First Industrial Realty Trust Inc. (NYSE:FR) Q1 2018 Earnings Conference Call - Preliminary Transcript
Apr 25, 2018 • 10:30 am ET
level and continued discipline with new construction tenants has fewer options. Our team is focused on maximizing cash flow from all leases, which involves not only pushing rents but maximizing term while minimizing improvements and of course we are always mindful of credit quality. On the development side, as discussed on our last call, in the first quarter we leased and placed in service, our 243,000 square foot, First Sycamore 215 Logistics Center in the Inland Empire.
We currently have $291 million under construction, comprised of 4.2 million square feet with a projected cash yield of 7.2%. At this cash return, our projected margin on this batch of development is north of 50% based on prevailing market cap rates for comparable leased assets. We plan on delivering each project over the next few quarters and we're encouraged by the early leasing interest. Of this group, we will shortly wrap up construction on our six-building project in Chinos (ph) known as The Ranch. We're pleased to say that we just signed a lease for 100% of the 156,000 square foot building with an international parcel delivery company.
We will also complete our First Joliet Logistics Center in Chicago and our second building at PV303 in Phoenix by the end of the second quarter. Staying with Phoenix for a moment, we are developing the second building at First Park at PV303 on the hills of our successful needs of our first building there, which serves as UPS' new regional hub. We like the long-term position of the PV303 Park given a strategic location, which is already attracted several major corporate users and we think the presence of UPS will serve as an attraction for other prominent company.
Earlier this year, we became aware of the opportunity to acquire the remaining entitled industrial site totaling 532 net acres at the Park, inclusive of a site we already had under option. As I said, we love the PV303 sub-market and this site and wanted to capitalize on the opportunity to control its future development. However, the investment represented significantly outsized allocation to Phoenix given the current size of our portfolio. Not wanting to lose the opportunity, we decided to find the project specific joint venture partner for this site. We are very pleased to have engaged Diamond Realty, the US real estate arm of Mitsubishi Corporation as our partner.
Together, we acquired the site for $49 million in an all cash transaction with our interest at 49%. The venture we're engaged in speculative development, as well as build-to-suit and one-off land sales to users for their own build-to-suit needs. At approximately $2 per land foot we believe we have a highly competitive basis. Target leverage for each speculative or build-to-suit project is 55% loan to cost and the venture will utilize non-recourse construction loans. First Industrial will earn development, asset management, property management, disposition and leasing fees and we have the opportunity to earn and promote beyond an established return for the joint venture.