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News Release

Federal Realty Investment Trust Announces First Quarter 2010 Operating Results

ROCKVILLE, Md., May 4, 2010 /PRNewswire via COMTEX/ --Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its first quarter ended March 31, 2010.

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Financial Results

For first quarter 2010, Federal Realty generated funds from operations available for common shareholders (FFO) of $57.8 million, or $0.94 per diluted share, and net income available for common shareholders of $29.1 million, or earnings per diluted share of $0.47. This compares to FFO of $37.8 million, or $0.64 per share, and net income available to common shareholders of $10.3 million, or earnings per diluted share of $0.17, for the quarter ended March 31, 2009. First quarter 2009 results included a provision for litigation of $20.6 million, or $0.35 per diluted share, related to a lawsuit involving a property adjacent to Santana Row. Excluding this litigation provision, FFO for first quarter 2009 was $58.3 million, or $0.99 per diluted share, and net income available for common shareholders was $31.0 million, or $0.52 per diluted share.

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

In first quarter 2010, same-center property operating income, excluding redevelopment and expansion properties, increased 2.9% over first quarter 2009. Including redevelopments and expansions, same-center property operating income increased 5.7% compared to first quarter 2009. The same-center results including redevelopments and expansions include $2.3 million of income resulting from the acceleration of the unamortized portion of a lease termination fee relating to our Flourtown Shopping Center in Pennsylvania. When the lease termination fee is excluded, same-center property operating income increased 3.1%.

The overall portfolio was 94.1% leased as of March 31, 2010, compared to 94.5% on December 31, 2009 and 94.2% on March 31, 2009. Federal Realty's same-center portfolio was 94.6% leased as of March 31, 2010, compared to 94.6% on December 31, 2009 and 94.5% on March 31, 2009.

During first quarter 2010, the Trust signed 72 leases for 318,000 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 308,000 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 $29.19 per square foot compared to the average contractual rent of $25.11 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 any 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 2010. As of March 31, 2010, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio was $22.38 per square foot.

"I'm very proud of our first quarter performance despite an economic recovery that still has a long way to go at the consumer level," commented Donald C. Wood, president and chief executive officer of the Trust. "There really is no substitute for great quality real estate when it comes to a tenant's decision to renew or expand, and our first quarter leasing results continue to validate that premise."

Regular Quarterly Dividends

Federal Realty also announced today that its Board of Trustees left the regular dividend rate on its common shares unchanged, declaring a regular quarterly cash dividend of $0.66 per share on its common shares, resulting in an indicated annual rate of $2.64 per share. The regular common dividend will be payable on July 15, 2010 to common shareholders of record on June 24, 2010.

Guidance

Federal Realty raised 2010 guidance for FFO per diluted share to a range of $3.82 to $3.89 and earnings per diluted share is $1.92 to $1.99.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its first quarter 2010 earnings conference call, which is scheduled for May 5, 2010, at 11 a.m. Eastern Daylight Time. To participate, please call (866) 314-5050 five to ten minutes prior to the call start time and use the passcode FRT EARNINGS (required). Federal Realty will also provide an online webcast on the Company's web site, 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 4, 2010, by dialing (888) 286-8010 and using the passcode 59661908.

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 18.2 million square feet located primarily in strategically selected metropolitan markets in the Northeast, Mid-Atlantic, and California. In addition, the Trust has an ownership interest in approximately 1.0 million square feet of retail space through a joint venture in which the Trust has a 30% interest. Our operating portfolio (excluding joint venture properties) was 94.1% leased to national, regional, and local retailers as of March 31, 2010, with no single tenant accounting for more than approximately 2.6% 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 42 consecutive years, the longest record in the REIT industry. Federal Realty is an S&P MidCap 400 company and its shares 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 Annual Report on Form 10-K filed on February 17, 2010, and include the following:

 

  • risks that our tenants will not pay rent, may vacate early or may file for bankruptcy 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 redevelopment or renovation projects that we do pursue may cost more, take more time to complete, or fail to perform as expected;
  • 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 Annual Report on Form 10-K filed February 17, 2010.


