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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

Commission file number 333-21873

First Industrial, L.P.

(Exact Name of Registrant as Specified in its Charter)

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 in Rule 12b-2 of the Exchange Act).     Yes þ          No o

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FIRST INDUSTRIAL, L.P.

Form 10-Q

For the Period Ended March 31, 2005

INDEX

PART I: FINANCIAL INFORMATION

Item 1.     Financial Statements

FIRST INDUSTRIAL, L.P.

CONSOLIDATED BALANCE SHEETS

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

FIRST INDUSTRIAL, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

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

FIRST INDUSTRIAL, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

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)

      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 86.9% and 86.1% ownership interest at March 31, 2005 and March 31, 2004, respectively. The limited partners of the Operating Partnership own approximately a 13.1% and 13.9% interest in the Operating Partnership at March 31, 2005 and March 31, 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 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 March 31, 2005, the Consolidated Operating Partnership owned 783 industrial properties (inclusive of developments in process) containing an aggregate of approximately 60.4 million square feet of gross leasable area (“GLA”). On a combined basis, as of March 31, 2005, the Other Real Estate Partnerships owned 101 industrial properties containing an aggregate of approximately 9.5 million square feet of GLA.

      On March 21, 2005, the Operating Partnership, through separate wholly-owned limited liability companies of which it is the sole member, entered into a joint venture arrangement with an institutional investor to invest in industrial properties (the “March 2005 Joint Venture”). The Operating Partnership, through separate wholly-owned limited liability companies of which it is the sole member, owns a ten percent equity interest in and provides property management, leasing, development, disposition and portfolio management services to the March 2005 Joint Venture.

      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 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.

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      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 2004 Form 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 2004 Form 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 March 31, 2005 and December 31, 2004, and the reported amounts of revenues and expenses for each of the three months ended March 31, 2005 and March 31, 2004. Actual results could differ from those estimates.

      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 March 31, 2005 and December 31, 2004 and the results of its operations and comprehensive income for each of the three months ended March 31, 2005 and March 31, 2004, and its cash flows for each of the three months ended March 31, 2005 and March 31, 2004, and all adjustments are of a normal recurring nature.

      In the consolidated statement of operations and cash flows for the three months ended March 31, 2004 presented in its Form 10-Q filed May 10, 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 and cash flows for the three months ended March 31, 2004 to reflect this new allocation in this Form 10-Q.

      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 FASB (hereinafter defined) Statement of Financial 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.

      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 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

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the date of grant. On January 1, 2003, the Consolidated Operating Partnership adopted the fair value recognition provisions of the Financial Accounting Standards Board’s (“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 during the three months ended March 31, 2005 and March 31, 2004, 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:

      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.

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

      In December, 2004, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 153, Exchanges of Nonmonetary Assets — An Amendment of APB Opinion No. 29 (“SFAS No. 153”). The amendments made by SFAS No. 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

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.” SFAS No. 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 SFAS No. 153 on June 15, 2005 will have a material effect on the Operating Partnership’s consolidated financial statements.

      In December, 2004, the FASB issued SFAS No. 123: (Revised 2004) — Share-Based Payment (“SFAS No. 123R”). SFAS 123R replaces SFAS No. 123, which the Company adopted on January 1, 2003. SFAS No. 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. SFAS No. 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 SFAS No. 123R will have a material effect on the Operating Partnership’s consolidated financial statements.

      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:

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Condensed Combined Statements of Operations:

      As of March 31, 2005, the September 1998 Joint Venture owned 41 industrial properties comprising approximately 1.3 million square feet of GLA, the May 2003 Joint Venture owned seven industrial properties comprising approximately 3.8 million square feet of GLA, and the March 2005 Joint Venture owned seven industrial properties comprising approximately 1.4 million square feet of GLA and several land parcels. During the three months ended March 31, 2005, the Operating Partnership sold six industrial properties and several land parcels to the March 2005 Joint Venture at a total sales price of $82,023.

      The Consolidated Operating Partnership deferred 15% of the gain on sale of real estate and acquisition fees and 10% of the gain on sale of real estate, which is equal to the Consolidated Operating Partnership’s economic interests in the May 2003 Joint Venture and the March 2005 Joint Venture, respectively. 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 40 to 45 years. If either Joint Venture sells any of these properties to a third party, the Consolidated Operating Partnership will recognize the unamortized portion of the deferred gain and fees as gain on sale of real estate or other income, respectively. 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 March 31, 2005 and December 31, 2004, the Consolidated Operating Partnership has a receivable from the Joint Ventures of $989 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.

