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News Release

Federal Realty Investment Trust Announces First Quarter 2014 Operating Results

ROCKVILLE, Md., May 8, 2014 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its first quarter ended March 31, 2014.

Federal Realty Investment Trust (FRT) is an equity real estate investment trust specializing in the ownership, management, development, and redevelopment of high quality retail assets. Federal Realty's portfolio is located primarily in strategic metropolitan markets in the Northeast, Mid-Atlantic, and California. Federal Realty has paid quarterly dividends to its shareholders continuously since its founding in 1962, and has the longest consecutive record of annual dividend increases in the REIT industry.

Financial Results

For first quarter 2014, Federal Realty generated funds from operations available for common shareholders (FFO) of $81.8 million, or $1.21 per diluted share, compared to $74.1 million, or $1.14 per diluted share, in first quarter 2013. Net income available for common shareholders was $38.6 million and earnings per diluted share was $0.57 for first quarter 2014 versus $34.5 million and $0.53, respectively, for first quarter 2013. 

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 2014, same-center property operating income increased 3.4% including redevelopment and expansion properties, and increased 2.9% excluding redevelopment and expansion properties, compared to first quarter 2013. During the quarter, same-center property operating income was impacted by approximately 100 basis points due to excessive snow removal costs experienced in the Northeast and Mid-Atlantic regions.    

The overall portfolio was 95.6% leased as of March 31, 2014, compared to 95.8% on December 31, 2013 and 95.1% on March 31, 2013.  Federal Realty's same-center portfolio was 95.5% leased on March 31, 2014, compared to 95.9% on December 31, 2013 and 95.2% on March 31, 2013.

During first quarter 2014, the Trust signed 78 leases for 364,034 square feet of retail space.  On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 328,355 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 18%.  The weighted average contractual rent on this comparable space for the first year of the new lease is $31.84 per square foot compared to the weighted average contractual rent of $27.01 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 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 29% for first quarter 2014.

Summary of Other Quarterly Activities and Recent Developments

  • January 6, 2014Federal Realty announced the acquisition of a controlling interest in two shopping centers totaling 285,600 square feet in affluent Monmouth County, New Jersey, for a total value of $161 million. The Grove at Shrewsbury and Brook 35 are located on busy Route 35, less than three miles from the Garden State Parkway, serving the NY Metro emerging bedroom and second home communities of Shrewsbury, Red Bank, Rumson, Fair Haven, Little Silver and Middletown. The acquisition, which was effective January 1, 2014, was made using a combination of downREIT units, cash and the assumption of $68 million of fixed rate debt secured by the properties.
  • May 6, 2014Federal Realty announced the promotion of Christopher J. Weilminster to the position of Executive Vice President, Real Estate & Leasing for the Trust, Wendy Seher to the position of Vice President & Director of Leasing, Mid-Atlantic Region, and the concurrent promotions of Jeffrey Fischer and Joseph Byrnes as Co-Directors of Leasing, Northeast Region.

"With the closing of the acquisitions of The Grove at Shrewsbury and Brook 35, two iconic assets, and the leasing and development progress at Pike & Rose, Assembly Row and The Point, we continue to demonstrate a clear and stable path toward future growth and value creation," commented Donald C. Wood, president and chief executive officer of Federal Realty. "As always, this activity was supported by a strong core portfolio that continued to deliver sector leading growth despite the significant snow impact in the first quarter."

Guidance

We have maintained our 2014 guidance for FFO per diluted share of $4.86 to $4.93.  Our earnings per share guidance was maintained at $2.54 to $2.62.

Regular Quarterly Dividends

Federal Realty also announced today that its Board of Trustees declared a regular quarterly cash dividend on its common shares of $0.78 per share, resulting in an indicated annual rate of $3.12 per share.  The regular common dividend will be payable on July 15, 2014 to common shareholders of record on June 23, 2014.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its first quarter 2014 earnings conference call, which is scheduled for May 9, 2014, at 11 a.m. Eastern Daylight Time.  To participate, please call (800) 708-4540 five to ten minutes prior to the call start time and use the passcode 36876436 (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 May 16, 2014, by dialing (888) 843-7419 and using the passcode 36876436.

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 20 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 95.6% leased to national, regional, and local retailers as of March 31, 2014, with no single tenant accounting for more than approximately 3.3% 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 46 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 11, 2014, 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 redevelopments or renovations may cost more, take more time to complete, or fail to perform as expected;
  • risks that we are investing a significant amount in ground-up development projects that may be dependent on third parties to deliver critical aspects of certain projects, requires spending a substantial amount upfront in infrastructure, and assumes receipt of public funding which has been committed but not entirely funded;
  • 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 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 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 with the Securities and Exchange Commission on February 11, 2014.

