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News Release

Federal Realty Investment Trust Announces First Quarter 2006 Operating Results

-Increased Occupancy and Redevelopment Stabilizations Drive Strong Internal Growth-

ROCKVILLE, Md., May 3 /PRNewswire-FirstCall/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its first quarter ended March 31, 2006.

  • Funds from operations available for common shareholders (FFO) per diluted share was $0.81 and earnings per diluted common share was $0.53 for the quarter ended March 31, 2006, versus $0.74 and $0.40, respectively, for first quarter 2005.
  • When compared to first quarter 2005, same-center property operating income increased 6.4% including redevelopments and expansions, and 5.0% excluding redevelopments and expansions.
  • Rent increases on lease rollovers for retail space for which there was a prior tenant were 16% on a cash-basis and 27% on a GAAP-basis for the quarter ended March 31, 2006.
  • The Trust's portfolio was 96.2% leased and 94.8% occupied as of March 31, 2006.
  • Guidance for 2006 FFO per diluted share remains unchanged at $3.30 to $3.35.

Financial Results

In first quarter 2006, Federal Realty reported FFO of $43.4 million, or $0.81 per diluted share. This compares to FFO of $39.3 million, or $0.74 per diluted share, reported in first quarter 2005. Net income available for common shareholders was $28.2 million and earnings per diluted common share was $0.53 for the quarter ended March 31, 2006, versus $21.1 million and $0.40, respectively, for first quarter 2005.

FFO is a non-GAAP supplemental earnings measure which the Trust considers meaningful in measuring its operating performance. A reconciliation of FFO to net income is attached to this press release.

Portfolio Results

On a same-center basis, including redevelopments and expansions, property operating income increased 6.4% over first quarter 2005. When redevelopments and expansions are excluded from the same-center results, property operating income increased 5.0% from first quarter 2005.

Overall, the Trust's portfolio was 96.2% leased and 94.8% occupied as of March 31, 2006, compared to 95.1% and 91.5%, respectively, on March 31, 2005. Federal Realty's same-center portfolio was 97.3% leased and 96.4% occupied on March 31, 2006, compared to 96.6% and 95.4%, respectively, on March 31, 2005.

During first quarter 2006, the Trust signed 82 leases for 349,000 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 286,000 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 16%. The average contractual rent on this comparable space for the first year of the new lease is $23.05 per square foot compared to the average contractual rent of $19.85 per square foot for the last year of the prior lease. The previous 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 (i.e., including the impact of straight-line rents), rent increases per square foot for comparable retail space averaged 27% for first quarter 2006. As of March 31, 2006, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio is $18.97 per square foot.

"Our first quarter results reflect the continued stabilization of redevelopment projects and the associated increase in occupancy at these properties," commented Donald C. Wood, president and chief executive officer of Federal Realty Investment Trust. "We continue to focus on our core competencies -- leasing, redevelopment, acquisitions and operations -- capitalizing on the strength of our portfolio and our team."

Residential condominium sales at Santana Row, Federal Realty's mixed-use community in San Jose, Calif., remain strong. Through May 1, 2006, the Trust had closed sales on 189 units and had 19 units under contract, with associated gross sales proceeds of $131.3 million and $12.5 million, respectively. Federal Realty continues to expect gross sales proceeds from the sale of the 219 residential units at Santana Row to be approximately $150 million with sellout anticipated to be completed in 2006.

Guidance

Federal Realty left its guidance for 2006 FFO per diluted share unchanged at a range of $3.30 to $3.35, and its 2006 earnings per diluted common share guidance increased to a range of $1.68 to $1.74.

Summary of Other Quarterly Activities and Recent Developments

  • April 8, 2006 -- A ribbon cutting ceremony was held to mark the opening of The Sports Authority sporting goods store at Assembly Square Mall. The grand opening event brings the renovated power center to full occupancy.
  • March 20, 2006 -- Federal Realty celebrated the completion of Phase I of the redevelopment of Leesburg Plaza in Leesburg, Va. The center section of the plaza, formerly a vacant Kmart space, is now anchored by Party City, PetSmart, and Champion Billiards Sports Cafe.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its first quarter 2006 earnings conference call, which is scheduled for May 4, 2006, at 11 a.m. Eastern Daylight Time. To participate, please call (888) 566-5771 five to ten minutes prior to the call's 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, http://www.federalrealty.com, which will remain available for 30 days following the call. A telephone recording of the call will also be available through June 5, 2006, by dialing (866) 448-4809.

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 17.6 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 0.5 million 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 96.2% leased to national, regional, and local retailers as of March 31, 2006, with no single tenant accounting for more than approximately 2.5% of annualized base rent. Federal Realty has paid quarterly dividends to its shareholders continuously since its founding in 1962, and has increased its dividend rate for 38 consecutive years, the longest 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 most recent annual report on Form 10-K (as amended), 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 completion of anticipated or ongoing property redevelopments or renovations may cost more, take more time to complete, or fail to perform as expected;
  • risks that we may not be able to sell the condominium units at Santana Row for the expected prices or within the anticipated time frames;
  • 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;
  • 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 environmental issues may develop at our properties and result in unanticipated costs, and, because real estate is illiquid, that we may not be able to sell properties when appropriate;
  • risks that our growth will be limited if we cannot obtain additional capital;
  • 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 limitations imposed on our operations by those covenants, and the possibility of increases in interest rates that would result in increased interest expense; and
  • risks related to our status as a real estate investment trust, commonly referred to as a REIT, for federal income tax purposes, such as the existence of complex tax 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.

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 may be 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 carefully review the risks and risk factors included in our most current annual report on Form 10-K (as amended) and our quarterly reports on Form 10-Q.

    Investor and Media Inquiries
    Andrew Blocher                           Suzanne O'Neill
    Vice President, Capital Markets          Manager, Investor Relations
     & Investor Relations                    301/998-8358
    301/998-8166                             soneill@federalrealty.com
    ablocher@federalrealty.com



    Federal Realty Investment Trust
    Summarized Operating Results
    March 31, 2006


                               Financial Highlights
                      (in thousands, except per share data)
                                   (unaudited)

    CONSOLIDATED OPERATING RESULTS                Three months ended March 31,
                                                     2006              2005
    Revenue
       Rental income                               $105,488           $98,307
       Other property income                          2,095             1,930
       Mortgage interest income                       1,322             1,281
                                                    108,905           101,518
    Expenses
       Rental                                        22,190            23,191
       Real estate taxes                             10,611             9,603
       General and administrative                     4,501             4,502
       Depreciation and amortization                 24,036            21,929
                                                     61,338            59,225
       Operating income                              47,567            42,293

    Other interest income                               263               391
    Interest expense                                (24,280)          (22,063)
    Income from real estate partnership                 148                71
    Minority interests                               (1,073)           (1,516)
    Income from continuing operations                22,625            19,176

    Discontinued operations
       (Loss) income from discontinued
        operations                                     (331)              539
       Gain on sale of real estate                    8,737             4,282
    Results from discontinued operations              8,406             4,821

    Net Income                                       31,031            23,997

    Dividends on preferred stock                     (2,869)           (2,869)
    Net income available for common
     shareholders                                   $28,162           $21,128


    FUNDS FROM OPERATIONS AVAILABLE FOR
     COMMON SHAREHOLDERS
    Net income                                      $31,031           $23,997
    Gain on sale of real estate                      (8,737)           (4,282)
    Depreciation and amortization of real
     estate assets                                   21,874            20,519
    Amortization of initial direct costs
     of leases                                        1,739             1,626
    Depreciation of real estate
     partnership assets                                 165               156
    Funds from operations                            46,072            42,016
    Dividends on preferred stock                     (2,869)           (2,869)
    Income attributable to operating
     partnership units                                  233               158
    Funds from operations available for
     common shareholders                            $43,436           $39,305


    Weighted average number of common
     shares, diluted                                 53,662            53,179

    Funds from operations available for
     common shareholders per diluted
     share                                            $0.81             $0.74

    EARNINGS PER COMMON SHARE, BASIC
    Continuing operations                             $0.37             $0.31
    Discontinued operations                            0.16              0.09
                                                      $0.53             $0.40

    Weighted average number of common
     shares, basic                                   52,731            52,190

    EARNINGS PER COMMON SHARE, DILUTED
    Continuing operations                             $0.37             $0.31
    Discontinued operations                            0.16              0.09
                                                      $0.53             $0.40

    Weighted average number of common
     shares, diluted                                 53,254            52,742



    Federal Realty Investment Trust
    Summarized Balance Sheets
    March 31, 2006


                              Financial Highlights
                                 (in thousands)


    CONSOLIDATED BALANCE SHEETS
                                                March 31,        December 31,
                                                   2006              2005
    ASSETS

    Real estate, at cost
        Operating                               $2,774,603        $2,743,658
        Construction-in-progress                    55,579            50,593
        Discontinued operations                     15,254            35,070
                                                 2,845,436         2,829,321
    Less accumulated depreciation and
     amortization                                 (682,049)         (663,750)
    Net real estate                              2,163,387         2,165,571

    Cash and cash equivalents                        4,792             8,639
    Accounts and notes receivable                   39,413            38,161
    Mortgage notes receivable                       40,368            40,531
    Investment in real estate partnership            9,376             9,375
    Other assets                                    90,533            88,575
    TOTAL ASSETS                                $2,347,869        $2,350,852

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Liabilities
        Obligations under capital leases
         and mortgage notes                       $418,467          $419,713
        Notes payable                              360,210           316,755
        Senior notes and debentures                613,316           653,675
        Other liabilities                          166,683           166,669
    Total liabilities                            1,558,676         1,556,812

    Minority interests                              19,480            19,193

    Shareholders' equity
        Preferred stock                            135,000           135,000
        Common shares and other
         shareholders' equity                      634,713           639,847
    Total shareholders' equity                     769,713           774,847
    TOTAL LIABILITIES AND SHAREHOLDERS'
     EQUITY                                     $2,347,869        $2,350,852



    Federal Realty Investment Trust
    Reconciliation of Net Income to FFO Guidance
    March 31, 2006


                                                        2006 Guidance
                                                 ($ millions except per share
                                                         amounts) (1)

        Net income                                   $102      to       $105
        Gain on sale of real estate                    (9)                (9)
        Depreciation and amortization of
         real estate & partnership assets              88                 88
        Amortization of initial direct
         costs of leases                                7                  7
        Funds from operations                         189                191
        Income attributable to operating
         partnership units                              1                  1
        Dividends on preferred stock                  (11)               (11)
        Funds from operations available
         for common shareholders                      178      to        180

        Weighted Average Shares (diluted)            53.9

        Funds from operations available
         for common shareholders per
         diluted share                              $3.30      to      $3.35

    Note:
    (1) Individual items may not add up to total due to rounding.

SOURCE Federal Realty Investment Trust

CONTACT: Investor and Media Inquiries: Andrew Blocher, Vice President, Capital Markets & Investor Relations, +1-301-998-8166, ablocher@federalrealty.com, or Suzanne O'Neill, Manager, Investor Relations, +1-301-998-8358, soneill@federalrealty.com, both of Federal Realty Investment Trust