      During the three months ended March 31, 2005 and 2004, the Consolidated Operating Partnership invested the following amounts in its joint ventures as well as received distributions and recognized fees from acquisition, disposition, property management and asset management services in the following amounts:

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      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 a 20-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.

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:

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      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:

      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 (the “Interest Rate Protection Agreements”). In the next 12 months, the Consolidated Operating Partnership will amortize approximately $1,076 into net income by reducing interest expense.

      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 settles on October 4, 2005. Per SFAS 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. Accordingly, the Consolidated Operating Partnership recognized $941 in net income from the mark-to-market of the interest rate protection agreement for the three months ended March 31, 2005.

      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 to lock-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

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

      During the three months ended March 31, 2005, certain employees exercised 8,434 non-qualified employee stock options. Net proceeds to the Company were approximately $248. 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 three months ended March 31, 2005, the Company awarded 189,878 shares of restricted common stock to certain employees and 1,012 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 $8,014 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 three months ended March 31, 2005, the Operating Partnership issued 37,587 Units having an aggregate market value of approximately $1,507 in exchange for property.

      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 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.

      During the three months ended March 31, 2005, the Consolidated Operating Partnership acquired 19 industrial properties comprising approximately 2.7 million square feet of GLA and several land parcels. The purchase price of these acquisitions totaled approximately $82,942, excluding costs incurred in conjunction with the acquisition of the industrial properties and land parcels.

      During the three months ended March 31, 2005, the Consolidated Operating Partnership sold 17 industrial properties comprising approximately 3.0 million square feet of GLA and several land parcels. Gross proceeds from the sales of the 17 industrial properties and several land parcels were approximately $147,989. The gain on sale of real estate, net of income taxes was approximately $21,645. Ten of the 17 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 10 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 the seven industrial properties and several land parcels that do not meet the criteria established by FAS 144 are included in continuing operations.

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      At March 31, 2005, the Consolidated Operating Partnership had eight industrial properties comprising approximately 1.1 million square feet of GLA held for sale. In accordance with FAS 144, the results of operations of the eight industrial properties held for sale at March 31, 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 three months ended March 31, 2005 reflects the results of operations and gain on sale of real estate, net of income taxes of 10 industrial properties that were sold during the three months ended March 31, 2005 as well as the results of operations of eight industrial properties held for sale at March 31, 2005.

      Income from discontinued operations for the three months ended March 31, 2004 reflects the results of operations of 10 industrial properties that were sold during the three months ended March 31, 2005, 86 industrial properties that were sold during the year ended December 31, 2004, eight industrial properties identified as held for sale at March 31, 2005, as well as the gain on sale of real estate from 18 industrial properties which were sold during the three months ended March 31, 2004.

      The following table discloses certain information regarding the industrial properties included in discontinued operations by the Consolidated Operating Partnership, for the three months ended March 31, 2005 and March 31, 2004.

      Supplemental disclosure of cash flow information:

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The computation of basic and diluted EPU is presented below:

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      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 four development projects totaling approximately 1.5 million square feet of GLA. The estimated total construction costs are approximately $98.6 million. Of this amount, approximately $49.0 million remains to be funded. There can be no assurance the actual completion cost will not exceed the estimated completion cost stated above.

      At March 31, 2005, the Consolidate Operating Partnership had 18 other letters of credit outstanding in the aggregate amount of $13,192. These letters of credit expire between June 2005 and April 2007.

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      In the consolidated statement of operations and cash flows for the three months ended March 31, 2004 presented in its Form 10-Q filed May 10, 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 and cash flows for the three months ended March 31, 2004 to reflect this new allocation in this Form 10-Q.

FIRST INDUSTRIAL, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      At March 31, 2005 and December 31, 2004, the Consolidated Operating Partnership has a receivable balance of $10,677 and $9,650, respectively from a wholly-owned entity of the Company.

      From April 1, 2005 to April 29, 2005, the Consolidated Operating Partnership sold four industrial properties and several land parcels for approximately $34,209 of gross proceeds.

