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News Release

Federal Realty Investment Trust Announces First Quarter 2015 Operating Results

ROCKVILLE, Md., May 7, 2015 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its first quarter ended March 31, 2015.

Financial Results
In the first quarter 2015, Federal Realty generated funds from operations available for common shareholders (FFO) of $87.3 million, or $1.26 per diluted share. This compares to FFO of $81.8 million, or $1.21 per diluted share, in first quarter 2014. Net income available for common shareholders was $46.1 million and earnings per diluted share was $0.67 for first quarter 2015, versus $38.6 million and $0.57, respectively, for first quarter 2014.    

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 2015, same-center property operating income increased 3.7% over the prior year, excluding properties that are being redeveloped and 3.6% when including those properties.

The overall portfolio was 95.4% leased as of March 31, 2015, compared to 95.6% on both December 31, 2014 and March 31, 2014.  Federal Realty's same center portfolio was 96.0% leased on March 31, 2015, compared to 95.8% on December 31, 2014 and 95.9% on March 31, 2014.

During first quarter 2015, Federal Realty signed 86 leases for 279,586 square feet of retail space.  On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty leased 249,295 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 leases is $37.50 per square foot compared to the average contractual rent of $33.70 per square foot for the last year of the prior leases.  The previous average contractual rent was 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 22% for first quarter 2015. As of March 31, 2015, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio was $25.55 per square foot.

Summary of Other Quarterly Activities and Recent Developments

  • May 7, 2015—Federal Realty today announced it is proceeding with Phase II of Assembly Row, which will include 167,000 square feet of new retail space, 447 high-end apartments, 117 luxury condominium residences and a 155 room boutique hotel to be owned in a joint venture partnership. Phase II also includes the 700,000 square foot office building being constructed by Partners HealthCare.
  • May 4, 2015—Federal Realty acquired an 80% interest in a 198,000 square foot lifestyle center in South Florida, based on a total value of $87.5 million. Situated in the resurgent Coconut Grove District, at the prominent intersection of Main Highway and Grand Avenue, CocoWalk is well located to serve the affluent, year round residents of Miami-Dade.
  • April 24, 2015—Federal Realty closed on the sale of its Houston St. property in San Antonio, Texas, for a sales price of $46.1 million.
  • March 16, 2015—Federal Realty issued $200 million aggregate principal amount of 4.50% senior unsecured notes due December 1, 2044. The notes were offered at 105.379% of the principal amount with a yield to maturity of 4.179%. The notes have the same terms and are of the same series as the $250 million senior notes issued in November 2014. The proceeds were used to redeem its 6.20% senior unsecured notes due 2017 for an aggregate principal of $200 million. The redemption was completed on April 11, 2015 and included a prepayment premium of $19 million.

"We are pleased with yet another quarter of strong performance, driven by our core portfolio and bolstered by deliveries from our development and redevelopment pipelines," commented Donald C. Wood, President and Chief Executive Officer of Federal Realty. "There's a lot to be excited about this quarter, and there's a lot to be excited about going forward. With the ongoing, successful deliveries of the initial phases of Pike & Rose and Assembly Row, our recent acquisition of CocoWalk, and our decision to proceed with Phase II at Assembly Row, we continue to execute very well on our long-term business plan."

Regular Quarterly Dividends
Federal Realty announced today that its Board of Trustees declared a regular quarterly cash dividend on its common shares of $0.87 per share, resulting in an indicated annual rate of $3.48 per share.  The regular common dividend will be payable on July 15, 2015 to common shareholders of record on June 22, 2015.

Guidance
We have maintained our 2015 guidance for FFO per diluted share excluding early extinguishment of debt of $5.26 to $5.34, and updated earnings per diluted share to $2.75 to $2.83.

Conference Call Information
Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its first quarter 2015 earnings conference call, which is scheduled for May 8, 2015, at 10 a.m. Eastern Daylight Time.  To participate, please call (877) 445-3230 five to ten minutes prior to the call start time and use the passcode 16324379 (required).  Federal Realty will also provide an online webcast 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 May 15, 2015, by dialing (855) 859-2056 and using the passcode 16324379.

About Federal Realty
Federal Realty is a recognized leader in the ownership, operation and redevelopment of high-quality retail based properties located primarily in major coastal markets from Washington, D.C. to Boston as well as San Francisco and Los Angeles.  Founded in 1962, our mission is to deliver long term, sustainable growth through investing in densely populated, affluent communities where retail demand exceeds supply.  Our expertise includes creating urban, mixed-use neighborhoods like Santana Row in San Jose, California, Pike & Rose in North Bethesda, Maryland and Assembly Row in Somerville, Massachusetts. These unique and vibrant environments that combine shopping, dining, living and working provide a destination experience valued by their respective communities.  Federal Realty's 90 properties include over 2,600 tenants, in approximately 21 million square feet, and 1500 residential units. 

Federal Realty has paid quarterly dividends to its shareholders continuously since its founding in 1962, and has increased its dividend rate for 47 consecutive years, the longest record in the REIT industry. Federal Realty shares are traded on the NYSE under the symbol FRT. For additional information about Federal Realty and its properties, visit 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. These factors include, but are not limited to, the risk factors described in our Annual Report on Form 10-K filed on February 10, 2015, 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 renovation projects that we do pursue 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 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 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 10, 2015.

