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News Release

Federal Realty Investment Trust Announces First Quarter 2003 Operating Results

ROCKVILLE, Md.--(BUSINESS WIRE)--May 7, 2003--Federal Realty Investment Trust (NYSE:FRT) today reported operating results for the quarter ended March 31, 2003.

  • Funds from operations (FFO) was $0.64 per diluted share for the first quarter
  • First quarter 2003 net income per diluted share was $0.26
  • Same-center property operating income, excluding properties redeveloped, expanded or acquired, increased 4.8% when compared to first quarter 2002
  • Cash rent increases on lease rollovers were 18% for the first quarter on 374,000 square feet of comparable retail space

    Financial Results

    Federal Realty reported FFO of $28.9 million for the first quarter of 2003, or $0.64 per diluted share. This compares to FFO of $19.0 million for the first quarter of 2002, or $0.46 per diluted share, which included an $8.5 million, or $0.21 per diluted share charge recognized as a result of the change in business strategy and resulting restructuring announced on March 11, 2002.

    Net income available for common shareholders was $11.5 million, or $0.26 per diluted share for the quarter ended March 31, 2003. For the first quarter of 2002, the Trust reported a net loss to common shareholders of $6.2 million, or $0.15 per diluted share. The net loss recorded for the first quarter of 2002 included an $18.1 million, or $0.44 per diluted share charge relating to the change in business strategy, resulting restructuring and loss on abandoned developments held for sale.

    Portfolio Results

    On a same-center basis, which excludes properties redeveloped, expanded or acquired since March 31, 2002, property operating income increased 4.8% versus first quarter 2002. At March 31, 2003, retail occupancy on a same-center basis remained strong at 95.8% compared to 95.5% on March 31, 2002 and December 31, 2002. Same-center occupancy excludes the 444,000 square feet of retail space in Phase I of Santana Row which was 74% leased and 471,000 square feet of retail space in South Valley Shopping Center and Mount Vernon Plaza, properties acquired late in the first quarter that were a combined 74% leased. Overall occupancy was 94.3% at March 31, 2003, compared to 95.5% on March 31, 2002 and 94.7% on December 31, 2002.

    During the first quarter, the Trust signed 77 leases for over 525,000 square feet of retail space. On a comparable space basis (i.e. spaces for which there was a former tenant), the Trust leased 374,000 square feet at an average cash-basis contractual rent increase (i.e. excluding the impact of straight-line rents) in rent per square foot of 18%. The weighted-average contractual rent on this space for the first year of the new lease was $16.35 per square foot compared to the weighted-average contractual rent of $13.88 per square foot for the last year of the prior lease. The previous weighted-average contractual rent is calculated by including both the minimum rent and the percentage rent actually paid during the last year of the lease term for the re-leased space. On a GAAP basis, rent increases were 31% on the 374,000 square feet of comparable space re-leased during the quarter.

    "I am impressed with the strong performance of our core portfolio in the face of the uncertainties caused by the war and generally poor economic conditions," stated Donald C. Wood, Federal Realty's president and chief executive officer. "We look forward to executing the opportunities afforded to us by projects like Santana Row, our newly acquired properties and our redevelopment pipeline."

    Guidance

    Federal Realty re-confirmed previous expectations for 2003 FFO per diluted share of $2.60 and provided new guidance, as a result of SEC Regulation G covering non-GAAP financial disclosure, for net income per diluted share of $0.99.

    Summary of Other Quarterly Activities and Recent Developments

  • On April 23, 2003, the Trust provided updated information relating to the status of its three Kmart locations, comprising 326,000 square feet of retail space and $1.7 million of contractual rent, that were closed as a result of the retailer's chapter 11 bankruptcy filing. Kohl's Corporation is assuming the previous lease for the 150,000 square foot store at Fresh Meadows in Queens, New York. The leases for the Kmart locations at both Flourtown Shopping Center in Flourtown, Pennsylvania and Leesburg Plaza in Leesburg, Virginia, represent a combined 1.1% of portfolio occupancy and 0.15% of annualized revenues. The Trust will re-claim both of these spaces and management believes both properties provide potential for increased earnings and increased value through redevelopment or re-tenanting.

  • On April 16, 2003, Federal Realty announced the appointment of David Faeder, vice chairman of Sunrise Assisted Living, Inc. (NYSE:SRZ) to serve on the Trust's board of trustees. Mr. Faeder also has been appointed to serve on the Trust's audit committee and has been designated by the Board as the Trust's "audit committee financial expert." Mr. Faeder will stand for election by the Trust's shareholders at the 2004 Annual Meeting of Shareholders.