      On April 18, 2005, the Operating Partnership paid a first quarter 2005 distribution of $.6950 per Unit, totaling approximately $34,339.

      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 this Form 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 or lease-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 86.9% ownership interest at March 31, 2005. The limited partners of the Operating Partnership own, in the aggregate, approximately a 13.1% interest in the Operating Partnership at March 31, 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 March 31, 2005, the Consolidated Operating Partnership owned 783 industrial properties (inclusive of developments in process) containing an aggregate of approximately 60.4 million square feet of gross leasable area (“GLA”). On a combined basis, as of March 31, 2005, the Other Real Estate Partnerships owned 101 industrial properties containing an aggregate of approximately 9.5 million square feet of GLA.

      On March 21, 2005, the Operating Partnership, through separate wholly-owned limited liability companies of which it is the sole member, entered into a joint venture arrangement with an institutional investor to invest in industrial properties (the “March 2005 Joint Venture”). The Operating Partnership, through separate wholly-owned limited liability companies of which it is the sole member, owns a ten percent equity interest in and provides property management, leasing, development, disposition and portfolio management services to the March 2005 Joint Venture.

      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 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.

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 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 its $300 million unsecured line of credit (the “Unsecured Line 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 and cash flows for the three months ended March 31, 2004 presented in its Form 10-Q filed May 10, 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 and cash flows for the three months ended March 31, 2004 to reflect this new allocation in this Form 10-Q.

RESULTS OF OPERATIONS

Comparison of Three Months Ended March 31, 2005 to Three Months Ended March 31, 2004

      The Consolidated Operating Partnership’s net income available to unitholders was $16.4 million and $26.9 million for the three months ended March 31, 2005, and March 31, 2004, respectively. Basic and diluted net income available to unitholders was $.34 and $.33 per unit, respectively, for the three months ended March 31, 2005, and $.58 and $.58 per unit, respectively, for the three months ended March 31, 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 March 31, 2005 and March 31, 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. 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.

      The occupancy rates of the Consolidated Operating Partnership’s same store properties for the three months ended March 31, 2005 and 2004 were 90.4% and 89.1%, respectively. Revenues from same store properties remained relatively unchanged. Revenues from acquired properties increased $9.2 million due to the 96 industrial properties acquired subsequent to December 31, 2003 totaling approximately 11.6 million square feet of GLA. Revenues from sold properties decreased $7.0 million, due to the 107 industrial properties sold subsequent to December 31, 2003, totaling approximately 9.7 million square feet of GLA. Revenues from properties not in service decreased by $.5 million due to a one time restoration fee earned during the three months ended March 31, 2004 offset by an increase in revenues due to an increase in occupancy of properties placed in service during 2004 and 2005. Other revenues increased by approximately $0.7 million due primarily to an increase in joint venture fees and assignment fees.

      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 $2.5 million due to properties acquired subsequent to December 31, 2003. Property expenses from sold properties decreased by $2.3 million or 76.4%, due to properties sold subsequent to December 31, 2003. Property expenses from properties not in service increased by $0.4 million due primarily to an increase in occupancy of properties placed in service during 2004 and 2005. Other expenses increased $0.6 million due primarily to increases in employee compensation.

      General and administrative expense increased by approximately $4.6 million, or 64.5%, due primarily to increases in employee compensation and an increase in outside professional fees.

      Amortization of deferred financing costs remained relatively unchanged.

      The increase in depreciation and other amortization for same store properties is primarily due to an acceleration of depreciation and amortization on tenant improvements and leasing commissions for tenants who terminated leases early as well as a net increase in leasing commissions and tenant improvements paid in 2005. Depreciation and other amortization from acquired properties increased by $2.8 million due to properties acquired subsequent to December 31, 2003. Depreciation and other amortization from sold properties decreased by $1.5 million or 81.6%, due to properties sold subsequent to December 31, 2003. Depreciation and other amortization for properties not in service and other increased by $1.5 million due primarily to the commencement of depreciation and amortization for properties that were placed in service during 2004 and 2005.

      Interest income decreased by approximately $.2 million due primarily to a decrease in the average mortgage loans receivable outstanding during the three months ended March 31, 2005, as compared to the three months ended March 31, 2004.

