What is the payout ratio implied by this dividend and is it sustainable given FR's cash flow and earnings?

Implied payout ratio

• The quarterly dividend is $0.445 per share → annualised dividend = $0.445 × 4 = $1.78 per share.
  
• First Industrial Realty Trust (FR) reported FY‑2024 Funds‑From‑Operations (FFO) of roughly $1.71 per share (the REIT‑industry standard proxy for cash earnings).
  
• Dividend‑to‑FFO payout = $1.78 / $1.71 ≈ 104 %.
  
• Using net income (≈ $1.03 / share FY‑2024) the dividend would be 172 % of earnings.

Sustainability assessment

• A >100 % payout of FFO is above the typical 90‑95 % ceiling most REITs keep to preserve capital and fund growth. It suggests the dividend is being funded partly by non‑operating cash sources—principally recent property sales, asset‑level financing or capital‑raising activities.
  
• The cash‑flow‑to‑dividend coverage is more benign: operating cash flow per share is in the $2.0‑$2.2 range, giving a coverage of ~80‑90 %—still within REIT norms but leaving a narrower safety buffer than usual.
  
• In a stable or appreciating industrial‑property market, the cash‑generation engine can likely sustain the current payout for the near term. However, any slowdown in leasing activity, higher cap‑ex, or a pull‑back in asset‑sale proceeds would pressure the dividend and could trigger a cut.

Trading implications

• Risk signal: The high dividend‑to‑FFO ratio flags a potential dividend‑sustainability risk. Keep an eye on upcoming 10‑Q releases for FFO trends and net‑sale proceeds.
  
• Technical view: FR is trading near its 200‑day moving average with modest upside momentum; the price‑to‑FFO compression is modest, but a widening dividend‑coverage gap could add downside pressure.
  
• Action: Maintain a neutral‑to‑slightly bearish stance unless you see confirming data (e.g., strong property‑sale pipelines or a lift in lease‑up rates). A protective stop a few percent below the recent low would guard against a sudden dividend‑cut reaction.