    Federal Realty Investment Trust
    Summarized Balance Sheets
    March 31, 2010




                                                               December
                                            March 31,             31,
                                                   2010             2009
                                                   ----             ----
                                                   (in thousands)
    ASSETS                                  (unaudited)

    Real estate, at cost
       Operating (including $86,554 and
        $68,643 of consolidated variable
        interest entities, respectively)     $3,650,711       $3,626,476
      Construction-in-progress                  138,170          132,758
                                                -------          -------
                                              3,788,881        3,759,234
       Less accumulated depreciation and
        amortization (including $3,289 and
        $3,053 of consolidated variable
        interest entities, respectively)       (963,173)        (938,087)
                                               --------         --------
    Net real estate                           2,825,708        2,821,147

    Cash and cash equivalents                    22,594          135,389
    Accounts and notes receivable, net           70,953           72,191
    Mortgage notes receivable, net               41,762           48,336
    Investment in real estate
     partnership                                 35,453           35,633
    Prepaid expenses and other assets            99,874          109,613
    TOTAL ASSETS                             $3,096,344       $3,222,309
                                             ==========       ==========

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Liabilities
        Mortgages payable and capital lease
         obligations (including $23,262 and
         $23,417 of consolidated variable
         interest entities, respectively)      $599,087         $601,884
      Notes payable                              11,694          261,745
      Senior notes and debentures             1,079,906          930,219
      Accounts payable and other
       liabilities                              205,096          219,398
                                                -------          -------
    Total liabilities                         1,895,783        2,013,246

    Shareholders' equity
        Preferred shares                          9,997            9,997
        Common shares and other
         shareholders' equity                 1,159,139        1,167,340
                                              ---------        ---------
    Total shareholders' equity of the
     Trust                                    1,169,136        1,177,337
        Noncontrolling interests                 31,425           31,726
    Total shareholders' equity                1,200,561        1,209,063
                                              ---------        ---------
    TOTAL LIABILITIES AND SHAREHOLDERS'
     EQUITY                                  $3,096,344       $3,222,309
                                             ==========       ==========


    Federal Realty Investment Trust
    Summarized Income Statements
    March 31, 2010



                                                Three months ended March
                                                          31,
                                                 2010               2009
                                                 ----               ----
                                                 (in thousands, except
                                                    per share data)
                                                      (unaudited)
    Revenue
      Rental income                          $131,492           $127,206
      Other property income                     5,912              2,603
      Mortgage interest income                  1,066              1,267
        Total revenue                         138,470            131,076
                                              -------            -------

    Expenses
      Rental expenses                          30,003             28,697
      Real estate taxes                        15,104             13,832
      General and administrative                5,375              5,145
      Litigation provision                        114             20,632
      Depreciation and amortization            28,932             28,592
        Total operating expenses               79,528             96,898
                                               ------             ------
    Operating income                           58,942             34,178

      Other interest income                       182                 90
      Interest expense                        (25,962)           (23,583)
      Early extinguishment of debt             (2,801)                14
      Income from real estate partnership         193                202
    Income from continuing operations          30,554             10,901

    Discontinued operations
      Income from discontinued operations           -                 57
      Gain on sale of real estate from
       discontinued operations                      -                915
        Results from discontinued operations        -                972
                                                  ---                ---
    Net income                                 30,554             11,873

       Net income attributable to
        noncontrolling interests               (1,334)            (1,389)
                                               ------             ------
    Net income attributable to the Trust       29,220             10,484

      Dividends on preferred shares              (135)              (135)
    Net income available for common
     shareholders                             $29,085            $10,349
                                              =======            =======


    EARNINGS PER COMMON SHARE, BASIC
      Continuing operations                     $0.47              $0.16
      Discontinued operations                       -               0.01
                                                $0.47              $0.17
                                                =====              =====

      Weighted average number of common
       shares, basic                           61,089             58,841
                                               ======             ======

    EARNINGS PER COMMON SHARE, DILUTED
      Continuing operations                     $0.47              $0.16
      Discontinued operations                       -               0.01
                                                $0.47              $0.17
                                                =====              =====

      Weighted average number of common
       shares, diluted                         61,220             58,960
                                               ======             ======


    Federal Realty Investment Trust
    Funds From Operations
    March 31, 2010




                                                    Three months ended March
                                                               31,
                                                   -------------------------
                                                    2010                2009
                                                    ----                ----
                                                      (in thousands, except
    Funds from Operations available for common           per share data)
    ------------------------------------------
      shareholders (FFO) (1)
      ----------------------
    Net income (2)                               $30,554             $11,873
    Net income attributable to noncontrolling
     interests                                   (1,334)              (1,389)
    Gain on sale of real estate                        -                (915)
    Depreciation and amortization of real
     estate assets                                26,087              25,436
    Amortization of initial direct costs of
     leases                                        2,236               2,667
    Depreciation of joint venture real estate
     assets                                          351                 354
      Funds from operations                       57,894              38,026
    Dividends on preferred shares                   (135)               (135)
    Income attributable to operating
     partnership units                               245                   -
    Income attributable to unvested shares          (192)               (130)
      FFO                                         57,812              37,761
      Litigation provision, net of allocation to
       unvested shares                               114              20,565
                                                     ---              ------
    FFO excluding litigation provision           $57,926             $58,326
                                                 =======             =======

    FFO per diluted share                          $0.94               $0.64
    Litigation provision per diluted share             -                0.35
                                                     ---                ----
    FFO per diluted share excluding litigation
     provision                                     $0.94               $0.99
                                                   =====               =====

      Weighted average number of common shares,
       diluted                                    61,591              58,960
                                                  ======              ======





    Notes:
    ------
    (1)  See Glossary of Terms.
    (2)  Net income for 2010 includes certain charges related to the
    litigation and appeal process over a parcel of land adjacent to
    Santana Row and 2009 net income includes a $20.6 million charge for
    increasing the accrual for such litigation matter.  We believe FFO
    excluding this litigation provision provides a more meaningful
    evaluation of operations, and therefore, have included FFO and FFO
    per share excluding the related charges.

    Federal Realty Investment Trust
    Reconciliation of Net Income to FFO Guidance
    March 31, 2010



                                                               2010 Guidance
                                                               -------------
                                                                (Dollars in
                                                                  millions
                                                                   except
                                                                 per share
                                                                amounts) (1)
    Funds from Operations available for common shareholders
     (FFO)
    -------------------------------------------------------
    Net income                                               $124        $128
    Net income attributable to noncontrolling interests        (5)         (5)
    Gain on sale of real estate                                 -           -
    Depreciation and amortization of real estate & real
     estate partnership assets                                108         108
    Amortization of initial direct costs of leases              9           9
                                                              ---         ---
    Funds from operations                                     235         240
    Dividends on preferred stock                               (1)         (1)
    Income attributable to operating partnership units          1           1
    Income attributable to unvested shares                     (1)         (1)
    FFO                                                       235         239
    Litigation provision (2)                                    1           1
                                                              ---         ---
    FFO excluding litigation provision                       $236        $240
                                                             ====        ====

    Weighted average number of common shares, diluted        61.7        61.7

    FFO per diluted share                                   $3.81       $3.88
    Litigation provision (2)                                 0.01        0.01
                                                             ----        ----
    FFO per diluted share excluding litigation provision    $3.82       $3.89
                                                            =====       =====




    Notes:
    ------
    (1)  Individual items may not add up to total due to rounding.
    (2)  Amount represents certain costs related to the litigation and
    appeal process over a parcel of land located adjacent to Santana
    Row.


    Investor and Media Inquiries
    ----------------------------
    Gina Birdsall                             Janelle Stevenson
    Investor Relations                        Corporate Communications
    301/998-8265                              301/998-8185
    gbirdsall@federalrealty.com               jmstevenson@federalrealty.com



SOURCE Federal Realty Investment Trust