		Ended			Ended
		September 30,			September 30,
		2005			2004			$ Change			% Change

REVENUES ($ in 000’s)
Same Store Properties		$	57,930		$	58,376		$	(446	)		(0.76	)%
Acquired Properties			10,660			377			10,283			2727.59	%
Sold Properties			1,605			7,264			(5,659	)		(77.90	)%
Properties Not In Service			6,260			4,330			1,930			44.57	%
Other			15,192			1,677			13,515			805.90	%

		$	91,647		$	72,024		$	19,623			27.25	%
Discontinued Operations			(1,533	)		(6,441	)		4,908			(76.20	)%

	Total Revenues	$	90,114		$	65,583		$	24,531			37.40	%

At September 30, 2005 and September 30, 2004 occupancy rates of the Consolidated Operating Partnership’s same store properties were 90.0% and 89.9%, respectively. Revenues from same store properties remained relatively unchanged. Revenues from acquired properties increased $10.3 million due to the 133 industrial properties acquired subsequent to June 30, 2004 totaling approximately 16.1 million square feet of GLA. Revenues from sold properties decreased $5.7 million, due to the 96 industrial properties sold subsequent to June 30, 2004, totaling approximately 10.1 million square feet of GLA. Revenues from properties not in service increased by $1.9 million due to an increase in occupancy of properties placed in service during 2004 and 2005. Other revenues increased by approximately $13.5 million due primarily tobuild-to-suit-for-sale revenues of $10.7 million and an increase in joint venture fees and assignment fees.


		Three Months			Three Months
		Ended			Ended
		September 30,			September 30,
		2005			2004			$ Change			% Change

PROPERTY EXPENSES ($ in 000’s)
Same Store Properties		$	18,928		$	18,115		$	813			4.49	%
Acquired Properties			3,417			86			3,331			3873.26	%
Sold Properties			560			1,987			(1,427	)		(71.82	)%
Properties Not In Service			2,022			2,291			(269	)		(11.74	)%
Other			14,125			1,880			12,245			651.33	%

		$	39,052		$	24,359		$	14,693			60.32	%
Discontinued Operations			(471	)		(1,850	)		1,379			(74.54	)%

	Total Property Expenses	$	38,581		$	22,509		$	16,072			71.40	%

Property expenses include real estate taxes, repairs and maintenance, property management, utilities, insurance and other property related expenses. Property expenses from same store properties remained relatively unchanged. Property expenses from acquired properties increased by $3.3 million due to properties acquired subsequent to June 30, 2004. Property expenses from sold properties decreased by $1.4 million or 71.8%, due to properties sold subsequent to June 30, 2004. Property expenses from properties not in service remained relatively unchanged. Other expenses increased $12.2 million due primarily tobuild-to-suit-for-sale costs of $10.5 million and increases in employee compensation.

General and administrative expense increased by approximately $4.3 million, or 39.8%, due primarily to increases in employee compensation related to compensation for new employees as well as an increase in incentive compensation.

Amortization of deferred financing costs remained relatively unchanged.


	Three Months			Three Months
	Ended			Ended
	September 30,			September 30,
	2005			2004			$ Change			% Change

DEPRECIATION and OTHER AMORTIZATION ($ in 000’s)
Same Store Properties	$	19,546		$	18,482		$	1,064			5.76	%
Acquired Properties		6,193			(405	)		6,598			(1629.14	)%
Sold Properties		256			1,959			(1,703	)		(86.93	)%
Properties Not In Service and Other		3,173			1,019			2,154			211.38	%
Corporate Furniture, Fixtures and Equipment		343			325			18			5.54	%

	$	29,511		$	21,380		$	8,131			38.03	%
Discontinued Operations		(436	)		(1,606	)		1,170			(72.85	)%

Total Depreciation and Other Amortization	$	29,075		$	19,774		$	9,301			47.04	%

Depreciation and other amortization for same store properties remained relatively unchanged. Depreciation and other amortization from acquired properties increased by $6.6 million due to properties acquired subsequent to June 30, 2004. Depreciation and other amortization from sold properties decreased by $1.7 million or 86.9%, due to properties sold subsequent to June 30, 2004. Depreciation and other amortization for properties not in service and other increased $2.2 million due to developments placed in service during 2004 and 2005. Amortization of corporate furniture, fixtures and equipment remained relatively unchanged.

Interest income decreased by approximately $.3 million due primarily to a decrease in the average mortgage loans receivable outstanding during the three months ended September 30, 2005, as compared to the three months ended September 30, 2004.

Interest expense increased by approximately $1.7 million primarily due to an increase in the weighted average debt balance outstanding for the three months ended September 30, 2005 ($1,710.3 million), as compared to the three months ended September 30, 2004 ($1,609.2 million), as well as an increase in the weighted average interest rate for the three months ended September 30, 2005 (6.56%), as compared to the three months ended September 30, 2004 (6.42%).

The Consolidated Operating Partnership recognized $1.2 million relating to the mark-to-market of an interest rate protection agreement that was entered into in January 2005 in order to hedge the change in value of a build to suit development project as well as a deferred gain that was reclassed out of Other Comprehensive Income relating to a settled interest rate protection agreement that no longer qualifies for hedge accounting treatment.

Equity in income of Other Real Estate Partnerships increased by approximately $14.3 million due primarily to an increase in gain on sale of real estate for the three months ended September 30, 2005 as compared to the three months ended September 30, 2004.

Equity in income of joint ventures decreased by approximately $31.3 million due primarily to the gain recognized for the three months ended September 30, 2004 related to the sale of all of the properties in the December 2001 Joint Venture.

Income tax benefit increased by $2.3 million due primarily to an increase in general and administrative expense (“G&A”) in the TRS due to additional G&A costs, which increases operating losses, incurred in the three months ended September 30, 2005 compared to the three months ended September 30, 2004 associated with additional investment activity in the TRS. The increase in the income tax benefit is partially offset by an increase in state tax expense.

The $2.6 million gain on sale of real estate for the three months ended September 30, 2005 resulted from the sale of one industrial property and several land parcels that do not meet the criteria established by FAS 144 for inclusion in discontinued operations.

The following table summarizes certain information regarding the industrial properties included in discontinued operations by the Consolidated Operating Partnership, for the three months ended September 30, 2005 and September 30, 2004.


				Restated

	Three Months			Three Months
	Ended			Ended
	September 30,			September 30,
	2005			2004

	($ in 000’s)
Total Revenues	$	1,533		$	6,441
Operating Expenses		(471	)		(1,850	)
Depreciation and Amortization		(436	)		(1,606	)
Interest Expense		(29	)		(67	)
Provision for Income Taxes		(157	)		(595	)
Gain on Sale of Real Estate, Net of Income Taxes		16,484			8,892

Income from Discontinued Operations	$	16,924		$	11,215

Income from discontinued operations (net of income taxes) for the three months ended September 30, 2005 reflects the results of operations and gain on sale of real estate, net of income taxes, relating to 20 industrial properties that were sold during the three months ended September 30, 2005 and the results of operations from four properties identified as held for sale at September 30, 2005.

Income from discontinued operations for the three months ended September 30, 2004, reflects the results of operations of 20 industrial properties that were sold during the three months ended September 30, 2005, 86 industrial properties that were sold during the year ended December 31, 2004, four industrial properties identified as held for sale at September 30, 2005, as well as the gain on sale of real estate from 29 industrial properties which were sold during the three months ended September 30, 2004.

LIQUIDITY AND CAPITAL RESOURCES

The Consolidated Operating Partnership has considered its short-term (one year or less) liquidity needs and the adequacy of its estimated cash flow from operations and other expected liquidity sources to meet these needs. The Consolidated Operating Partnership believes that its principal short-term liquidity needs are to fund normal recurring expenses, debt service requirements and the minimum distribution required by the Company to maintain the Company’s REIT qualification under the Internal Revenue Code. The Consolidated Operating Partnership anticipates that these needs will be met with cash flows provided by operating activities.

The Consolidated Operating Partnership expects to meet long-term (greater than one year) liquidity requirements such as property acquisitions, developments, scheduled debt maturities, major renovations, expansions and other nonrecurring capital improvements principally through the disposition of select assets, and the issuance of long-term unsecured indebtedness and Units and preferred Units. As of September 30, 2005 and November 2, 2005, $500.0 million of debt securities were registered and unissued under the Securities Act of 1933, as amended. The Consolidated Operating Partnership also may finance the development or acquisition of additional properties through borrowings under unsecured lines of credit. At September 30, 2005, borrowings under the Operating Partnership’s $500 million unsecured line of credit (the “2005 Unsecured Line of Credit ‘”) bore interest at a weighted average interest rate of 4.52%. The 2005 Unsecured Line of Credit bears interest at a floating rate of LIBOR plus .625%, or the Prime Rate, at the Operating Partnership’s election. As of November 2, 2005, approximately $50.1 million was available for additional borrowings under the 2005 Unsecured Line of Credit.

Nine Months Ended September 30, 2005

Net cash provided by operating activities of approximately $55.0 million for the nine months ended September 30, 2005 was comprised primarily of net income of approximately $70.3 million offset by adjustments for non-cash items of approximately $11.0 million and by the net change in operating assets and liabilities of approximately $4.3 million. The adjustments for the non-cash items consist of gain on sale of real estate of approximately $89.6 million, the mark to market of the interest rate protection of $.7 million, net equity in net income of joint ventures of approximately $3.2 million and the effect of the straight-lining of rental income of approximately $4.8 million substantially offset by $86.0 million of depreciation and amortization and $1.3 million of provision for bad debt.

Net cash used in investing activities of approximately $163.6 million for the nine months ended September 30, 2005 was comprised primarily by the acquisition and development of real estate, leasing costs and capital expenditures related to the expansion and improvement of existing real estate, investments in and advances to the Other Real Estate Partnerships, and contributions to and investments in three of the Consolidated Operating Partnership’s industrial real estate joint ventures offset by the net proceeds from the sales of investment in real estate, distributions from the Other Real Estate Partnerships, distributions from two of the Consolidated Operating Partnership’s industrial real estate ventures, and the repayment of mortgage loans receivable.

During the nine months ended September 30, 2005, the Consolidated Operating Partnership acquired 79 industrial and several land parcels properties comprising approximately 10.7 million square feet of GLA and several land parcels. The gross purchase price for 78 industrial properties totaled approximately $374.0 million. Additionally, one industrial property was acquired through foreclosure due to a defaulted note receivable.

The Consolidated Operating Partnership, through a wholly-owned limited liability company in which the Operating Partnership is the sole member, invested approximately $40.1 million and received distributions of approximately $1.2 million from the Operating Partnership’s industrial real estate joint ventures. As of September 30, 2005, the Operating Partnership’s industrial real estate joint ventures owned 298 industrial properties comprising approximately 23.5 million square feet of GLA.

Net cash provided by financing activities of approximately $105.6 million for the nine months ended September 30, 2005 was comprised primarily of general partnership and limited partnership units (“Unit”) and preferred general partnership unit distributions, net repayments under the 2005 Unsecured Line of Credit, the repurchase of restricted units and repayments on mortgage loans payable, partially offset by the net proceeds from the exercise of stock options and proceeds from a mortgage loan payable.

On August 23, 2005, the Consolidated Operating Partnership, through the Operating Partnership, amended and restated its $300.0 million unsecured line of credit (the “Unsecured Line of Credit”), which was due September 28, 2007, and bore interest at a floating rate of LIBOR plus .7%, or the Prime Rate, at the Consolidated Operating Partnership’s election. The amended and restated unsecured line of credit (the “2005 Unsecured Line of Credit”) will mature on September 28, 2008, has a borrowing capacity of $500.0 million, with the right, subject to certain conditions, to increase the borrowing capacity up to $600.0 million and bears interest at a floating rate of LIBOR plus .625%, or the Prime Rate, at the Consolidated Operating Partnership’s election. The net unamortized deferred financing fees related to the Unsecured Line of Credit and any additional deferred financing fees incurred related to the 2005 Unsecured Line of Credit are being amortized over the life of the 2005 Unsecured Line of Credit in accordance with Emerging Issues Task Force Issue98-14, “Debtor’s Accounting for Changes inLine-of-Credit or Revolving-Debt Arrangements” except for $.1 million, which represents the write off of deferred financing costs and is included in gain from early retirement of debt.

During the nine months ended September 30, 2005, the Company awarded 189,878 shares of restricted common stock to certain employees and 9,135 shares of restricted common stock to certain Directors. The Operating Partnership issued Units to the Company in the same amount. These shares of restricted common stock had a fair value of approximately $8.3 million on the date of grant. The restricted common stock vests over periods from one to ten years. Compensation expense will be charged to earnings over the respective vesting periods.

During the nine months ended September 30, 2005, certain employees exercised 247,764 non-qualified employee stock options. Net proceeds to the Company were approximately $6.7 million. The Consolidated Operating Partnership, through the Operating Partnership, issued Units to the Company in the same amount.

Market Risk

The following discussion about the Consolidated Operating Partnership’s risk-management activities includes “forward-looking statements” that involve risk and uncertainties. Actual results could differ materially from those projected in the forward-looking statements.

This analysis presents the hypothetical gain or loss in earnings, cash flows or fair value of the financial instruments and derivative instruments which are held by the Consolidated Operating Partnership at September 30, 2005 that are sensitive to changes in the interest rates. While this analysis may have some use as a benchmark, it should not be viewed as a forecast.

In the normal course of business, the Consolidated Operating Partnership also faces risks that are either non-financial or non-quantifiable. Such risks principally include credit risk and legal risk and are not represented in the following analysis.

At September 30, 2005, approximately $1,404.2 million (approximately 78.7% of total debt at September 30, 2005) of the Consolidated Operating Partnership’s debt was fixed rate debt and approximately $380.5 million (approximately 21.3% of total debt at September 30, 2005) was variable rate debt. During the nine months ended September 30, 2005, the Company, through First Industrial Development Services, Inc., entered into an interest rate protection agreement which hedged the change in value of a build to suit development project the Company is in the process of constructing. This interest rate protection agreement has a notional value of $50.0 million, is based on the five year treasury, has a strike rate of 3.936% and settles on October 4, 2005. Currently, the Consolidated Operating Partnership does not enter into financial instruments for trading or other speculative purposes.

For fixed rate debt, changes in interest rates generally affect the fair value of the debt, but not earnings or cash flows of the Consolidated Operating Partnership. Conversely, for variable rate debt, changes in the interest rate generally do not impact the fair value of the debt, but would affect the Consolidated Operating Partnership’s future earnings and cash flows. The interest rate risk and changes in fair market value of fixed rate debt generally do not have a significant impact on the Consolidated

Operating Partnership until the Consolidated Operating Partnership is required to refinance such debt. See Note 5 to the consolidated financial statements for a discussion of the maturity dates of the Consolidated Operating Partnership’s various fixed rate debt.

Based upon the amount of variable rate debt outstanding at September 30, 2005, a 10% increase or decrease in the interest rate on the Consolidated Operating Partnership’s variable rate debt would decrease or increase, respectively, future net income and cash flows by approximately $1.7 million per year. A 10% increase in interest rates would decrease the fair value of the fixed rate debt at September 30, 2005 by approximately $48.2 million to $1,487.3 million. A 10% decrease in interest rates would increase the fair value of the fixed rate debt at September 30, 2005 by approximately $51.7 million to $1,587.2 million.


	*Recent Accounting Pronouncements*

In June 2005, the FASB ratified the consensus reached by the Emerging Issues Task Force (“EITF”) regardingEITF 04-05, “Investor’s Accounting for an Investment in a Limited Partnership When the Investor is the Sole General Partner and the Limited Partners Have Certain Rights.” The conclusion provides a framework for addressing the question of when a sole general partner, as defined inEITF 04-05, should consolidate a limited partnership. The EITF has concluded that the general partner of a limited partnership should consolidate a limited partnership unless (1) the limited partners possess substantive kick-out rights as defined in paragraph B20 of FIN 46R, or (2) the limited partners possess substantive participating rights similar to the rights described in Issue96-16, “Investor’s Accounting for an Investee When the Investor has a Majority of the Voting Interest by the Minority Shareholder or Shareholders Have Certain Approval or Veto Rights.” In addition, the EITF concluded that the guidance should be expanded to include all limited partnerships, including those with multiple general partners. The Company will adoptEITF 04-05 as of December 31, 2005. The Company is currently assessing all of its

investments in unconsolidated real estate joint ventures to determine the impact, if any, the adoption ofEITF 04-05 will have on results of operations, financial position or liquidity.