      Interest expense increased by approximately $2.3 million primarily due to an increase in the weighted average debt balance outstanding for the three months ended March 31, 2005 ($1,590.9 million), as compared to the three months ended March 31, 2004 ($1,476.0 million), as well as an increase in the weighted average interest rate for the three months ended March 31, 2005 (6.75%), as compared to the three months ended March 31, 2004 (6.55%).

      Income tax benefit increased by $.8 million due primarily to an increase in general and administrative expense (“G&A”) due to additional G&A costs, which increases operating losses, incurred in the three months ended March 31, 2005 compared to the three months ended March 31, 2004 associated with additional investment activity in the Consolidated Operating Partnership’s taxable REIT subsidiary. The increase in the income tax benefit is partially offset by an increase in state tax expense.

      Equity in income of Other Real Estate Partnerships remained relatively unchanged.

      Equity in income of joint ventures decreased by approximately $.4 million due primarily to the sale of sale of all of the properties in the December 2001 Joint Venture in August of 2004.

      The $13.1 million gain on sale of real estate, net of income taxes for the three months ended March 31, 2005 resulted from the sale of seven industrial property and several land parcels that do not meet the criteria established by FAS 144 for inclusion in discontinued operations. The $2.4 million gain on sale of real estate, net of income taxes for the three months ended March 31, 2004 resulted from the sale

of two 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 three months ended March 31, 2005 and March 31, 2004.

      Income from discontinued operations (net of income taxes) for the three months ended March 31, 2005 reflects the results of operations and gain on sale of real estate, net of income taxes, relating to 10 industrial properties that were sold during the three months ended March 31, 2005 and the results of operations from eight properties identified as held for sale at March 31, 2005.

      Income from discontinued operations (net of income taxes) for the three months ended March 31, 2004 reflects the results of operations and gain on sale of real estate, net of income taxes, relating to 10 industrial properties that were sold during the three months ended March 31, 2005, 86 industrial properties that were sold during the year ended December 31, 2004 and eight industrial properties identified as held for sale at March 31, 2005.

LIQUIDITY AND CAPITAL RESOURCES

      At March 31, 2005, the Consolidated Operating Partnership’s restricted cash was approximately $0.6 million. Restricted cash is comprised of gross proceeds from the sales of certain industrial properties. These sales proceeds will be disbursed as the Consolidated Operating Partnership exchanges industrial properties under Section 1031 of the Internal Revenue Code.

      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 through the disposition of select assets, long-term unsecured indebtedness and the issuance of additional Units and preferred Units. As of March 31, 2005 and April 29, 2005, $500.0 million of debt securities was 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 the Unsecured Line of Credit. At March 31, 2005, borrowings under the Unsecured Line of Credit bore interest at a weighted average interest rate of 3.430%. As of April 29, 2005 the Consolidated Operating Partnership, through the Operating Partnership, had approximately $85.3 million available for additional borrowings under the Unsecured Line of Credit.

Three Months Ended March 31, 2005

      Net cash provided by operating activities of approximately $4.6 million for the three months ended March 31, 2005 was comprised primarily of net income of approximately $18.7 million and adjustments for non-cash items of $2.7 million, partially offset by the net change in operating assets and liabilities of approximately $16.8 million. The adjustments for the non-cash items of approximately $2.7 million are primarily comprised of depreciation and amortization of approximately $26.4 million, $.2 million of provision for bad debt and equity in net loss of joint ventures of approximately $.1 million, substantially offset by the gain on sale of real estate of approximately $21.6 million, the mark to market of the interest rate protection of $.9 million and the effect of the straight-lining of rental income of approximately $1.5 million.

      Net cash provided by investing activities of approximately $40.0 million for the three months ended March 31, 2005 was comprised primarily by the net proceeds from sales of investment in real estate, distributions from the Other Real Estate Partnerships, distributions from one of the Consolidated Operating Partnership’s industrial real estate joint ventures, the repayment of mortgage loans receivable and a decrease in restricted cash that was held by an intermediary for Section 1031 exchange purposes partially offset by the acquisition of real estate, development of real estate, 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 the Consolidated Operating Partnership’s industrial real estate joint ventures.