  • On April 1, 2003, Federal Realty announced the acquisition of South Valley Shopping Center and Mount Vernon Plaza in Fairfax County, Virginia. The shopping centers are adjacent to one another on the west side of Route 1 approximately three miles south of the Capital Beltway and were acquired from unrelated, private owners. The Trust purchased the fee interest in South Valley Shopping Center for approximately $13.7 million in an all cash transaction and acquired the leasehold interest with a purchase option in Mount Vernon Plaza for aggregate consideration of approximately $17.5 million in the form of cash, down-REIT partnership units and the assumption of debt. Management believes that both properties have significant potential for future re-leasing and redevelopment.

  • On February 7, 2003, the Trust announced plans for Phase II of Santana Row, which includes 84,000 square feet of retail space on two pad sites and 275 additional parking spaces. 95% of the retail space has been pre-leased to Best Buy and The Container Store, and Federal Realty expects an approximately 16% unleveraged return on its anticipated $27 million cost.

    Conference Call Information

    Federal Realty's management team will present an in depth discussion of the Trust's operating performance on its first quarter earnings conference call, which is scheduled for Thursday, May 8, 2003 at 11:00 A.M. Eastern Time. To participate, please call (888) 913-9966 five to ten minutes prior to the start time and use the Passcode EARNINGS (required). The conference leader is Andrew Blocher. Federal Realty will also provide an online Web Simulcast on the company's web site, www.federalrealty.com, which will remain available for 14 days following the conference call. A telephone recording of the call will be available for 14 days by dialing (800) 337-6851.

    Federal Realty Investment Trust is an equity real estate investment trust specializing in the ownership, management, development and re-development of shopping centers and street retail properties. Federal Realty's portfolio contains approximately 15.7 million square feet located in major metropolitan markets across the United States. The operating portfolio is currently over 94% occupied by over 2,000 national, regional and local retailers with no single tenant accounting for more than 2.5% 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 35 consecutive years, the longest consecutive record in the REIT industry. Shares of Federal Realty are traded on the New York Stock Exchange under the symbol FRT. Additional information about Federal Realty can be found on the Internet at www.federalrealty.com.

    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. The factors that may impact these expectations include:

  • risks of financing, such as our ability to consummate additional financings or obtain replacement financing on terms which are acceptable to us, our ability to meet existing financial covenants and the possibility of increases in interest rates that would result in increased interest expense;

  • risks that our growth will be limited if we cannot obtain additional capital;

  • risks normally associated with the real estate industry, including risks that our tenants will not pay rent or that we may be unable to renew leases or relet space at favorable rents as leases expire, that new acquisitions or our development, construction and renovation projects, including our Santana Row project, may fail to perform as expected, that competition for acquisitions could result in increased prices, 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;

  • risks related to our status as a REIT for federal income tax purposes, such as the existence of complex regulations relating to our status as a REIT, the effect of future changes in REIT requirements as a result of new legislation and the adverse consequences of the failure to qualify as a REIT; and

  • those risks detailed from time to time in our SEC reports, including our current report on Form 8-K filed with the SEC on March 25, 2003, our annual report on Form 10-K filed with the SEC on March 26, 2003 and our quarterly reports on Form 10-Q.

    Federal Realty assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent event.

     Federal Realty Investment Trust
    Income Statement
    March 31, 2003
    
                             Financial Highlights
                    (in thousands, except per share data)
                                 (unaudited)
    
                                                        Three Months Ended
                                                             March 31,
    OPERATING RESULTS                                      2003     2002
    -----------------                                    -------- --------
    
    Revenues
       Rental income                                     $79,996 $70,499
       Other property income                               4,095    3,476
       Interest and other income                           1,215    1,261
                                                         -------- --------
                                                          85,306   75,236
    Expenses
       Rental                                             21,700   15,371
       Real estate taxes                                   7,858    7,740
                                                         -------- --------
    Total property operating expenses                     29,558   23,111
                                                         -------- --------
    