In June 2005, the FASB ratified the consensus reached by the EITF regarding EITF05-6, “Determining the Amortization Period for Leasehold Improvements.” The guidance requires that leasehold improvements acquired in a business combination, or purchased subsequent to the inception of a lease, be amortized over the lesser of the useful life of the assets or a term that includes renewals that are reasonably assured at the date of the business combination or purchase. The guidance is effective for periods beginning after June 29, 2005. EITF05-6 does not impact the Consolidated Operating Partnership’s results of operations, financial position, or liquidity.

Subsequent Events

From October 1, 2005 to November 2, 2005, the Consolidated Operating Partnership acquired 18 industrial properties and one land parcel for a purchase price of approximately $56.4 million (approximately $1.2 million of which was made through the issuance of limited partnership interests in the Operating Partnership (“Units”)), excluding costs incurred in conjunction with the acquisition of these industrial properties. The Consolidated Operating Partnership also sold four industrial properties and one land parcel for approximately $11.9 million of gross proceeds during this time period.

On October 17, 2005, the Operating Partnership paid a third quarter 2005 distribution of $.6950 per Unit, totaling approximately $34.6 million.

On October 4, 2005, the Consolidated Operating Partnership settled the interest rate protection agreement which hedged the change in value of a build to suit development project the Company is in the process of constructing for proceeds of $675.

On October 17, 2005, the Operating Partnership, through First Industrial Development Services, Inc., entered into an interest rate protection agreement which hedged the change in value of a build to suit development project the Operating Partnership is in the process of constructing. This interest rate protection agreement has a notional value of $50 million, is based on the 3 Month LIBOR rate, has a strike rate of 4.8675%, and has an effective date of December 30, 2005 and a termination date of December 30, 2010. Per FASB Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“FAS 133”), fair value and cash flow hedge accounting for hedges of non-financial assets and liabilities is limited to hedges of the risk of changes in the market price of the entire hedged item because changes in the price of an ingredient or component of a non-financial item generally do not have a predictable, separately measurable effect on the price of the item. Since the interest rate protection agreement is hedging a component of the change in value of the build to suit development, the interest rate protection agreement does not qualify for hedge accounting and the change in value of the interest rate protection agreement will be recognized immediately in net income as opposed to other comprehensive income.

On November 8, 2005, the Company issued 6,000,000 depositary shares, each representing 1/10,000 of a share of Series I Flexible Cumulative Redeemable Preferred Stock, $.01 par value (the “Series I Depositary Shares”), in a private placement at an initial offering price of $25.00 per depositary share for an aggregate initial offering price of $150.0 million. The net proceeds received from the Series I Depositary Shares were contributed to the Operating Partnership in exchange for preferred limited partnership units (“Series I Preferred Units”). Dividends on the Series I Depositary Shares are payable monthly in arrears commencing December 31, 2005 at an initial dividend rate of One-Month LIBOR plus 1.25%, subject to reset on the four-month, six-month andone-year anniversary of the date of issuance. The Operating Partnership will make distributions to the Company on the Series I Preferred Units corresponding to the dividends to be paid by the Company on the Series I Depositary Shares. Pursuant to the purchase agreement with respect to the Series I Depositary Shares, the Company, at its option, may issue, and the initial purchaser of the Series I Depositary Shares shall purchase, on or before November 18, 2005 an additional 4,000,000 shares of the Series I Depositary Shares at an initial offering price of $25.00 per depositary share.


Item 3.	*Quantitative and Qualitative Disclosures About Market Risk*

Response to this item is included in Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” above.


Item 4.	*Controls and Procedures*


	*Evaluation of Disclosure Controls and Procedures*

In connection with the original Form 10-Q filed on November 9, 2005, the Consolidated Operating Partnership’s principal executive officer and principal financial officer, after evaluating the effectiveness of the Consolidated Operating Partnership’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report, based on the evaluation of these controls and procedures required by Exchange ActRule 13a-15(b), originally concluded that as of the end of such period the Consolidated Operating Partnership’s disclosure controls and procedures were effective.

