Federal Realty Acquires Assembly Square; Assembly Square Provides Significant Future Development Opportunity in Metropolitan Boston

ROCKVILLE, Md.--(BUSINESS WIRE)--March 1, 2005--Federal Realty Investment Trust (NYSE:FRT) today announced the acquisition of Assembly Square and an adjacent 220,000 square foot retail/industrial complex for $64 million. The properties are located in the City of Somerville, Mass., the most densely populated community in New England, just 1.5 miles from Boston's financial and commercial districts and easily accessible from I-93. The aggregate income (number of households multiplied by average household income) of over $14 billion within three miles of Assembly Square is higher than all but one property in Federal Realty's existing portfolio.

Assembly Square is an approximately 330,000 square foot enclosed mall that is currently being redeveloped into a power center. The property is 100% pre-leased to national credit tenants including TJ Maxx, Bed, Bath & Beyond, Staples, Kmart, Sports Authority, AC Moore and Christmas Tree Shops. The Trust expects to invest an additional $38 million to complete the redevelopment of the mall into a power center, with stabilization anticipated within 12 months. The acquisition of Assembly Square also includes zoning entitlements to add four mixed-use buildings on 3.5 acres, which will include approximately 41,000 square feet of retail space, 51,000 square feet of office and 239 residential units.

The adjacent 10-acre parcel, which comprises approximately 220,000 square feet of improvements, is currently 100% leased to a mix of quasi-retail and industrial uses. This parcel also includes an option to purchase adjacent land parcels from the Somerville Redevelopment Authority, all of which are zoned for dense, mixed-use development. When combined with Assembly Square, the entire project could encompass as much as 720,000 square feet of retail, 1.5 million square feet of office and over 1,600 residential units on 50-acres. Federal Realty anticipates investing significant efforts in the master planning of the site, which could provide investment opportunities for the Trust over the next ten years.

"We're thrilled to have a company of Federal's size and expertise invest in Somerville," said City of Somerville Mayor Joe Curtatone. "Not only do they have significant experience in the kind of mixed-use, urban village-style project we envision for Assembly Square, but they have the resources to make it happen, to make this more than just a mall project. Federal's commitment gives our city and our local economy an enormous boost."

"Federal Realty's acquisition of Assembly Square represents a well-balanced, risk-adjusted investment," stated Jeff Berkes, senior vice president and chief investment officer for Federal Realty. "Upon stabilization in early 2006, we expect to earn a 7% return on our approximately $100 million investment, a return which significantly exceeds those currently available for stabilized shopping centers which have little or no future upside. In addition, we have the potential to increase this return and create significant shareholder value through the build-out of the entitlements currently in place."

Don Wood, Federal Realty's president and chief executive officer continued, "The future development opportunity at Assembly Square will allow Federal Realty to utilize our knowledge and expertise with mixed-use to create tremendous value in a risk-mitigated structure. Federal Realty will master plan the development and bring in developers to bear the primary risk of residential and office development, while we retain control of the retail. Similar to the structures we employed at our redevelopments at Rockville Town Square and the Village of Shirlington, both of which are currently under construction, this plays to our strengths; creating, owning and operating great retail environments. The combination of these proposed uses is what will give Assembly Square the sense of place envisioned by the City of Somerville. I'd personally like to thank Mayor Curtatone, the Aldermen and the Somerville Redevelopment Authority. Without their focus on the zoning and entitlement of Assembly Square, this acquisition would not have been possible."

Consistent with today's announcement, Federal Realty has also announced its intention to open a full-service regional office in the Boston metropolitan market. Including Assembly Square Marketplace and the four Boston area properties that Federal Realty acquired for its own account and its joint venture in 2004, Federal Realty now manages, owns, or has an interest in eight retail properties comprising 1.6 million square feet in the Boston area.

About Federal Realty

Federal Realty Investment Trust is an equity real estate investment trust specializing in the ownership, management, development, and redevelopment of high quality retail assets. Federal Realty's portfolio (excluding joint venture properties) contains approximately 17.4 million square feet located primarily in strategic metropolitan markets in the Northeast, Mid-Atlantic, and California. In addition, the Trust has an ownership interest in approximately 460,000 square feet of retail space through its joint venture with Clarion Lion Properties Fund in which the Trust has a 30% interest. Our operating portfolio (excluding joint venture properties) was 95.1% leased to approximately 2,200 national, regional, and local retailers as of December 31, 2004, with no single tenant accounting for more than 2.3% of rental revenue. Federal Realty has paid quarterly dividends to its shareholders continuously since its founding in 1962, and has increased its dividend rate for 37 consecutive years, the longest consecutive record in the REIT industry. Shares of Federal Realty are traded on the NYSE under the symbol FRT.

Safe Harbor Language

Certain matters discussed within this press release may be deemed to be forward-looking statements within the meaning of the federal securities laws. Although Federal Realty believes the expectations reflected in the forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. These factors include, but are not limited to, the risk factors described in our Current Report on Form 8-K filed on March 11, 2004, and include the following:

• risks that our tenants will not pay rent or that we may be unable to renew leases or re-let space at favorable rents as leases expire;
• risks that we may not be able to proceed with or obtain necessary approvals for any redevelopment or renovation project, and that any redevelopment or renovation project that we do pursue may not perform as anticipated;
• risks that the number of properties we acquire for our own account, and therefore the amount of capital we invest in acquisitions, may be impacted by our real estate partnership; and
• risks normally associated with the real estate industry, including risks that occupancy levels at our properties and the amount of rent that we receive from our properties may be lower than expected, that new acquisitions may fail to perform as expected, that competition for acquisitions could result in increased prices for acquisitions, that we may have environmental risks at our properties, and, because real estate is illiquid, that we may not be able to sell properties when appropriate.

Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements that we make, including those in this press release. Except as required by law, we make no promise to update any of the forward-looking statements as a result of new information, future events, or otherwise. You should review the risks contained in our annual report on Form 10-K, our quarterly reports on Form 10-Q, and the risks contained in our Current Report on Form 8-K filed with the Securities and Exchange Commission on March 11, 2004.

CONTACT:
Federal Realty Investment Trust, Rockville
Investor and Media Inquiries:
Andrew Blocher, 301-998-8166
ablocher@federalrealty.com
or
Vikki Quinn, SCMD, 301-998-8178
vquinn@federalrealty.com

SOURCE: Federal Realty Investment Trust