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News Release

Federal Realty Investment Trust Announces First Quarter 2011 Operating Results

ROCKVILLE, Md., May 5, 2011 /PRNewswire via COMTEX/ --

Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its first quarter ended March 31, 2011.

 

(Logo: http://photos.prnewswire.com/prnh/20050907/DCW070LOGO )

Financial Results

For first quarter 2011, Federal Realty generated funds from operations available for common shareholders (FFO) of $61.3 million, or $0.99 per diluted share, and net income available for common shareholders of $31.1 million, or earnings per diluted share of $0.50. This compares to FFO of $57.8 million, or $0.94 per share, and net income available to common shareholders of $29.1 million, or earnings per diluted share of $0.47, for the quarter ended March 31, 2010.

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 2011, same-center property operating income, excluding redevelopment and expansion properties, increased 1.8% over first quarter 2010. Including redevelopments and expansions, same-center property operating income decreased 1.1% compared to first quarter 2010. First quarter 2010 same-center results including redevelopments and expansions included $3.3 million of lease termination fee income relating to our Flourtown Shopping Center in Pennsylvania.

The overall portfolio was 93.8% leased as of March 31, 2011, compared to 93.9% on December 31, 2010 and 94.1% on March 31, 2010. Federal Realty's same-center portfolio was 94.3% leased as of March 31, 2011, compared to 94.3% on December 31, 2010 and 94.6% on March 31, 2010.

During first quarter 2011, the Trust signed 96 leases for 382,000 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 340,000 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 11%. The average contractual rent on this comparable space for the first year of the new lease is $30.52 per square foot compared to the average contractual rent of $27.55 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 24% for first quarter 2011. As of March 31, 2011, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio was $22.73 per square foot.

"Leasing velocity ramped up as healthy retailers are looking for innovative ways to grow their businesses," commented Donald C. Wood, president and chief executive officer of the Trust. "Our portfolio includes all types of high-quality retail assets and has married well with retailers' expansion plans. By continuing to enhance our tenant mix with strong national and local retailers, we can further improve the overall value of our portfolio."

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 $0.67 per share on its common shares, resulting in an indicated annual rate of $2.68 per share. The regular common dividend will be payable on July 15, 2011 to common shareholders of record on June 23, 2011.

Guidance

Federal Realty maintained 2011 guidance for FFO per diluted share at a range of $3.95 to $4.02 and revised earnings per diluted share to a range of $1.96 to $2.03.

Summary of Other Quarterly Activities and Recent Developments

 

  • April 18, 2011 - Announced the addition of Michael Khouri to the Trust as director of leasing. Mr. Khouri will specialize in developing relationships with national and international tenants that have historically focused on mall and outlet center environments and will be based out of Federal Realty's corporate headquarters in Rockville, Md. Mr. Khouri joins Federal Realty with 26 years of mall leasing experience at General Growth Properties and The Rouse Company. During his tenure at General Growth Properties, Mr. Khouri was responsible for the merchandising and strategic planning for a variety of malls in the mid-Atlantic region including The Mall in Columbia (Columbia, Md.), Tyson's Galleria (McLean, Va.), White Marsh Mall (Baltimore, Md.) and Park City Center (Lancaster, Pa.). Mr. Khouri was also responsible for the recent expansion and remerchandising of Towson Town Center in Towson, Md.
  • March 7, 2011 - Announced the addition of Lance Billingsley to the Trust as director of anchor tenant leasing. Mr. Billingsley will be based out of Federal Realty's Northeast region office in Wynnewood, Pennsylvania and will specialize in leasing properties located in the Northeast and mid-Atlantic regions. Mr. Billingsley brings more than 20 years of retail real estate experience to the Trust and has executed over 1,000 leases for more than 15 million square feet with national retailers along the East Coast. Before joining the Trust, Mr. Billingsley served as vice president of leasing and development for Brandolini Companies and First Washington Realty Trust.

 

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its first quarter 2011 earnings conference call, which is scheduled for May 6, 2011, at 11 a.m. Eastern Daylight Time. To participate, please call (800) 659-1942 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 3, 2011, by dialing (888) 286-8010 and using the passcode 16096031.

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 18.6 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 93.8% leased to national, regional, and local retailers as of March 31, 2011, 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 43 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 Supplemental Information 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 15, 2011, 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 partnerships;
  • 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 costs associated with the periodic maintenance and repair or renovation of space, insurance and other operations may increase, 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 associated with general economic conditions, including local economic conditions in our geographic markets;
  • 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 Supplemental Information. 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, filed with the Securities and Exchange Commission on February 15, 2011.

Federal Realty Investment Trust

 

Summarized Balance Sheets

 

March 31, 2011

 
   
   
         
 

March 31,

 

December 31,

 
 

2011

 

2010

 
 

(in thousands)

 

ASSETS

(unaudited)

     
         

Real estate, at cost

       

Operating (including $157,443 and $97,157 of consolidated variable
interest entities, respectively)

$ 3,814,218

 

$ 3,726,223

 

Construction-in-progress

167,332

 

163,200

 

Assets held for sale (discontinued operations)

6,519

 

6,519

 
 

3,988,069

 

3,895,942

 

Less accumulated depreciation and amortization (including $4,978
and $4,431 of consolidated variable interest entities, respectively)

(1,060,218)

 

(1,035,204)

 

Net real estate

2,927,851

 

2,860,738

 
         

Cash and cash equivalents

10,001

 

15,797

 

Accounts and notes receivable, net

71,408

 

68,997

 

Mortgage notes receivable, net

44,925

 

44,813

 

Investment in real estate partnerships

51,270

 

51,606

 

Prepaid expenses and other assets

112,006

 

117,602

 

TOTAL ASSETS

$ 3,217,461

 

$ 3,159,553

 
         

LIABILITIES AND SHAREHOLDERS' EQUITY

       
         

Liabilities

       

Mortgages payable and capital lease obligations (including $22,621
and $22,785 of consolidated variable interest entities, respectively)

$ 586,450

 

$ 589,441

 

Notes payable

212,817

 

97,881

 

Senior notes and debentures

1,004,788

 

1,079,827

 

Accounts payable and other liabilities

191,737

 

211,274

 

Total liabilities

1,995,792

 

1,978,423

 
         

Shareholders' equity

       

Preferred shares

9,997

 

9,997

 

Common shares and other shareholders' equity

1,180,419

 

1,139,836

 

Total shareholders' equity of the Trust

1,190,416

 

1,149,833

 

Noncontrolling interests

31,253

 

31,297

 

Total shareholders' equity

1,221,669

 

1,181,130

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$ 3,217,461

 

$ 3,159,553

 
       

Federal Realty Investment Trust

       

Summarized Income Statements

       

March 31, 2011

       
         
         
 

Three months ended March 31,

 
 

2011

 

2010

 
 

(in thousands, except per share data)

 
 

(unaudited)

 

Revenue

       

Rental income

$ 135,270

 

$ 131,348

 

Other property income

2,090

 

5,910

 

Mortgage interest income

1,121

 

1,066

 

Total revenue

138,481

 

138,324

 
         

Expenses

       

Rental expenses

29,599

 

29,904

 

Real estate taxes

15,508

 

15,088

 

General and administrative

6,051

 

5,489

 

Depreciation and amortization

30,569

 

28,861

 

Total operating expenses

81,727

 

79,342

 

Operating income

56,754

 

58,982

 
         

Other interest income

15

 

182

 

Interest expense

(25,044)

 

(25,962)

 

Early extinguishment of debt

296

 

(2,801)

 

Income from real estate partnerships

323

 

193

 

Income from continuing operations

32,344

 

30,594

 
         

Discontinued operations

       

Income (loss) from discontinued operations

40

 

(40)

 

Net income

32,384

 

30,554

 
         

Net income attributable to noncontrolling interests

(1,198)

 

(1,334)

 

Net income attributable to the Trust

31,186

 

29,220

 
         

Dividends on preferred shares

(135)

 

(135)

 

Net income available for common shareholders

$ 31,051

 

$ 29,085

 
         
         

EARNINGS PER COMMON SHARE, BASIC

       

Continuing operations

$ 0.50

 

$ 0.47

 

Discontinued operations

-

 

-

 
 

$ 0.50

 

$ 0.47

 
         

Weighted average number of common shares, basic

61,471

 

61,089

 
         

EARNINGS PER COMMON SHARE, DILUTED

       

Continuing operations

$ 0.50

 

$ 0.47

 

Discontinued operations

-

 

-

 
 

$ 0.50

 

$ 0.47

 
         

Weighted average number of common shares, diluted

61,629

 

61,220

 
       

Federal Realty Investment Trust

 

Funds From Operations

   

March 31, 2011

       
           
   
           
   

Three months ended March 31,

 
   

2011

 

2010

 

Funds from Operations available for common

(in thousands, except per share data)

 

shareholders (FFO) (1)

       

Net income

$ 32,384

 

$ 30,554

 

Net income attributable to noncontrolling interests

(1,198)

 

(1,334)

 

Depreciation and amortization of real estate assets

27,589

 

26,087

 

Amortization of initial direct costs of leases

2,240

 

2,236

 

Depreciation of joint venture real estate assets

427

 

351

 

Funds from operations

61,442

 

57,894

 

Dividends on preferred shares

(135)

 

(135)

 

Income attributable to operating partnership units

243

 

245

 

Income attributable to unvested shares

(280)

 

(192)

 

FFO

$ 61,270

 

$ 57,812

 
         

FFO per diluted share

$ 0.99

 

$ 0.94

 
           
 

Weighted average number of common shares, diluted

61,991

 

61,591

 
           
           
           

Notes:

 

(1) See Glossary of Terms.

 
         

Federal Realty Investment Trust

       

Reconciliation of Net Income to FFO Guidance

       

March 31, 2011

       
           
   
   

2011 Guidance

 
   

(Dollars in millions except

 
   

per share amounts) (1)

 

Funds from Operations available for common shareholders (FFO)

       

Net income

$ 128

 

$ 132

 

Net income attributable to noncontrolling interests

(5)

 

(5)

 

Gain on sale of real estate

-

 

-

 

Depreciation and amortization of real estate & joint venture real estate assets

115

 

115

 

Amortization of initial direct costs of leases

9

 

9

 

Funds from operations

247

 

252

 

Dividends on preferred shares

(1)

 

(1)

 

Income attributable to operating partnership units

1

 

1

 

Income attributable to unvested shares

(1)

 

(1)

 

FFO

$ 246

 

$ 251

 
           

Weighted average number of common shares, diluted

62.4

 

62.4

 
           

FFO per diluted share

$ 3.95

 

$ 4.02

 
           
           

Notes:

 

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

 
         

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