    Property operating income                             55,748   52,125
    
       Interest                                           17,579   16,640
       Administrative                                      3,274    2,999
       Restructuring expenses                                  -    8,489
       Depreciation and amortization                      17,449   15,825
                                                         -------- --------
    Total other expenses                                  38,302   43,953
                                                         -------- --------
       Operating income before investors' share of
        operations and discontinued operations            17,446    8,172
       Investors' share of operations                     (1,070)    (697)
                                                         -------- --------
       Income before loss on abandoned developments held
        for sale and discontinued operations              16,376    7,475
       Income from operations of discontinued assets           -      841
                                                         -------- --------
       Income before loss on abandoned developments held
        for sale                                          16,376    8,316
       Loss on abandoned developments held for sale            -   (9,647)
                                                         -------- --------
               Net income (loss)                          16,376   (1,331)
       Dividends on preferred stock                       (4,856)  (4,856)
                                                         -------- --------
               Net income (loss) available for common
                shareholders                             $11,520  $(6,187)
                                                         ======== ========
    
    Funds from Operations
       Net income (loss) available for common
        shareholders                                     $11,520  $(6,187)
       Loss on abandoned developments held for sale            -    9,647
       Depreciation and amortization of real estate
        assets                                            15,798   14,537
       Amortization of initial direct costs of leases      1,354    1,171
       Income (loss) attributable to operating
        partnership units                                    206     (136)
                                                         -------- --------
       Funds from operations                             $28,878 $19,032
                                                         ======== ========
       Weighted average number of common shares, diluted  45,354   40,942
                                                         ======== ========
       Funds from operations per share                     $0.64 $0.46
                                                         ======== ========
    
       Funds from operations                             $28,878 $19,032
       Add back restructuring expense                          -    8,489
                                                         -------- --------
       Adjusted funds from operations                    $28,878 $27,521
                                                         ======== ========
         Weighted average number of common shares,
          diluted                                         45,354   40,942
                                                         ======== ========
       Adjusted funds from operations per share            $0.64 $0.67
                                                         ======== ========
    
       Earnings per common share, basic
          Income (loss) before loss on abandoned
           developments held for sale and discontinued
           operations                                      $0.26 $0.07
          Discontinued operations                              -     0.02
          Loss on abandoned developments held for sale         -    (0.24)
                                                         -------- --------
                                                           $0.26   $(0.15)
                                                         ======== ========
              Weighted average number of common shares,
               basic                                      44,271   39,702
                                                         ======== ========
    
       Earnings per common share, diluted
          Income (loss) before loss on abandoned
           developments held for sale and discontinued
           operations                                      $0.26 $0.06
          Discontinued operations                              -     0.02
          Loss on abandoned developments held for sale         -    (0.23)
                                                         -------- --------
                                                           $0.26   $(0.15)
                                                         ======== ========
              Weighted average number of common shares,
               diluted                                    45,354   40,942
                                                         ======== ========
    
    
    Federal Realty Investment Trust
    Balance Sheet
    March 31, 2003
    
                             Financial Highlights
                    (in thousands, except per share data)
    
    BALANCE SHEET DATA                            March 31,   December 31,
    ------------------                               2003         2002
                                                 ------------ ------------
    Assets                                       (unaudited)
    
    Real estate, at cost
       Operating                                  $1,907,912 $1,864,244
       Development                                   483,797      442,582
                                                 ------------ ------------
                                                   2,391,709    2,306,826
       Less accumulated depreciation and
        amortization                                (466,332)    (450,697)
                                                 ------------ ------------
                                                   1,925,377    1,856,129
    Other Assets
       Mortgage notes receivable                      37,542       35,577
       Cash and investments                           18,113       23,123
       Receivables                                    23,383       18,722
       Other assets                                   66,986       65,827
                                                 ------------ ------------
    Total Assets                                  $2,071,401 $1,999,378
                                                 ============ ============
    
    Liabilities and Shareholders' Equity
    
       Obligations under capital leases,
        mortgages and construction loans            $364,811 $393,212
       Notes payable                                 276,278      198,311
       Senior notes                                  535,000      535,000
       5 1/4% Convertible subordinated debentures     75,000       75,000
       Other liabilities                             148,209      153,568
                                                 ------------ ------------
    Total Liabilities                              1,399,298    1,355,091
    
    Preferred stock                                  235,000      235,000
    
    Common Shares and Other Shareholders' Equity     437,103      409,287
                                                 ------------ ------------
    Total Liabilities and Shareholders' Equity    $2,071,401 $1,999,378
                                                 ============ ============
    
    

    CONTACT:
    Federal Realty Investment Trust
    Investor Inquiries:
    Andrew Blocher, 301/998-8166
    ablocher@federalrealty.com
    or
    Federal Realty Investment Trust
    Media Inquiries:
    Kristine Warner, 301/998-8212
    kwarner@federalrealty.com

    SOURCE: Federal Realty Investment Trust