On December 19, 2005, the Consolidated Operating Partnership’s management concluded that the Consolidated Operating Partnership needed to correct errors affecting the General Partner Unit and General Partner Preferred Unit account dollar balances. Specifically, errors were discovered in how the Consolidated Operating Partnership recorded the redemption of its Series D, Series E and Series H General Partner Preferred Units and the issuance of its Series F, Series G and Series H General Partner Preferred Units. This control deficiency resulted in the restatement of the Consolidated Operating Partnership’s 2004 annual consolidated financial statements as well as its condensed consolidated financial statements for the quarters ended March 31, 2005, June 30, 2005, and September 30, 2005.

The above restatement is described in more detail in Note 2 to the condensed consolidated financial statements included in thisForm 10-Q/A. In addition, management has concluded that the Consolidated Operating Partnership had a material weakness in its internal control over financial reporting designed to ensure the accuracy and proper presentation of its General Partner Unit and General Partner Preferred Unit account dollar balance.

In connection with the filing of this Form 10-Q/ A, the Consolidated Operating Partnership’s principal executive officer and principal financial officer have re-evaluated the effectiveness of the Consolidated Operating Partnership’s disclosure controls and procedures as of the end of the period covered by this report and concluded that the Consolidated Operating Partnership’s disclosure controls and procedures were not effective as of the end of such period.


	*Changes in Internal Control over Financial Reporting*

There has been no change in the Consolidated Operating Partnership’s internal control over financial reporting that occurred during the fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, the Consolidated Operating Partnership’s internal control over financial reporting. However, in the fourth quarter of 2005, management, implemented an additional monitoring control to address the material weakness, discussed above, relating to the recording of its General Partner Unit and General Partner Preferred Unit account dollar balances. The new control requires the completion and review of an analysis that reconciles the detailed accounts of the Consolidated Operating Partnership’s consolidated partners’ capital accounts to the related equity accounts of its general partner, First Industrial Realty Trust, Inc.

PART II. OTHER INFORMATION


Item 1.	*Legal Proceedings*

None.


Item 2.	*Unregistered Sales of Equity Securities and Use of Proceeds*

On July 22, 2005, the Operating Partnership issued 183,158 Units having an aggregate market value of approximately $7.4 million in exchange for property.

All of the above Units were issued in private placements in reliance on Section 4(2) of the Securities Act of 1933, as amended, including Regulation D promulgated thereunder, to individuals or entities holding real property or interests therein. No underwriters were used in connection with such issuances.

Subject tolock-up periods and certain adjustments, Units are convertible into common stock, $.01 par value, of the Company on a one-for-one basis or cash at the option of the Company.


Item 3.	*Defaults Upon Senior Securities*

�� None.


Item 4.	*Submission of Matters to a Vote of Security Holders*

None.


Item 5.	*Other Information*

Not applicable.


Item 6.	*Exhibits*

(a) Exhibits:


Exhibit
Number			Description

	3	.1***	Amendment No. 2 dated July 22, 2005 to the Eighth Amended and Restated Partnership Agreement of the Operating Partnership dated June 2, 2004 (incorporated by reference to Exhibit 10.1 of the Form 10-Q of First Industrial Realty Trust, Inc. (the “Company”) dated August 8, 2005, File No. 1-13102)
	3	.2***	Amendment No. 3 dated October 31, 2005 to the Eighth Amended and Restated Partnership Agreement of First Industrial, L.P. dated June 2, 2004 (incorporated by reference to Exhibit 10.3 of the Form 10-Q of the Company dated November 9, 2005, File No. 1-13102)
	3	.3***	Ninth Amended and Restated Partnership Agreement of First Industrial, L.P. dated November 8, 2005 (incorporated by reference to Exhibit 10.2 of the Form 8-K of the Company filed November 9, 2005, File No. 1-13102)
	10	.1***	Unsecured Term Loan Agreement dated August 1, 2005 among the Operating Partnership, the Company and JP Morgan Chase Bank, N.A. (incorporated by reference to Exhibit 10.3 of the Form 10-Q of the Company dated August 8, 2005, File No. 1-13102)
	10	.2***	Purchase Agreement dated November 8, 2005 between First Industrial Realty Trust, Inc., First Industrial, L.P. and Wachovia Investment Holdings, LLC (incorporated by reference to Exhibit 10.1 of the Form 8-K of the Company filed November 9, 2005, File No. 1-13102)
	31	.1*	Certification of Principal Executive Officer of First Industrial Realty Trust, Inc., registrant’s sole general partner, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.


