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News Release

Federal Realty Investment Trust Announces First Quarter 2016 Operating Results

ROCKVILLE, Md., May 4, 2016 /PRNewswire/ -- Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its first quarter ended March 31, 2016. Highlights of the quarter and recent activity include:

  • Generated FFO per diluted share of $1.38 for the quarter, an increase of 9.5% over first quarter 2015.
  • Generated same center property operating income growth of 4.2% (or 2.5% when properties under redevelopment are excluded). 
  • Federal Realty's same-center portfolio was 95.6% leased on March 31, 2016, compared to 95.4% on December 31, 2015 and 96.2% on March 31, 2015.
  • Signed leases for 398,820 sf of comparable space at an average rent of $33.53 psf and achieved cash basis rollover growth on comparable spaces of 13%.
  • Acquired our JV partner's 70% interest in our unconsolidated real estate partnership for $153.7 million
  • Raised $149 million through an underwritten public offering of 1 million common shares.
  • Upsized our revolving credit facility to $800 million, extended the maturity date to April 2020 and lowered the pricing to LIBOR plus 82.5 basis points.
  • Affirmed 2016 FFO per diluted share guidance range of $5.65 to $5.71.

"We are proud to deliver another quarter of record bottom line results to our shareholders and remain focused on our long term strategic plan," commented Donald C. Wood, President and Chief Executive Officer of Federal Realty. "In our core portfolio, we continue to look for opportunities to take control of below market anchor space and drive value through redevelopment and releasing. In our mixed use portfolio, Assembly Row and Pike & Rose are well into their second phases of development. In addition, with our equity raise in March and credit facility upsize and extension in April, we maintain a solid balance sheet that allows us to continue to execute on our long term strategic plan."

Financial Results

In the first quarter 2016, Federal Realty generated funds from operations available for common shareholders (FFO) of $97.6 million, or $1.38 per diluted share. This compares to FFO of $87.3 million, or $1.26 per diluted share, in first quarter 2015.  Net income available for common shareholders was $76.8 million and earnings per diluted share was $1.10 for first quarter 2016 versus $46.1 million and $0.67, respectively, for first quarter 2015. 

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 in addition to Form 8-K that was filed.

Portfolio Results

In the first quarter 2016, same-center property operating income increased 4.2% including redevelopment and expansion properties, and 2.5% excluding redevelopment and expansion properties.

The overall portfolio was 94.1% leased as of March 31, 2016, compared to 94.3% on December 31, 2015 and 95.4% on March 31, 2015.  Federal Realty's same-center portfolio was 95.6% leased on March 31, 2016, compared to 95.4% on December 31, 2015 and 96.2% on March 31, 2015.

During first quarter 2016, the Trust signed 92 leases for 419,781 square feet of retail space.  On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 398,820 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 13%.  The average contractual rent on this comparable space for the first year of the new lease is $33.53 per square foot compared to the average contractual rent of $29.67 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 2016.

Summary of Other Quarterly Activities and Recent Developments

  • January 13, 2016 –Federal Realty acquired the 70% interest owned by affiliates of a discretionary fund advised by Clarion Partners in a joint venture that owns six neighborhood and community centers. Federal Realty purchased the 70% interest in the venture for $153.7 million, consisting of $130 million of cash and assumption of the allocable share of mortgage debt. With this acquisition, Federal Realty successfully concluded the venture that was formed in 2004 and increased its ownership of the six properties from 30% to 100%. The portfolio includes two properties near Boston, Massachusetts (Atlantic Plaza and Campus Plaza); one asset in the New York Metro region (Greenlawn Plaza on Long Island) and three centers in the Washington DC market (Free State Shopping Center and Plaza del Mercado in Suburban Maryland, and Barcroft Plaza in Northern Virginia).
  • March 1, 2016Federal Realty announced the sale of 1,000,000 common shares in an underwritten public offering. The shares were priced at $149.43 per share, net of underwriters discount, and were sold to Citigroup Global Markets Inc. as the sole bookrunner.
  • April 20, 2016 - Federal Realty completed an upsize of its revolving credit facility to $800 million and extended the maturity date to April 20, 2020, subject to two six-month extension options.  The pricing was also lowered to LIBOR plus 82.5 basis points based on the Trust's current rating.

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 $0.94 per share on its common shares, resulting in an indicated annual rate of $3.76 per share.  The regular common dividend will be payable on July 15, 2016 to common shareholders of record on June 22, 2016.

Guidance

We have affirmed our 2016 guidance for FFO per diluted share of $5.65 to $5.71, and updated our earnings per diluted share guidance to $3.49 to $3.56.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its first quarter 2016 earnings conference call, which is scheduled for May 5, 2016, at 11 a.m. Eastern Time.  To participate, please call (877) 445-3230 five to ten minutes prior to the call start time and use the passcode 68139087 (required).  Federal Realty will also provide an online webcast on the Company's website, 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 12, 2016 by dialing (855) 859-2056 and using the passcode 68139087.

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 96 properties include over 2,800 tenants, in approximately 22 million square feet, and over 1,800 residential units. 

Federal Realty has paid quarterly dividends to its shareholders continuously since its founding in 1962, and has increased its dividend rate for 48 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 9, 2016, 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 9, 2016.

 

Investor Inquiries                                                                           

Media Inquiries

Leah Andress                                                                          

Andrea Simpson

Investor Relations Associate                                             

Vice President, Marketing

301/998-8265                                                                     

617/684-1511

landress@federalrealty.com                                                            

asimpson@federalrealty.com 

 

 

Federal Realty Investment Trust

Consolidated Balance Sheets

March 31, 2016

 

March 31,

 

December 31,

 

2016

 

2015

 

(in thousands, except share and per share data)

 

(unaudited)

   

ASSETS

     

Real estate, at cost

     

Operating (including $1,197,847 and $1,192,336 of consolidated variable interest entities, respectively)

$

5,901,076

   

$

5,630,771

 

Construction-in-progress

452,070

   

433,635

 
 

6,353,146

   

6,064,406

 

Less accumulated depreciation and amortization (including $184,078 and $176,057 of consolidated variable interest entities, respectively)

(1,611,379)

   

(1,574,041)

 

Net real estate

4,741,767

   

4,490,365

 

Cash and cash equivalents

19,716

   

21,046

 

Accounts and notes receivable, net

113,749

   

110,402

 

Mortgage notes receivable, net

41,618

   

41,618

 

Investment in real estate partnerships

10,455

   

41,546

 

Prepaid expenses and other assets

198,152

   

191,582

 

TOTAL ASSETS

$

5,125,457

   

$

4,896,559

 

LIABILITIES AND SHAREHOLDERS' EQUITY

     

Liabilities

     

Mortgages payable (including $446,046 and $448,315 of consolidated variable interest entities, respectively)

$

513,009

   

$

481,084

 

Capital lease obligations

71,612

   

71,620

 

Notes payable

341,620

   

341,961

 

Senior notes and debentures

1,733,081

   

1,732,551

 

Accounts payable and accrued expenses

165,407

   

146,532

 

Dividends payable

67,593

   

66,338

 

Security deposits payable

15,845

   

15,439

 

Other liabilities and deferred credits

122,117

   

121,787

 

Total liabilities

3,030,284

   

2,977,312

 

Commitments and contingencies

     

Redeemable noncontrolling interests

126,232

   

137,316

 

Shareholders' equity

     

Preferred shares, authorized 15,000,000 shares, $.01 par: 5.417% Series 1 Cumulative Convertible Preferred Shares, (stated at liquidation preference $25 per share), 399,896 shares issued and outstanding

9,997

   

9,997

 

Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 70,861,269 and 69,493,392 shares issued and outstanding, respectively

710

   

696

 

Additional paid-in capital

2,565,581

   

2,381,867

 

Accumulated dividends in excess of net income

(714,452)

   

(724,701)

 

Accumulated other comprehensive loss

(6,885)

   

(4,110)

 

Total shareholders' equity of the Trust

1,854,951

   

1,663,749

 