Investor Inquiries

Media Inquiries

Brittany Schmelz

Andrea Simpson

Investor Relations Coordinator

Director, Marketing

301/998-8265

617/684-1511

bschmelz@federalrealty.com

asimpson@federalrealty.com  

 

 

 

 

Federal Realty Investment Trust

Summarized Balance Sheets

March 31, 2015

 

March 31,

 

December 31,

 

2015

 

2014

 

(in thousands)

 

(unaudited)

   

ASSETS

     

Real estate, at cost

     

Operating (including $266,198 and $282,303 of consolidated variable interest entities, respectively)

$

5,208,904

   

$

5,128,757

 

Construction-in-progress

466,469

   

480,241

 

Asset held for sale

61,987

   

 
 

5,737,360

   

5,608,998

 

Less accumulated depreciation and amortization (including $27,873 and $26,618 of consolidated variable interest entities, respectively)

(1,500,976)

   

(1,467,050)

 

Net real estate

4,236,384

   

4,141,948

 

Cash and cash equivalents

171,437

   

47,951

 

Accounts and notes receivable, net

100,981

   

93,291

 

Mortgage notes receivable, net

50,911

   

50,988

 

Investment in real estate partnerships

37,538

   

37,457

 

Prepaid expenses and other assets

183,499

   

175,235

 

TOTAL ASSETS

$

4,780,750

   

$

4,546,870

 
       

LIABILITIES AND SHAREHOLDERS' EQUITY

     

Liabilities

     

Mortgages and capital lease obligations (including $179,789 and $187,632 of consolidated variable interest entities, respectively)

$

651,392

   

$

635,345

 

Notes payable

290,577

   

290,519

 

Senior notes and debentures

1,694,764

   

1,483,813

 

Accounts payable and other liabilities

332,946

   

325,584

 

Total liabilities

2,969,679

   

2,735,261

 

Redeemable noncontrolling interests

119,145

   

119,053

 

Shareholders' equity

     

Preferred shares

9,997

   

9,997

 

Common shares and other shareholders' equity

1,581,572

   

1,594,404

 

Total shareholders' equity of the Trust

1,591,569

   

1,604,401

 

    Noncontrolling interests

100,357

   

88,155

 

Total shareholders' equity

1,691,926

   

1,692,556

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

4,780,750

   

$

4,546,870

 

 

 

Federal Realty Investment Trust

     

Summarized Income Statements

     

March 31, 2015

     
 

Three Months Ended

 

March 31,

 

2015

 

2014

 

(in thousands, except per share data)

 

(unaudited)

Revenue

     

Rental income

$

181,166

   

$

166,193

 

Other property income

2,465

   

3,400

 

Mortgage interest income

1,161

   

1,235

 

Total revenue

184,792

   

170,828

 

Expenses

     

Rental expenses

41,439

   

37,130

 

Real estate taxes

20,394

   

18,700

 

General and administrative

8,853

   

7,704

 

Depreciation and amortization

41,984

   

43,850

 

Total operating expenses

112,670

   

107,384

 

Operating income

72,122

   

63,444

 

Other interest income

29

   

25

 

Interest expense

(24,168)

   

(23,137)

 

Income from real estate partnerships

220

   

213

 

Net income

48,203

   

40,545

 

   Net income attributable to noncontrolling interests

(2,017)

   

(1,792)

 

Net income attributable to the Trust

46,186

   

38,753

 

Dividends on preferred shares

(135)

   

(135)

 

Net income available for common shareholders

$

46,051

   

$

38,618

 
       

EARNINGS PER COMMON SHARE, BASIC

$

0.67

   

$

0.58

 

Weighted average number of common shares, basic

68,368

   

66,615

 
       

EARNINGS PER COMMON SHARE, DILUTED

$

0.67

   

$

0.57

 

Weighted average number of common shares, diluted

68,563

   

66,773

 

 

 

 

Federal Realty Investment Trust

       

Funds From Operations

March 31, 2015

       
   

Three Months Ended

   

March 31,

   

2015

 

2014

   

(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO)

       

Net income

 

$

48,203

   

$

40,545

 

Net income attributable to noncontrolling interests

 

(2,017)

   

(1,792)

 

Depreciation and amortization of real estate assets

 

36,953

   

39,549

 

Amortization of initial direct costs of leases

 

3,440

   

2,831

 

Depreciation of joint venture real estate assets

 

331

   

409

 

Funds from operations

 

86,910

   

81,542

 

Dividends on preferred shares

 

(135)

   

(135)

 

Income attributable to operating partnership units

 

833

   

716

 

Income attributable to unvested shares

 

(320)

   

(369)

 

FFO

 

$

87,288

   

$

81,754

 

FFO per diluted share

 

$

1.26

   

$

1.21

 

       Weighted average number of common shares, diluted

 

69,515

   

67,691

 
         

 

 

 

Federal Realty Investment Trust

     

Reconciliation of Net Income to FFO Guidance

     

March 31, 2015

     
       
 

2015 Guidance

 

(Dollars in millions except

 

 per share amounts) (1)

Funds from Operations available for common shareholders (FFO)

     

Net income

$

200

   

$

206

 

Net income attributable to noncontrolling interests

(8)

   

(8)

 

Gain on sale of real estate

(11)

   

(11)

 

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

155

   

155

 

Amortization of initial direct costs of leases

13

   

13

 

Funds from operations

349

   

354

 

Dividends on preferred shares

(1)

   

(1)

 

Income attributable to operating partnership units

3

   

3

 

Income attributable to unvested shares

(1)

   

(1)

 

FFO

$

350

   

$

356

 

Early extinguishment of debt, net of allocation to unvested shares

19

   

19

 

FFO excluding early extinguishment of debt

$

369

   

$

375

 
       

Weighted average number of common shares, diluted

70.2

   

70.2

 
       

FFO excluding early extinguishment of debt, per diluted share

$

5.26

   

$

5.34

 
 

Note:

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

 

 

 

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SOURCE Federal Realty Investment Trust