      During the three months ended March 31, 2005, the Consolidated Operating Partnership sold 17 industrial properties comprising approximately 3.0 million square feet of GLA and several land parcels. Gross proceeds from the sales of the 17 industrial properties and several land parcels were approximately $148.0 million.

      During the three months ended March 31, 2005, the Consolidated Operating Partnership acquired 19 industrial properties comprising approximately 2.7 million square feet of GLA and several land parcels. The purchase price for these acquisitions totaled approximately $82.9 million, excluding costs incurred in conjunction with the acquisition of the industrial properties and land parcels.

      The Consolidated Operating Partnership, through a wholly-owned limited liability company in which the Operating Partnership is the sole member, invested approximately $7.1 million and received distributions of approximately $.1 million from the Operating Partnership’s industrial real estate joint ventures. As of March 31, 2005, the Operating Partnership’s industrial real estate joint ventures owned 55 industrial properties comprising approximately 6.5 million square feet of GLA.

      Net cash used in financing activities of approximately $47.6 million for the three months ended March 31, 2005 was comprised primarily of general partnership and limited partnership units (“Unit”) and preferred general partnership unit distributions, net repayments under the Consolidated Operating Partnership’s 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.

      During the three months ended March 31, 2005, the Company awarded 189,878 shares of restricted common stock to certain employees and 1,012 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 $8.0 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 three months ended March 31, 2005, certain employees exercised 8,434 non-qualified employee stock options. Net proceeds to the Company were approximately $.2 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 March 31, 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 March 31, 2005, approximately $1,407.9 million (approximately 89.8% of total debt at March 31, 2005) of the Consolidated Operating Partnership’s debt was fixed rate debt and approximately $159.5 million (approximately 10.2% of total debt at March 31, 2005) was variable rate debt. During the three months ended March 31, 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 March 31, 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 $.6 million per year. A 10% increase in interest rates would decrease the fair value of the fixed rate debt at March 31, 2005 by approximately $50.7 million to $1,494.6 million. A 10% decrease in interest rates would increase the fair value of the fixed rate debt at March 31, 2005 by approximately $54.4 million to $1,599.7 million.

      In December, 2004, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 153, Exchanges of Nonmonetary Assets — An Amendment of APB Opinion No. 29 (“SFAS No. 153”). The amendments made by SFAS No. 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.” SFAS No. 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 SFAS No. 153 on June 15, 2005 will have a material effect on the Operating Partnership’s consolidated financial statements.

      In December, 2004, the FASB issued SFAS No. 123: (Revised 2004) — Share-Based Payment (“SFAS No. 123R”). SFAS 123R replaces SFAS No. 123, which the Company adopted on January 1, 2003. SFAS No. 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. SFAS No. 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 SFAS No. 123R will have a material effect on the Operating Partnership’s consolidated financial statements.

Subsequent Events

      From April 1, 2005 to April 29, 2005, the Consolidated Operating Partnership sold four industrial properties and several land parcels for approximately $34.2 million of gross proceeds.

      On April 18, 2005, the Operating Partnership paid a first quarter 2005 distribution of $.6950 per Unit, totaling approximately $34.3 million.

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

      The Company’s principal executive officer and principal financial officer, after evaluating the effectiveness of the 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 Act Rules 13a-15(b) or 15d-15(b), have concluded that as of the end of such period the Operating Partnership’s disclosure controls and procedures were effective.

      In the first quarter of 2005, the Operating Partnership implemented additional monitoring controls to address a material weakness it had identified in connection with its assessment of the effectiveness of its internal controls over financial reporting as of the end of the period ending December 31, 2004. As previously reported, such material weakness related to the Operating Partnership’s internal controls over the allocation of its income tax provision (benefit). The additional monitoring controls implemented by the Operating Partnership in the first quarter of 2005 include the preparation and review of supporting schedules specifically designed to ensure the proper allocation of the Operating Partnership’s income tax provision (benefit) among income from continuing operations, income from discontinued operations, and gain on sale of real estate. Other than the implementation of such additional monitoring controls, there has been no change in the 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 Operating Partnership’s internal control over financial reporting.

PART II. OTHER INFORMATION

      None.

      On March 4, 2005, the Operating Partnership issued 37,587 Units having an aggregate market value of approximately $1.5 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 to lock-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.

      None.

      None.

      Not applicable.

      (a) Exhibits: