Activist Investor Jonathan Litt Targets First Industrial's 'Substantial' Discount To NAV

Activist investor Jonathan Litt, founder and CEO of Land & Buildings Investment Management, is urging Chicago-based First Industrial Realty Trust to sell assets and return capital to shareholders. 

Litt argued in a press release that the move is necessary to close the gap between First Industrial's share price and the company's net asset value. Land & Buildings estimates there is a 30% upside in First Industrial's shares to its underlying asset value. 

Land & Buildings Investment Management owns a 1% stake in First Industrial, according to Reuters.

"I have closely followed First Industrial for the past three decades and believe the investment community’s legacy perception of the Company as a low-quality also-ran has led to a persistently discounted valuation," Litt said in the release. 

First Industrial didn't immediately respond to a request for comment. 

First Industrial has "materially transformed" its portfolio over the past decade and now has quality that rivals its peers across a variety of metrics, Litt said. This includes nearly 40% of its portfolio being newly developed in that period and disposing of more than 40% of its legacy assets, "substantially upgrading" its asset quality. 

A presentation from Land & Buildings says First Industrial trades at a higher implied cap rate than its public peers, yet it has similar portfolio quality.

To realize First Industrial's full value, the activist investor said the company should pursue "all steps necessary" to achieve net asset value. This includes asset dispositions, land sales, returning capital to shareholders, improving investor communication and evaluating strategic alternatives if the discount continues.

Land & Buildings said it believes the First Industrial portfolio would be highly sought after by multiple buyers, including Prologis and Blackstone. 

U.S. REITs closed November at a median 18.2% discount to their consensus NAV, down from a 21.3% mark in October, according to S&P Global Market Intelligence. Of the 12 industrial companies tracked, the median discount to NAV was 10.2%. 

Two industrial REITS, Industrial Logistics Properties Trust and Americold Realty Trust, ranked in the top 10 discounts to NAV, at 51.7% and 47.4%, respectively.