Noncontrolling interests

113,990

   

118,182

 

Total shareholders' equity

1,968,941

   

1,781,931

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

5,125,457

   

$

4,896,559

 

 

 

Federal Realty Investment Trust

     

Consolidated Income Statements

     

March 31, 2016

     
 

Three Months Ended

 

March 31,

 

2016

 

2015

 

(in thousands, except per share data)

 

(unaudited)

REVENUE

     

Rental income

$

195,308

   

$

181,166

 

Other property income

2,312

   

2,465

 

Mortgage interest income

724

   

1,161

 

Total revenue

198,344

   

184,792

 

EXPENSES

     

Rental expenses

42,819

   

41,439

 

Real estate taxes

22,794

   

20,394

 

General and administrative

8,010

   

8,853

 

Depreciation and amortization

47,799

   

41,984

 

Total operating expenses

121,422

   

112,670

 

OPERATING INCOME

76,922

   

72,122

 

Other interest income

103

   

29

 

Interest expense

(23,729)

   

(24,168)

 

Income from real estate partnerships

41

   

220

 

INCOME FROM CONTINUING OPERATIONS

53,337

   

48,203

 

     Gain on change in control of interests

25,726

   

 

NET INCOME

79,063

   

48,203

 

   Net income attributable to noncontrolling interests

(2,108)

   

(2,017)

 

NET INCOME ATTRIBUTABLE TO THE TRUST

76,955

   

46,186

 

Dividends on preferred shares

(135)

   

(135)

 

NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS

$

76,820

   

$

46,051

 

EARNINGS PER COMMON SHARE, BASIC

     

Continuing operations

$

0.73

   

$

0.67

 

Gain on change in control of interests

0.37

   

 
 

$

1.10

   

$

0.67

 

Weighted average number of common shares, basic

69,771

   

68,368

 

EARNINGS PER COMMON SHARE, DILUTED

     

Continuing operations

$

0.73

   

$

0.67

 

Gain on change in control of interests

0.37

   

 
 

$

1.10

   

$

0.67

 

Weighted average number of common shares, diluted

69,957

   

68,563

 

 

 

Federal Realty Investment Trust

       

Funds From Operations

March 31, 2016

       
   

Three Months Ended

   

March 31,

   

2016

 

2015

   

(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO)

       

Net income

 

$

79,063

   

$

48,203

 

Net income attributable to noncontrolling interests

 

(2,108)

   

(2,017)

 

Gain on change in control of interests

 

(25,726)

   

 

Depreciation and amortization of real estate assets

 

41,683

   

36,953

 

Amortization of initial direct costs of leases

 

4,204

   

3,440

 

Depreciation of joint venture real estate assets

 

45

   

331

 

Funds from operations

 

97,161

   

86,910

 

Dividends on preferred shares

 

(135)

   

(135)

 

Income attributable to operating partnership units

 

855

   

833

 

Income attributable to unvested shares

 

(292)

   

(320)

 

FFO

 

$

97,589

   

$

87,288

 

Weighted average number of common shares, diluted

 

70,867

   

69,515

 

FFO per diluted share

 

$

1.38

   

$

1.26

 
         

 

Federal Realty Investment Trust

     

Reconciliation of FFO Guidance

     

March 31, 2016

     
       

The following table provides a reconciliation of the range of estimated earnings per diluted share to estimated FFO per diluted share for the full year 2016. Estimates do not include the impact from potential acquisitions or dispositions which have not closed as of May 4, 2016.

       
 

2016 Guidance

   
 

Low

 

High

Net income available to common shareholders, per diluted share

$

3.49

   

$

3.56

 

Adjustments:

     

Gain on change in control of interests

(0.36)

   

(0.36)

 

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

2.30

   

2.30

 

Amortization of initial direct costs of leases

0.22

   

0.22

 

All other amounts

0.00

   

0.00

 

FFO per diluted share

$

5.65

   

$

5.71

 
               

Note:

             

Individual items may not add up to total due to rounding.

             

 

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 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.

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SOURCE Federal Realty Investment Trust