Media Inquiries

Investor Inquiries

Andrea Simpson

Kristina Lennox

Director, Marketing

Investor Relations Manager

617/684-1511

301/998-8265

asimpson@federalrealty.com

klennox@federalrealty.com

 

Federal Realty Investment Trust

Summarized Balance Sheets

March 31, 2014

 

March 31,

 

December 31,

 

2014

 

2013

 

(in thousands)

 

(unaudited)

     

ASSETS

         

Real estate, at cost

         

Operating (including $281,602 and $265,138 of consolidated variable interest entities,

respectively)

$

4,815,667

   

$

4,618,258

 

Construction-in-progress

572,986

   

531,205

 
 

5,388,653

   

5,149,463

 

Less accumulated depreciation and amortization (including $20,974 and $19,086 of

consolidated variable interest entities, respectively)

(1,383,520)

   

(1,350,471)

 

Net real estate

4,005,133

   

3,798,992

 

Cash and cash equivalents

75,699

   

88,927

 

Accounts and notes receivable, net

92,769

   

84,838

 

Mortgage notes receivable, net

55,287

   

55,155

 

Investment in real estate partnership

32,140

   

32,264

 

Prepaid expenses and other assets

144,619

   

159,118

 

TOTAL ASSETS

$

4,405,647

   

$

4,219,294

 
           

LIABILITIES AND SHAREHOLDERS' EQUITY

         

Liabilities

         

Mortgages and capital lease obligations (including $209,742 and $202,782 of consolidated

variable interest entities, respectively)

$

729,929

   

$

660,127

 

Notes payable

300,910

   

300,822

 

Senior notes and debentures

1,361,098

   

1,360,913

 

Accounts payable and other liabilities

329,074

   

321,710

 

Total liabilities

2,721,011

   

2,643,572

 

Redeemable noncontrolling interests

110,368

   

104,425

 

Shareholders' equity

         

    Preferred shares

9,997

   

9,997

 

    Common shares and other shareholders' equity

1,475,741

   

1,438,163

 

Total shareholders' equity of the Trust

1,485,738

   

1,448,160

 

    Noncontrolling interests

88,530

   

23,137

 

Total shareholders' equity

1,574,268

   

1,471,297

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

4,405,647

   

$

4,219,294

 

 

Federal Realty Investment Trust

Summarized Income Statements

March 31, 2014

 

Three Months Ended

 

March 31,

 

2014

 

2013

 

(in thousands, except per share data)

 

(unaudited)

Revenue

         

Rental income

$

166,193

   

$

152,616

 

Other property income

3,400

   

3,268

 

Mortgage interest income

1,235

   

1,265

 

Total revenue

170,828

   

157,149

 

Expenses

         

Rental expenses

37,130

   

29,501

 

Real estate taxes

18,700

   

17,572

 

General and administrative

7,704

   

7,057

 

Depreciation and amortization

43,850

   

40,517

 

Total operating expenses

107,384

   

94,647

 

Operating income

63,444

   

62,502

 

Other interest income

25

   

30

 

Interest expense

(23,137)

   

(27,405)

 

Income from real estate partnership

213

   

312

 

Income from continuing operations

40,545

   

35,439

 

Discontinued operations

         

Discontinued operations - income

   

403

 

Net income

40,545

   

35,842

 

   Net income attributable to noncontrolling interests

(1,792)

   

(1,254)

 

Net income attributable to the Trust

38,753

   

34,588

 

Dividends on preferred shares

(135)

   

(135)

 

Net income available for common shareholders

$

38,618

   

$

34,453

 
           

EARNINGS PER COMMON SHARE, BASIC

         

Continuing operations

$

0.58

   

$

0.52

 

Discontinued operations

   

0.01

 
 

$

0.58

   

$

0.53

 
           

Weighted average number of common shares, basic

66,615

   

64,692

 
           

EARNINGS PER COMMON SHARE, DILUTED

         

Continuing operations

$

0.57

   

$

0.52

 

Discontinued operations

   

0.01

 
 

$

0.57

   

$

0.53

 
           

Weighted average number of common shares, diluted

66,773

   

64,847

 

 

Federal Realty Investment Trust

Funds From Operations

March 31, 2014

   

Three Months Ended

   

March 31,

   

2014

 

2013

   

(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO)

           

Net income

 

$

40,545

   

$

35,842

 

Net income attributable to noncontrolling interests

 

(1,792)

   

(1,254)

 

Depreciation and amortization of real estate assets

 

39,549

   

36,562

 

Amortization of initial direct costs of leases

 

2,831

   

2,768

 

Depreciation of joint venture real estate assets

 

409

   

376

 

Funds from operations

 

81,542

   

74,294

 

Dividends on preferred shares

 

(135)

   

(135)

 

Income attributable to operating partnership units

 

716

   

227

 

Income attributable to unvested shares

 

(369)

   

(336)

 

FFO

 

$

81,754

   

$

74,050

 

FFO per diluted share

 

$

1.21

   

$

1.14

 

Weighted average number of common shares, diluted

 

67,691

   

65,158

 
             

 

Federal Realty Investment Trust

Reconciliation of Net Income to FFO Guidance

March 31, 2014

 
 

2014 Guidance

 

(Dollars in millions except

 

 per share amounts) (1)

Funds from Operations available for common shareholders (FFO)

         

Net income

$

180

   

$

185

 

Net income attributable to noncontrolling interests

(8)

   

(8)

 

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

148

   

148

 

Amortization of initial direct costs of leases

11

   

11

 

Funds from operations

331

   

336

 

Dividends on preferred shares

(1)

   

(1)

 

Income attributable to operating partnership units

3

   

3

 

Income attributable to unvested shares

(1)

   

(1)

 

FFO

$

332

   

$

337

 
           

Weighted average number of common shares, diluted

68.3

   

68.3

 
           

FFO per diluted share

$

4.86

   

$

4.93

 

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

Photo - http://photos.prnewswire.com/prnh/20050907/DCW070LOGO

SOURCE Federal Realty Investment Trust