Exhibit
Number			Description

	31	.2*	Certification of Principal Financial Officer of First Industrial Realty Trust, Inc., registrant’s sole general partner, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
	32	.1**	Certification of the Principal Executive Officer and the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


	*	Filed herewith


	**	Furnished herewith


***	Previously filed

The Company maintains a website at www.firstindustrial.com. Copies of the Company’s annual report onForm 10-K, quarterly reports onForm 10-Q, current reports onForm 8-K, and amendments to such reports are available without charge on the Company’s website as soon as reasonably practicable after such reports are filed with or furnished to the SEC. In addition, the Company’s Corporate Governance Guidelines, Code of Business Conduct and Ethics, Audit Committee Charter, Compensation Committee Charter, Nominating/ Corporate Governance Committee Charter, along with supplemental financial and operating information prepared by the Company, are all available without charge on the Company’s website or upon request to the Company. Amendments to, or waivers from, the Company’s Code of Business Conduct and Ethics that apply to the Company’s executive officers or directors shall be posted to the Company’s website at www.firstindustrial.com. Please direct requests as follows:

First Industrial Realty Trust, Inc.

311 S. Wacker, Suite 4000

Chicago, IL 60606

Attention: Investor Relations

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	FIRST INDUSTRIAL, L.P.


	By:	FIRST INDUSTRIAL REALTY TRUST, INC.


	Its Sole General Partner


	By:	/s/ Scott A. Musil



	Scott A. Musil
	Senior Vice President-Controller
	(Principal Accounting Officer)

Date: December 21, 2005

EXHIBIT INDEX


Exhibit
Number			Description

	3	.1***	Amendment No. 2 dated July 22, 2005 to the Eighth Amended and Restated Partnership Agreement of the Operating Partnership dated June 2, 2004 (incorporated by reference to Exhibit 10.1 of the Form 10-Q of First Industrial Realty Trust, Inc. (the “Company”) dated August 8, 2005, File No. 1-13102)
	3	.2***	Amendment No. 3 dated October 31, 2005 to the Eighth Amended and Restated Partnership Agreement of First Industrial, L.P. dated June 2, 2004 (incorporated by reference to Exhibit 10.3 of the Form 10-Q of the Company dated November 9, 2005, File No. 1-13102)
	3	.3***	Ninth Amended and Restated Partnership Agreement of First Industrial, L.P. dated November 8, 2005 (incorporated by reference to Exhibit 10.2 of the Form 8-K of the Company filed November 9, 2005, File No. 1-13102)
	10	.1***	Unsecured Term Loan Agreement dated August 1, 2005 among the Operating Partnership, the Company and JP Morgan Chase Bank, N.A. (incorporated by reference to Exhibit 10.3 of the Form 10-Q of the Company dated August 8, 2005, File No. 1-13102)
	10	.2***	Purchase Agreement dated November 8, 2005 between First Industrial Realty Trust, Inc., First Industrial, L.P. and Wachovia Investment Holdings, LLC (incorporated by reference to Exhibit 10.1 of the Form 8-K of the Company filed November 9, 2005, File No. 1-13102)
	31	.1*	Certification of Principal Executive Officer of First Industrial Realty Trust, Inc., registrant’s sole general partner, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
	31	.2*	Certification of Principal Financial Officer of First Industrial Realty Trust, Inc., registrant’s sole general partner, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
	32	.1**	Certification of the Principal Executive Officer and the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


	*	Filed herewith


	**	Furnished herewith


***	Previously filed

First Industrial 10-Q/A2005 Q3 Quarterly report (amended)